The predicted housing downturn has shown significant price correction in capital cities, particularly Sydney and Melbourne. ABC (1 April 2019) reports the price correction has extended beyond the major capital cities with regional areas experiencing small declines in dwelling values.
In 2017, Australian Prudential Regulation Authority (APRA), Australia’s regulatory body, began to more tightly regulate investor and interest-only loans, resulting in less investment from investors. The Reserve Bank of Australia (RBA) issued a warning in March about the impact of falling house prices on the Australian economy particularly in the context of household consumption. Combined with weak wage growth, these changes to the economy may result in ongoing declining house prices and annual growth, and possibly interest rate cuts. The RBA elected to leave interest rates at 1.5 per cent in March. Philip Lowe, Governor of the RBA said, ‘the main domestic uncertainty continues to be the strength of household consumption in the context of weak growth in household income and falling housing prices in some cities.’
Market Cycle Position
The past 10 years has seen exponential growth for Greater Geelong with percentage change overall ten per cent higher over 10 years from 2009 – 2019. The graph below shows media price changes with periods of neutral growth in 2012. Growth stabilised from 2014 – 2016 at approximately four per cent year on year. In 2016, price growth accelerated from four to almost 13 per cent. In the past 15 months, price growth has slowed by approximately five per cent and will continue to decrease.
HtAG projects percentage growth for houses will decrease by three per cent in the next 12 months. The impact to the sale prices of property will be a plateau or slight decline compared with the previous 12 months. However, despite this decrease in price growth, the overall growth reflects approximately 40 per cent growth since 2009.
Greater Geelong has experienced significant price growth in the past 12 months. The heatmaps tab within our set of available tools illustrates the annual median price growth for a specific area, in this case Greater Geelong, for 2018-2019.
Most of the suburbs within Greater Geelong have experienced significant growth of at least 6 per cent in the this year, however, a few suburbs have seen a negative or neutral price percentage growth including Barwon Heads, Moolap, Geelong CBD, Drumcondra, Manifold Heights and Lovely Banks. These areas represent price growth of six to -12 per cent in the this year. These suburbs may have qualities such as a low number of property sales, or have mainly expensive real estate, thus a lower than expected sale for one property may result in negative growth.
Some of the highest growth areas with light and medium green are Little River, Corio, Norlane, Bell Post Hill, Bell Park, North Geelong. Rippleside, Herne Hill, South Geelong, Whittington, Thomson, Breakwater, St Albans Park, Wallington, and Queenscliff. These areas represent price growth of up to 15 per cent in the this year.
Given the market cycle position, we can expect the percentage growth to shift to a lower percentage range for most of the Greater Geelong area.
The percentage growth in units across Greater Geelong shows significant change with many suburbs highlighted in green on the growth heatmap. Corio, Norlane, Bell Post Hill, Highton, Grovedale, Belmont, Breakwater, Whittington, St Albans Park, Leopold, Ocean Grove, Point Lonsdale, Drysdale, and St Leonards enjoyed price growth of between eight and 24 per cent in 2018.
However, other suburbs, including Portarlington, Clifton Springs, Barwon Heads, South Geelong, East Geelong, Bell Park and Hamlyn Heights experienced neutral or negative growth of between three to negative eight per cent in 2018.
The overall trend shown in the heatmaps tab shows a dominant yellow and red sale price which represents approximately $400,000 – $600,000. Much of Greater Geelong sits within this range including some of the Bellarine Peninsula, Clifton Springs, Leopold, Belmont, Grovedale, Highton, Geelong West and Herne Hill.
The sale prices of areas such as Geelong CBD, South Geelong, Wallington, Barwon Heads and Point Lonsdale is more significant, with the median price between $900,000 – $1,100,000.
The overall trend shown in the heatmaps tab shows a dominant orange and yellow sale price which represents approximately $210,000 – $390,000. Almost the entire Greater Geelong region sits within this range including some of the Bellarine Peninsula, Drysdale, Belmont, Grovedale, Highton, Geelong West, Herne Hill, Corio and Norlane.
The sale prices of areas such as Geelong CBD, South Geelong, Ocean Grove and Barwon Heads is as expected more significant, with the median price between $510,000 – $690,000.
Given the dominant yellow and red highlighting on the heatmaps, we can see Greater Geelong remains an affordable place to buy property compared with capital cities.
Dwelling Type Demand
Greater Geelong has a vast range of property types including houses, townhouses, units, and rural properties. With 2,664 sales in the past 12 months, three-bedroom dwellings are the most popular. Detached homes represent the largest portion of 2,373 sales, with sales of semidetached and unit dwellings making up the second and third largest portions respectively.
Four-bedroom homes are also popular, with sales of 1,477 in the past 12 months. Again, detached homes are the most popular. Other home sizes including one- and two-bedroom properties account for 109 and 851 sales respectively, with 211 five-bedroom properties selling across the region in the past 12 months.
The overall property market outlook for Greater Geelong shows high demand for three- and four-bedroom properties in central suburban areas, as well as the Bellarine Peninsula and coastal locations. Although a decrease in price growth has occurred in the past 12 months and is expected to continue, the demand for properties indicates a positive outlook for owners and investors.
Properties in family friendly suburbs such as Clifton Springs, Drysdale, Belmont, Grovedale, Highton, Geelong West, Herne Hill, Corio and Norlane show promising demand and will continue to offer affordable options. More expensive properties in Barwon Heads, Geelong CBD, Drumcondra and Point Lonsdale may experience a softening of sale pricing, however, there is still demand for these areas.