Melbourne’s growth woes are drawing attention to Victoria’s regional areas, and Geelong is gaining ground in the eyes of many
Corelogic expects the nationwide pattern of property market decline to continue throughout 2019, and Melbourne is leading the charge alongside Sydney.
While it ended 2018 on a stronger note than its counterpart, Melbourne is still seeing falling dwelling values, influenced by the lack of foreign investment and heightened restrictions on financing.
“The ramp-up in housing supply has been more pronounced in these markets against a backdrop of slowing demand,” explains CoreLogic research analyst Cameron Kusher.
“Additionally, housing affordability constraints are more pronounced in these markets and rental yields are substantially lower, indicating an imbalance between rental values and dwelling values.”
As a result, leverage has shifted from sellers, who were better able to dictate prices in the past, to buyers, who are now able to negotiate, given the larger pool of choices available to them.
Geelong steps in
The regional market is absorbing much of the demand seeping out of Melbourne into more affordable areas.
According to CoreLogic’s Regional Market Update for November 2018, the top-performing areas outside of Melbourne were Latrobe- Gippsland, Wide Bay and Geelong, with the latter reporting the highest annual increases in house and unit median values.
Geelong is still on its way up, and infrastructure projects are being implemented to improve accessibility and enhance its appeal.
“The Geelong Ring Road has long functioned as Geelong’s growth boundary, but plans are underway – Lovely Banks has already started, for example – for suburbs on the other side of this road, meaning a lot of those ‘outer suburbs’ of Geelong become ‘middle ring’,” explains Henry Fields, property research and acquisitions coordinator at Research Property Real Estate.
He also points to the suburb of Corio as an example of where buyers in Geelong can look.
“Corio continues its run as an impressive long-term steady capital growth suburb. It has averaged over 6% per annum growth over the last three, five, 10, 15 and 35 years – it is matched only by Norlane in the city for that history of growth at that price point,” Fields says.
“The blocks are of a generous size in comparison to the rest of Geelong, and Corio’s median price is now over $300,000, meaning that townhouse developments now make sense and profit for everyday folks.”
MOOROOLBARK: Positive streak is broken
The large suburb of Mooroolbark, located about an hour from the Melbourne CBD and 10 minutes from Lilydale, enjoyed significant and consistent growth over the five years to December 2018, but the downswing being experienced by the capital city has begun to have an impact on prices.
Over the year to December 2018, both houses and units recorded price drops – of 7.4% and 6.1%, respectively – breaking a long-running trend of positivity. Nonetheless, there is still demand, which is indicated by the fact that properties only spend around 30 days on the market. Rents also continue to rise and have reached weekly rates of $420 for houses and $380 for units. The fact that Mooroolbark is a highly accessible area may be a reason for the continuing demand.
Location: Mooroolbark is 31km from the Melbourne CBD and 5km from the Lilydale CBD
Time on market: In spite of falling growth, properties only spend around 30 days on the market