It’s a landlord’s market in Victoria’s biggest regional centres, and even smaller country cities, as government and industry de-centralise their operations and the appeal of country town living attracts a growing cohort of city ‘escapees’.
Two recent ABC reports looked at the plight of renters in regional cities struggling to find suitable and affordable housing. Sometimes, this has been brought about by the ‘perfect storm’ of increased industry and enhanced infrastructure. Often it is simply the tree-change factor.
The western Victorian town of Stawell is one such city where the combination of a $10 million scientific research centre, the re-opening of Stawell Gold Mines, and the building of a $90 million hydroponics farm has seen the town’s vacancy rate plummet to below one percent and a 13 per cent rise in house prices in the past year alone, with one real estate manager noting that, of the 420 rental properties in the area, only three are available*.
Big cities, big appeal, big demand
The story is reflected in the state’s largest inland hubs as well, with Ballarat/Central Highlands, and Bendigo/Loddon experiencing vacancy rates of 0.8 per cent and 1.1 per cent respectively.
In both centres, industry and commerce are growing and diversifying. On top of the improved or planned improvements to local infrastructure , greater job opportunities are stemming from the investment that government and the private sector are ploughing into the communities. Even the infrastructure itself requires a steady supply of tradespeople and construction workers – all of whom need a roof over their heads, and many relying on the ever-tightening rental market.
Ballarat alone is about to see a $460 million hospital upgrade, a $100 million revamp of its rail and, probably most significantly, the building of a 600-person public service hub*, which not only needs to be constructed but filled. All told, that equates to a lot of medical and hospital workers, commuters and public servants to house.
Importantly, this diversity of demand not only opens up the prospect of higher rental yields in the country, but can also make the prospect of building multiple affordable-housing dwellings a viable option. Instead of focusing on just one or a handful of higher-end, family sized homes – for which there would naturally be an expected demand, at higher rent, over a longer term – astute investors may instead turn their sights to building two or more smaller, less expensive houses instead, and expand their property portfolio. After all, every industry has its executives and its entry level staff – each with different budgets and needs, but with one thing in common: the need for housing.
A good time to buy
While metropolitan Melbourne was experiencing a sluggish market, the same could not be said for the regions, where buyer demand remained comparatively strong and highly active. An analysis in propertyobserver.com.au suggests that, while this demand has softened slightly*, it still remains encouragingly high – especially in Bendigo, where eight of the city’s suburbs continue to experience increasing demand.
But even in Ballarat and Geelong, where demand has tempered slightly, prospects are still excellent.
“Despite being passed their peaks in terms of buyer demand, both Geelong and Ballarat are still delivering significant price growth: 17 suburbs of the City of Greater Geelong and nine in the Ballarat LGA have had double-digit growth in their median house prices in the past year,” said real estate commentator, Terry Ryder*.
Yet, for all this growth, median house prices remain at a fraction of those in the city, with Bendigo sitting at $391,000 and Central Ballarat at $470,500*, while in metropolitan Melbourne the median price is currently $785,000*.