Surf Coast Real Estate: What’s Driving The Market Right Now?
To say that the property market on the Surf Coast has been booming would be an understatement.
Over the past year alone, the median house price has risen 17.1% in Jan Juc, 33.1% in Torquay and an incredible 39.1% in Anglesea.
To put that into perspective, over the same 12 month period, house prices in established Melbourne suburbs, such as South Yarra (4.4%), Kew (7.1%) and Hawthorn (7.5%), grew at just a fraction of the rate.
But with interest rates and inflation rising, economic conditions becoming more uncertain and the national property market slowing, can we expect the market here to slow down also or are there other factors at play?
A strong local market
These have been very good times for local property sellers. In fact, CoreLogic’s recent Pain and Gain Report reveals that in the December 2021 quarter more vendors in our area sold for a profit than anywhere else in Australia.
But rising interest rates and a high inflation rate are leading many people to question whether the current conditions can continue. Recent media reports suggest that in many parts of the country property prices have already peaked and are now starting to slide. While this would be welcome news for many buyers, particularly first home buyers, struggling to get into a super competitive market, whether or not it happens remains to be seen.
The effect of rising interest rates
One of the main concerns, of course, is rising interest rates. In May 2022, the Reserve Bank of Australia (RBA) lifted the official cash rate by 0.25% – the first time it had lifted rates since 2010. The banks immediately followed by lifting their own variable rates by the same amount, potentially putting a brake on house price growth.
But those fearing (or hoping for) a property market to decline in our local area should keep in mind three things. First, interest rates are still at incredibly low rates, with most banks offering variable home loans that begin with 2, so this rise won’t impact too many people’s ability to borrow.
Second, my experience is that many buyers had already factored a much-anticipated rate rise into their budgeting – even multiple rises. And, third, some buyers on the Surf Coast are increasingly doing so with only a small mortgage or no mortgage at all. That’s because a large number of our buyers are relocating from Melbourne and other metropolitan areas, often having sold a large family home. So rate rises don’t have quite the same direct effect here on many parts of the market.
Rental market surging
One factor that is often overlooked is the link between the rental market and the property market, especially in regional areas such as ours. And it’s been a very challenging market for renters.
Often, strong rent demand is a sign of more people coming into the area – some of whom will be ‘trying before buying’, and others of whom have been locked out of the sales market due to short supply.
The sheer depth and strength of the Surf Coast’s rental market have taken many by surprise. Realestate.com.au reports that renting a house in Jan Juc is now 27.5% more expensive than at the same time last year. Renting a house in Anglesea (15.4%) and Torquay (9.1%) is also far more expensive.
Just researching the market?
What this tells us is that there are still many people renting, with a view to buying in the near future. This is keeping demand stronger than in metropolitan areas, with realestate.com.au also reporting that a three-bedroom house in our area tends to last an average of fewer than 20 days on market (17 for Anglesea and 19 for Torquay) – roughly half the length of time of a property in Melbourne.
Resilience in a slowing environment
With that in mind, it’s little wonder Anglesea was recently named Victoria’s best performing suburb over the past five years. And we believe, unlike most of the country, there is still room for further growth.
A life by the beach has become many people’s ideal and there are still far too few properties on the market to fulfil the demand. Until that happens, prices should continue to rise.
Here’s where the property market was at on 19 May 2022, according to realestate.com.au data
Houses median property price: $1.275m
Houses median weekly rent: $600
Units median property price: $903,000
Units median weekly rent: $500
Houses median property price: $1.6 million
Houses median weekly rent: $600
Houses median property price: $1.41 million
Houses median weekly rent: $650
If you’re looking to buy or sell on Victoria’s Surf Coast contact me for further information.