VICTORIA’S North West has recorded a higher monthly decline in house prices than Melbourne, and Australia as a whole, but real estate director Ben Ridley says prices haven’t dropped in Mildura yet.
Market insight service PropTrack’s July Home Price Index report states that Australia had recorded a house price decrease of 0.43 per cent for the month of July. The whole of regional Victoria recorded a decline of 0.32 per cent, and Melbourne prices fell 0.59 per cent.
Victoria’s North West recorded a major decline of 0.64 per cent in July, higher than all three areas.
Mr Ridley, director of Collie & Tierney First National, said he was surprised by these statistics as he had not seen a decrease in prices in Mildura.
“We are certainly not seeing much discounting going on,” he said.
“We have found that prices have stayed relatively stable to the fact that there is quite a limited amount of stock.”
Mr Ridley said that given that there had not been a noticeable price fall locally, it was possible that other towns in the North West may have had high price drops, influencing the numbers.
He stated Mildura’s prices were stable, due to lack of stock and continued healthy demand.
“Owners are reluctant thinking prices have changed, but we actually haven’t seen that, there is still a healthy number of buyers,” he said.
“For example we had a couple of properties on the weekend that had 15-plus buyers at the inspection”.
PropTrack’s report stated that rising interest rates were the cause of the price falls across the country, as potential buyers became hesitant, anticipating further interest rises.
Mr Ridley said rising interest rates would deter some buyers from entering the market locally.
“With all the talk of interest rises it does certainly take buyer confidence out of the market, the unknown of when it is going to stop,” he said.
“It always does have an effect on buyers understanding of where the market is at and whether they want to go in or wait until things stabilise and they have a bit more certainty of where rates might finish.
“While (rates) are still increasing, buyer sentiment will always be more fragile.”
Ray White chief economist Nerida Conisbee said seeing the market steady would be a relief to many potential home owners.
She said a slow down would help first home buyers break into the market.
“Many first home buyers feel increasingly locked out of the housing market, particularly those that can’t rely on help from family,” she said.
“Lack of affordable housing is a challenge for government at all levels, it’s expensive to fix using tax incentives and politically unpopular to use planning policy.”
The North West still boasts strong affordability, as the median house price sits at $389,000, considerably lower than Melbourne’s $800,000 and regional Victoria’s $610,000.
Mr Ridley said this, combined with rising rental prices was putting a “very strong spotlight on our region” for buyers looking to purchase investment properties.
CoreLogic’s monthly figures highlighted a national rent rise of 0.9 per cent in July and 9.8 per cent over the past 12 months.
CoreLogic’s Research Director Tim Lawless said the rental market was tight, as vacancy rates were low across many parts of Australia.
However, he said with rents rising faster than property values, yields would be consistently improving for investors.
“Such tight rental markets, improving yields and stronger buying conditions should help to keep a floor under investment demand,” he said.
Mr Ridley said investors were still highly attracted to buying in Mildura due to the almost record-low vacancy rate and local market safety.
“That is the biggest thing you will find, especially when the metropolitan markets start to decrease, buyers are looking for safer markets and that’s where our market is certainly perfect for them,” he said.
“We are a very safe market in regards to pricing, it is not too volatile dropping or increasing sharply either way, we also get a very strong rental return.”
Mr Ridley said the local rental demand was still “incredibly high”.
“I think rental prices are going to keep on increasing,” he said.
“And if that is the case, and rental prices increase and house prices stabilise or slightly drop, it just means a larger return for investors.”
