Hotspots: Four bright spots for house prices in Victoria for 2012: Greville Pabst

Hotspots: Four bright spots for house prices in Victoria for 2012: Greville Pabst
Greville PabstDecember 8, 2020

Melbourne inner east

In Melbourne’s inner east slowing demand led to prolonged selling periods for many vendors in 2011, with buyers taking advantage of weakened conditions by making low offers. Consequently,  many properties that typically go to auction were offered to the market via private sale amid fears of insufficient demand.

Suburbs including Ringwood and Blackburn were among the region’s worst performers, suffering from increased supply of housing while demand constricted. Similarly, the suburb of Doncaster continues to see an ongoing increase in the supply of new apartments. The oversupply has implications for local values in the future as the stock of similar properties competes for buyers.

In 2012, the improvement to affordability is expected to give rise to activity from entry-level and first-home buyers who would otherwise be priced out of the market. However, activity among established home buyers is expected to remain slow as prices continue to stabilise following strong growth in 2009-10.

Geelong, Bellarine Peninsula and Surf Coast

During the final quarter of 2011 there was a general easing of sales activity and buyer enquiry across Geelong and Bellarine Peninsula, as demand from first home owners and investors softened.

Buyers are seeking well-maintained property that requires no immediate repairs or improvements expenditure such as new homes and fully renovated dwellings. Established home owners remain inactive and are concentrating on reducing debt levels in the short to medium term. This has caused a decline in properties for sale within the $500,000 to $1 million range.

The summer selling period has brought reasonable demand for properties in coastal areas including Ocean Grove, Barwon Heads, Torquay and Anglesea, however, slower selling conditions continue in Bellarine towns such as Portarlington, Clifton Springs, St Leonards and Leopold. This is expected to continue into the second quarter of 2012.

While it has not experienced any significant increase in property prices, Geelong West remains in high demand, with properties selling much faster than surrounding areas. Conversely, Wandana Heights has experienced sluggish sales as a result of improved transport linkages to neighbouring suburbs and supply of new housing available in the well regarded suburb of Highton Ridge, resulting in a poor performance for the area.

Macedon Ranges

Improved affordability had little effect on demand in Victoria’s north, with little activity from buyers and sellers in the Macedon region in late 2011. While transactions continue to occur they do so at lower levels than 12 months earlier, applying pressure to vendors to meet buyers’ expectations.

This trend is likely to persist in the first quarter of 2012, with movement in values between -4%  and 4% for some property types. This means there are good opportunities to buy in suburbs such as Gisborne and Woodend.

Even though conditions are ripe, investors are scarce, with buyers namely consisting of owner-occupiers and those downsizing from larger rural properties. Properties on larger allotments of land valued at over $600,000 are experiencing prolonged periods on the market due to poor demand.

On the upside, current conditions mean there are strong opportunities for savvy investors to purchase property at reasonable prices and achieve a sound investment return.  The area is experiencing a shortage of rental properties, which has led to significant demand and competition among renters.

South-east Gippsland

Melbourne’s outer south east eased into the new year period, with many buyers chasing reduced prices.

The Cranbourne prestige market softened in 2011, with some agents reporting 20% price falls and minimal sales over $500,000.

Similarly, Berwick recorded a fall of more than $35,000 in the median house price during the December quarter. While median statistic are often misleading due to fluctuations in stock levels the price fall has been confirmed by local real estate agents who witnessed the price decline across the outer south east, particularly within Pakenham, where demand dramatically reduced during the December quarter.

The Wonthaggi Desalination Plant has brought hundreds of workers to the town from Melbourne and surrounding towns.

The infrastructure project has attracted investors and resulted in rising property prices in the area. Local real estate agents reported that the investors seeking to purchase in the area held very little discrimination to local property and were just eager to secure a property. The desalination plant brought a transient workforce to Wonthaggi, which increased average rental returns from 4% to a high of 10% at peak periods. The activity also stimulated an increase in property prices by an average 25%.

As construction on the project nears completion prices in the town appear to be trending down, with the price of some properties already falling 20%. For now rents remain stable at 6% to 7%. The downward trending in the growth in this area begs the question about the long-term investment viability of Wonthaggi and other regional communities subject to major projects.

Greville Pabst is CEO of the WBP Property Group.

 

 


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