Victoria property: Ararat, Portland, Mildura among Victorian regional towns where house prices rose most
House price growth in regional Victoria has slowed amid interest rate rises and an uncertain economy, but prices remain higher than a year ago in most towns.
Affordable areas where houses can be bought for less than $600,000 have recorded some of the biggest price gains over the past year as home buyers and investors seek cheaper options.
The overall median house price in regional Victoria rose 0.8 per cent to $640,000 in the three months to June, Domain’s latest House Price Report, released on Thursday, showed.
This was the smallest quarterly gain in almost two years, albeit a stronger result than Melbourne where the median house price fell 3.1 per cent in the June quarter.
“Regional Victoria has the affordability edge driving demand,” Domain chief residential economist Dr Nicola Powell said. “It is that affordability, and less exposure to changes in the cash rate. But it only nudged marginally higher so it isn’t ruling out that prices go backwards.”
The modest recent gains may be cold comfort to buyers in areas where prices are up more than 20 per cent from a year ago.
In Ararat, west of Ballarat, the median house price soared 28.4 per cent over the past year to reach a still relatively affordable $437,750. Further north in the shire of Yarriambiack, house prices jumped 27.8 per cent – but remain at just $260,000.
There were also gains of more than 20 per cent in the Glenelg shire, Mildura and Benalla, where buyers can pick up the typical house for under $600,000.
Powell said the lower price points were a drawcard for various types of purchasers.
“They make it attractive for first home buyers, local owner occupiers but also probably investors that are chasing those stronger rental yields,” she said.
“The higher yielding locations are going to be the ones investors are looking towards more so as a result of those taxation changes,” she added, referring to the federal budget’s changes to the tax treatment of negative gearing and capital gains.
Prices are higher than a year ago in most parts of regional Victoria. A handful rose 50 per cent-plus over five years.
“It becomes ever more challenging for locals on that local average wage,” Powell said. “They often do not have deep enough pockets to compete against an investor and don’t have deep enough pockets to compete against somebody who may be a hybrid worker.”
KPMG urban economist Terry Rawnsley said regional housing markets were not immune from interest rate rises, but tended to lag capital cities.
“We always see the Melbourne market lead the regional markets … When Melbourne starts to slow the regions come six months after that,” he said.
“Those three interest rate rises over the last six months are impacting all the housing markets. People might have got a reduced borrowing capacity so hence they’ll be offering a bit less on those homes in your Geelongs, and your Bendigos, and the same things for the capital cities.”
He said first-home hopefuls priced out of Melbourne who could get work, for example as a teacher or nurse, in regional Victoria, were moving out of the city.
Melburnians looking for their first investment property with a budget up to $700,000 may in the past have considered south-east Queensland, but a boom there means they are now priced out, he said, prompting some to consider Victoria’s regional centres instead.
But he added some smaller towns on the list may only need a handful of standout sales or new households arriving to move the median price.
Ray White Ararat director and selling principal Adam Walker said first home buyers and investors were active in his market, especially at the affordable end.
“Anything up to about $600,000 [is] fairly popular, moving along fairly quickly,” he said.
First home buyers were arriving from Melbourne looking for affordable homes and a better lifestyle, while investors disappeared straight after the budget, but have since returned.
He recently sold 41 Benbow Street for $542,500, which he described as a “stunning old home” but warned there were fewer homes for sale under $600,000 than a year ago.
In western Victoria’s Portland in the Glenelg shire, Portland Seaview Real Estate director Allan Barrett was also fielding demand from investors, especially on a budget of $450,000 to $600,000.
He sells some homes before they even hit the market because so many clients were searching and ready to move quickly when opportunities come up. He said good rental yields are available to investors.
But some first home buyers were wary about a market downturn.
“First home buyers are a little bit nervous about property prices,” he said. “Sometimes they are getting outbid by other investors and they are concerned they are paying high market prices and if anything changes they may be in negative equity.”
Elizabeth Redman is the national property editor at The Age and The Sydney Morning Herald.Connect via X or email.
