The property market in Mildura and Regional Victoria has been performing exceptionally well over the past year. According to CoreLogic, home values in Regional Victoria have increased 15.9% over the year, outperforming Melbourne and Sydney. In fact, Mildura has experienced an 11.1% median price rise over the past 12 months, with the median sales price currently being $360,000.
The COVID-19 pandemic has “normalised” remote work and enabled thousands of people to work from essentially anywhere. This has been a major factor to the demand we are seeing in Mildura and Regional Victoria – as the “exodus to affordable lifestyle” trend continues. Over the past quarter alone, Mildura houses have appreciated 2.9%, and Regional Victoria houses have experienced an incredible 10.5% price increase, according to the REIV.
Is this current price growth likely to continue? What is driving this growth? What does this mean for vendors and the local market? Let’s delve into how this is translating to sales and prices locally.
What is happening within the local real estate market?
The impact of COVID-19 has been significant with many Victorians feeling isolated by not seeing family and close friends for many months.
This has resulted in a number of buyers changing their attitudes and perspectives towards family, home location and work. These buyers are now looking to be closer to loved ones and are seeking lifestyle, over congested suburban environments.
According to ABS migration data, intrastate departures from Melbourne to Regional Victoria totalled 41,391 in 2020, 6.1% higher than in the previous 12-month period.
Within Regional Victoria, buyers are very confident and are out in force – owner-occupiers, upgraders, investors, and first home buyers – at a time when good quality supply is extremely low, putting upwards pressure on prices.
Despite the double-digit price increase, the median house price in Regional Victoria is $560,000, according to the REIV. For buyers who have come up against affordability constraints in larger cities, such as Melbourne, this median house price-point is now providing relatively affordable purchasing opportunities.
In fact, we are seeing strong interest and demand from first home buyers taking advantage of these opportunities. The demand from first home buyers, has essentially been brought forward due to various government incentives such as HomeBuilder, the first home loan deposit scheme, stamp duty discounts and other various grants. Record low interest rates have also been a significant driver in increasing demand, potentially motivating prospective buyers who would have otherwise not entered the market.
We are also seeing healthy investor activity in the region too. The median rent for houses in Mildura is currently $350 per week, which translates to an annual rental yield of approximately 5.1%. In addition, the median rent for units is $280 per week, which translates to an annual rental yield of approximately 6.2%. Not so long ago, this would have been considered an average return, but with record low interest rates, that perception has changed. So much so, that many investors are purchasing investment properties that are positively geared from day one.
However, the buyer segment that is truly driving this demand, and subsequent price growth in Mildura and Regional Victoria, is upgraders. It’s the family buyer, looking to purchase a well-presented ready-to-move-in family home. This demand has contributed to the average days on market metric declining to 41 days. Buyers’ preferences have changed – family buyers are looking for homes where one or both parents can work from home semi-permanently, and where children can potentially have space for home-schooling; should a wide-spread lockdown occur again. As such, it’s the vendors who are listing their well-presented ready-to-move-in family homes that are the big winners here.
Our projections for the next 3 months
Throughout the past quarter, we have seen some terrific sales results in Regional Victoria. We are now starting to see an increase in good-quality supply come onto the market, and as we continue through winter, we believe we’ll start to see some heat come out of the market with prices stabilising slightly.
According to CoreLogic, there is evidence of some softening through June, as the total advertised housing stock was nearly 25% below the five-year average.
Ironically, the lockdowns experienced in Victoria and New South Wales have had little effect on prices, with activity bouncing back very quickly after any lockdown, according to CoreLogic. Furthermore, through circuit-breaker lockdowns, CoreLogic has observed short, sharp falls in sales and listings – followed by a swift “catch-up” recovery in transaction activity with very little impact observed on prices.
Naturally, the dynamic of strong and committed consumer demand, and low supply, continues to create some urgency, and FOMO, among buyers. As other parts of Victoria and Melbourne continue to become out-of-reach for most buyers, Regional Victoria and Mildura will continue to be in demand for prospective buyers who see value in the region.
This is likely to result in continued price growth, albeit at a slightly lower rate of growth, and strong prices being paid for good quality, well-located property, where buyers can immediately begin to enjoy an exciting new lifestyle.
Always seek advice from a trusted professional.
Always speak with trusted professionals who can provide you with an unbiased opinion and provide value-added insight. Furthermore, do you know the current market value of your property? With the market having moved significantly in the past 6 months, you may be delighted to know how much your area has appreciated. With One Agency being one of Mildura’s most trusted real estate agencies, we are well placed to provide you with our view of the current market, based on our local experience. If you are considering to sell, we’ll thoroughly guide you through the sales and presentation process, and help you take advantage of this incredible time in the market.
