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House prices dropped most in the Northern Grampians, which includes Stawell and St Arnaud, down 12.9 per cent over the year to a median $322,000. It was followed by Horsham, down 12.1 per cent to $369,000, and Corangamite, which stretches from Port Campbell to Skipton, down 10.3 per cent to $375,000.
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Prices were also falling in towns that once benefited from COVID-era tree-changers, Powell said.
“We know that lots of people have relocated into regional Victoria because of the pandemic, and we know some of that has reversed,” she said.
Locations that were considered commutable when working-from-home rules were more relaxed have seen prices fall, partially due to a return to office-based work in post-lockdown years. Prices fell in Ballarat, Geelong and Bendigo 3.6 per cent, 2.1 per cent and 1.8 per cent respectively.
McGrath Geelong principal David Cortous said interest rates had also affected the market.
“I think prices have been suppressed a little bit. We’ve seen more opportunities for buyers than over the past few years,” he said. “When the last interest rate rise hit last year, volume dropped.”
Cortous said a flight of investors unable to afford higher interest rates and taxes was also bringing down prices.
PRD Real Estate chief economist Diaswati Mardiasmo disagreed. “To be honest with you, I don’t think that’s significant enough,” she said. “Investors cut in and out anyway, mostly based on the cash rate. Now it’s stable, more are coming back.”
Mardiasmo said an increase in supply from new developments had a bigger influence on house prices in Melbourne’s satellite towns.
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“Those areas … they’re becoming more known to people,” she said. “A lot of developers have seen the rise of popularity, people going out of Melbourne to those areas. Because of that, they’ve diverted their attention to those other places.”
Some areas bucked the trend. Gannawarra, which includes border town Kerang, grew the most, at 13.5 per cent over the year to $312,000. It was followed by neighbouring Swan Hill, where prices rose 11.7 per cent to $430,000 and Moira, which includes Cobram and Nathalia, up 7.4 per cent to $505,000.
Nutrien Harcourts selling agent Tanya Harvey, who sells in the Gannawarra Shire, said prices were rising as a flow-on effect from increases in larger, more expensive neighbouring regions. Its median house price is $118,000 lower than in Swan Hill.
“My belief for why we’ve seen such an influx in people and increase in prices is because of a lack of affordability in Swan Hill and Echuca,” she said. “The Gannawarra Shire is a much more affordable region.
“We still offer as much as the big towns, so when it comes to Kerang, Cohuna and Koondrook, we offer really great shopping, there’s still Woolworths, medical facilities and public transport, but it’s more affordable to live here.”
Harvey said strong regional economies along the Murray River meant most people in town – and those moving to the region – could afford to buy a home on a local salary.
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