Figures from the Real Estate Institute of Victoria (REIV) show that house prices in regional Victoria increased 4.5% in the year to March 2016; however some regional centres saw growth levels well above that.
In the 12 months to March, Daylesford in central Victoria saw its median house price grow by 20.7% from $401,500 to $485,000, while Horsham in the state’s west saw its median house price increase 18.5% to $237,000 over the year.
House prices in Soldiers Hill increased 17.5% over the year to a median of $373,000, up from $317,500 for the same period last year, while West Wodonga’s median house price rose 16.9% over the year to a median of $331,500. This was up from $283,500 in March 2015.
Closer to Melbourne, regional locations such as Ballarat North (13.3%), Warragul (11%), Bell Park, (11.2%), Cowes (up 10.9%) and Brown Hill (10.6%) all saw double digit growth.
But while those numbers seem impressive, Ben Kingsley, director at property investment advisory firm Empower Wealth, said markets outside of regional Victoria are still the ones most are focussed on.
“We’re not buying anything regional at the moment,” Kinglsey said.
“We’re buying more in Melbourne and more interstate right now. We’re currently buying in Adelaide and Brisbane and looking at some other alternatives,” he said.
“The medium to longer term players are probably going to be Geelong and Albury-Wodonga, but they’re not necessarily areas that I would say are absolutely ones you need to buy into now.”
Kingsley said markets such as Melbourne still currently offer better long term prospects, however he can see why some may be attracted to Victoria’s regional offerings.
“It’s fair to say that from an affordability and potentially a better yield point of view that those regional areas that a getting a little bit of attention. Let’s face it Melbourne’s yields are at 20-year lows, so if you’re a yield investor you’re going to struggle to find something in Melbourne,” he said.
“But from a from a growth and longer term point of view I think you still want to be focussed in on the bigger cities that have the better job opportunities and better growth prospects.”
For those investors who are committed to looking to a regional area in Victoria, Kingsley recommends a gradual move out of Melbourne’s reaches.
“A good rule of thumb is if you can try and keep within that hour travel time to the greater Melbourne area. There are often job opportunities on the fringes of Melbourne more so than there is in the central business districts in some of these smaller regional centres.
“If you can sort of draw a ring around the greater Melbourne area and say I can commute there in an hour from Seymour or from the likes of Sale, Geelong or Traralgon or somewhere along those lines then that might be somewhere to look at. If you’ve got a rail connection that’s also a huge advantage, because people can be more productive on the train than they would be in the car.”
Kinglsey said investors looking at regional areas do need tyo do a high level of research, however there is on risk that is less evident in Victoria compared to other states.
“The reality is that Victoria has been established for 180 odd years so townships like Geelong, Ballarat, Bendigo, Shepparton and Wodonga aren’t really one industry towns.
“You might argue that Shepparton being one of the citrus fruit areas has struggled a bit with the hits that industry has taken in the last decade, but in reality not too many of the smaller towns in Victoria are one industry towns like you might get in the larger states where you have mining centres.”
