Geelong economy “strong enough” to absorb Ford plant closure: Terry Ryder

The decision by Ford Australia to close its Geelong production plant in October 2016 with an expected loss of 510 jobs is “unfortunate” but the regional city’s economy is “strong enough” to absorb the shutdown, says hotspotting.com.au’s Terry Ryder. 

“There was a time when Geelong was highly dependent on manufacturing but the city has reinvented itself by moving into new industries, such as health, education and tourism,” Ryder tells Property Observer. 

“One of the positive things in the Ford announcement is that the city has several years to prepare for the event. 

“There are also new ventures in the pipeline which will counter-balance the economic impact, such as the Regional Rail Link and the plan to make Avalon the second international airport for Melbourne," he says.

Ryder says Geelong will continue to have a “strong future as an affordable lifestyle alternative to Melbourne, with improving transport links to the City”. 

The April 2013 Real Estate Institute of Victoria (REIV) update on Geelong, the Surf Coast and Queenscliff has house prices up 0.3% to $390,000 and unit prices up by 1.7% to $305,000. 

The figures are based on properties sold in the previous 12 months, updated on a rolling monthly basis. 

The highest demand was reported in Hamlyn Heights to the west of Geelong on hills that overlook Corio Bay, where the median property price increased by 2.1% in April followed by Highton in the south west, which recorded a 0.7% rise. 

In the Borough of Queenscliff the median house price rose 5% to $735,000 in April. 

The median house price in Surf Coast Shire was stable for the month at $585,000. 

The rental vacancy rate in Geelong is around 4.4% according to the REIV, with 11,659 homes reported as vacant by local estate agents.

Typical Geelong yields are between 5% to 6.5% for houses and townhouses within 5 kilometres of the CBD says Peter Fort, sales manager at PRDNationwide Geelong - well above Melbourne yields of around 3.6% for houses and 4.4% for units. 

REIV spokesperson Robert Larocca says the health of any property market is directly linked to the health of the economy. 

“As a result if the closure of Ford leads to reduced economic growth and less employment then it will have a negative impact on the market. 

“It really depends on the region finding a replacement for the economic activity provided by Ford and its suppliers. Thankfully there is a strong and resilient local community,” he says. 

Larocca says the Geelong market has displayed steady growth over the years. 

He says the strong points of the Geelong market are its more affordable houses and the appeal of its country feel and access to the bay. 

“Access to the Bellarine and Surf Coast provides great lifestyle options," he says.

“Improved transport links to Melbourne over the last decade has also allowed a growth in commuting. 

“Given the state government’s desire for decentralisation as a way to deal with population growth in Melbourne this should provide further demand for housing in the next decade or two,” he says. 

Larocca says the Geelong detached houses market has performed better than units. 

“In the market for houses we have seen the strongest growth in a range of price points with Corio house prices rising 9%, Hamlyn Heights by 8.4% and Barwon Heads by 6.2%.

Local estate agent Peter Nell from Stockdale & Leggo Geelong says the Ford announcement  would effect the confidence of all types of purchasers.

"The concerns are obviously employment, as Shell, Alcoa and now Ford have all turning their backs on this town," he says.

But, he believes Geelong has so much to offer that he is sure "we will figure a way to create different forms of employment".

"But we need to do something now, not in 2016," he says.

Nell describes the Geelong market as "fair" with properties selling provided vendors meet the market on price.

"Listings on the other hand are much harder to obtain as loads of vendors are hesitant in putting their homes on the market and are hoping that the market might improve," he says.

Nick Lord, director at Maxwell Collins Real Estate, says the Geelong property market will continue to see healthy growth over the coming years "with demand still strong from investors and home buyers from within the city but more importantly from purchasers who do not currently reside in Geelong".

"While the pending closure of Ford is very disappointing for the town and we feel for the employees and their families, our city has grown to have strong employment in areas such as education and health to name just a few," he says.

He says the city has changed over recent years "with people continuing to commute to Melbourne for work whilst enjoying the Geelong lifestyle"

"I feel that the Ford closure will not have a large impact on the housing market," he says.

Lord says there is renewed interest from investors due to the lowering of interest rates and average rental returns of around 5% on offer.

However, as is the case in Melbourne and other capital cities, first-home buyers "continue to be the quietest section of the market"