Surf Coast Real Estate Snapshot: End Of Year Update
The Surf Coast’s property market has looked very different from much of the country’s over 2022.
While the national media spruiked headlines about a declining property market, we’ve experienced some truly amazing results.
Here’s what buyers and sellers need to know about the Surf Coast property market over the past 12 months.
The headline news
As we wrote last quarter, it’s been difficult to escape the doom and gloom of the news headlines about a declining property market. CoreLogic’s national Home Value Index (HVI) shows that the national property market has now experienced seven straight months of decline. Home values fell -1.0% over November alone to sit -7.0% (approximately -$53,400), lower than the peak values recorded in April 2022.
It’s no secret that these declines correspond with the RBA raising the cash rate over a similar period, taking it from 0.1% in April to 3.1% in December, with the possibility of further rate rises looming. This has had the impact of constraining would-be buyers’ budgets and limiting their borrowing power.
But the reality is that the Surf Coast has largely escaped this narrative. Despite a recent softening in regional markets, the major capital cities have been hit hardest by declining property prices. For example, Melbourne property values fell -7.1% since peaking in February, while regional Victoria’s median value has fallen -5.3% since its May peak and has registered a 1.2% annual rise.
Incredible price rises on the Surf Coast
Domain data shows that our area has been greatly impacted by the “pandemic sea-change trend” inspired by “e-changers” – those people working from home or telecommuting.
Anglesea is eighth on Domain’s list of places where property prices have risen the most over the past five years. It registered 25% annual growth over the past year and 140.4% growth over the past five years, so the median value now stands at $1.725 million. As Domain argues, Anglesea’s price growth is partly thanks to its relative affordability compared to many other coastal areas.
Importantly, Domain economists argue that “these huge price rises are not likely to happen so fast again, as the unique market conditions caused by COVID-19 are unlikely to be repeated”. They refer to the Covid property boom as the “unicorn of property cycles” due to the speed of price growth.
While Torquay may not have made Domain’s list, it has still experienced phenomenal price growth in a declining wider property market. Realestate.com.au data shows Torquay’s median house value is now $1.375 million, having risen 19.4% over the year to November 2022. That’s almost double Torquay’s 2017 median of $723,000.
Homes sell quickly here too. According to realestate.com.au, the average Anglesea house sells in 36 days, while in Torquay, it’s just 33 days – a sign of a strong market with strong demand.
An unprecedented rental market
The rental market is tight around Australia with listings at their lowest volumes in more than a decade. Corelogic reports in its Hedonic Home Value Index that regional rental ads across Australia have not been this low since 2009.
Here on the Surf Coast, low supply combined with increased demand is leading to competition between tenants, which means landlords are receiving higher rents. realestateinvestar.com.au reports that across the Surf Coast, the average yield for houses is 2.38% and for apartments, it is 3.54%. The vacancy rate sits at an impossibly low 0.38%.
According to realestate.com.au, rents in Torquay have increased 10.3% to $640 per week in the past year, while in Anglesea they’re up 4.8% to $650 a week.
Again, this is being driven by a real imbalance between supply and demand. In Anglesea, just seven houses have leased in the past month, and only 39 have leased over the past year. However, realestate.com.au reports that the average Anglesea rental property attracts 171 interested renters.
This has led some to label the situation as a rental crisis.
Market trends
Census data shows we are one of the fastest-growing regions in Victoria, which means there is strong demand for local property.
Just researching the market?
As we said at the beginning of this article, our area’s relaxed vibe, great amenities, range of housing and proximity to Geelong and Melbourne are making it increasingly popular with e-changers. This includes young and more established families, as well as couples – often downsizers or sea changers. At the same time, the Surf Coast remains a coveted holiday destination, so we continue to see strong demand for holiday homes, many of which are rented out short term.
For the past few years, many buyers have been content to buy something in original condition with a view to carrying out their own renovations or even a full knock-down rebuild. Lately, some have become more circumspect thanks to rising construction costs and delays in getting trades. Today, it seems renovated properties are often in higher demand than properties requiring extensive work.
Despite rising property prices and interest rates, we expect to see two key groups make more of a splash in 2023. Investors are likely to be attracted by the low vacancy rates, higher rents and affordability of the Surf Coast compared to Melbourne, as well as by the opportunity to choose between leasing their property short-term or long-term.
On the flip side, more prospective first-home buyers may be spurred into action by the same rising rents and falling vacancy rates. The many grants and schemes available to first-home buyers may also help tilt the balance towards buying.
And, as we end 2022, the market fundamentals remain the same, so we don’t expect a major change as we enter the new year. The reality is that thanks to interest rate rises, we probably won’t see the frenzy of price growth we’ve experienced over the past two years. In fact, some experts are forecasting that regional markets like ours will follow the capital city markets and soften.
Right now, vendors wanting to sell can still be confident of receiving a good price so long as their home is marketed and presented effectively. Buyers shouldn’t expect a bargain anytime soon – they still need to put their best foot forward to secure a home on the Surf Coast.
The data
Here’s where the Surf Coast property market was at on 7 December 2022, according to realestate.com.au data.
Houses
Median property price: $1.375m
12-month growth: 19.6%
Median weekly rent: $640
Apartments
Median property price: $975,000
12-month growth: 12.1%
Median weekly rent: $525
Houses
Median property price: $1.6925 million
12-month growth: 23.1%
Median weekly rent: $650
Jan Juc
Houses
Median property price: $1.34 million
12-month growth: -1.7%
Median weekly rent: $645
Further information?
If you’re looking to buy or sell on Victoria’s Surf Coast, contact me for further information.
