Victorian tree-change towns where property prices are getting cheaper

Regional house prices have fallen across Victoria, reversing some of the COVID-era gains that pushed prices to unaffordable levels in many regional towns.

Most regional council areas have recorded annual price falls, though all are still more expensive than they were five years ago.

Regional Victoria’s overall median house price fell 4.6 per cent to $560,000 over the March quarter, and was down 4.3 per cent year-on-year, Domain data shows. Units were down 0.3 per cent to $399,000 over the quarter, but still 0.8 per cent higher than 12 months earlier.

Domain head of research and economics Dr Nicola Powell said prices were well below their peak.

“House prices overall for regional Victoria peaked in the March quarter of 2022. So they are now 5.9 per cent below that peak,” she said. “What that is showcasing is we have weakness across the broad spectrum of Victoria.

“Population dynamics have just changed so much for regional Victoria. We have strong flows of overseas migration, but they go to the city, not regional Victoria. That will be having a negative impact overall for prices.”

Satellite cities like Geelong have recorded price falls following the winding back of work from home rights. Credit: Visit Victoria

High cost of living, high mortgage rates and low investor activity were weighing on the regional property market, much like Melbourne’s, Powell said. “These are all being amplified across regional Victoria,” she said.

“When you look at the five-year change some of these markets have seen, it’s a significant price change. That impact on local buyers would be great.”

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.

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.

“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.