Victorian regional towns where house prices dropped $100,000 in a year

House values have fallen by as much as $100,000 in some regional Victorian towns over the past year due to the rising cost of living, higher interest rates, and plentiful supply of homes for sale.

The deepest fall over 2024 was in Venus Bay in south-west Gippsland, where the median house value fell 13.8 per cent or more than $81,000 to a median of $511,000.

Venus Bay house values fell during 2024.

It was followed by San Remo near Phillip Island which fell 11.6 per cent or $100,000, to a median of about $765,000.

Four suburbs in the greater Ballarat area dropped by about 9 per cent to 11 per cent: Smythes Creek (down $117,000), Cardigan (down almost $99,000), Lake Wendouree (down about $93,000) and nearby Trentham (down about $102,000).

“There’s definitely a weaker dynamic from a selling perspective,” said Eliza Owen, head of Australian research at CoreLogic.

“There’s a lot more properties on the market relative to the sales that are happening. So, in a pure supply-demand sense, the buyer currently has a lot more negotiating power to work down asking prices and values.”

The reason that this dynamic is playing out, Owen said, could be due to some of the broader trends that have affected the Victorian property market, like unfavourable trends in migration and higher for longer interest rates, along with cost-of-living pressures.

“But from a more micro perspective, the Ballarat area in particular – Smythes Creek, Cardigan, Lake Wendouree and Trentham – could be that because it is a relatively expensive market,” she said.

“The more expensive the market is, the steeper the decline it has had over the past twelve months.”

Tim Veal, a sales consultant from Buxton Ballarat, has observed other trends that could be influencing the local market, including a preference for ready-to-move-in properties.

Lake Wendouree home values have dropped.Credit: Luis Enrique Ascui

“Properties that are move-in ready often perform strongly, while any that require builders to be engaged, because of the high cost of materials, they are not so sure.”

Veal believes that a lack of investors could be playing a role.

“The investors, over the past two years, have really thinned out. Buyers are primarily local owner-occupiers who are interested – upsizing or downsizing,” he said.

While Veal doesn’t expect values to increase quickly in the immediate future, he believes the market is showing promising signs.

“The change we are seeing, probably over the past three months, are buyer’s advocates from Brisbane, Sydney and Melbourne – who are purchasing for their clients – looking quite intensely at the Ballarat market, so they are obviously seeing some benefits here,” he said.

In Venus Bay, Dan Lawrie, director of Alex Scott & Staff Real Estate, said interest in the area dropped off for six to 12 months from early to mid-2024.

“The recent quiet period was due to the uncertainty with interest rates, coupled with the cost-of-living crisis. Buyers were simply holding back during this time,” he said.

The popularity of the area as a holiday town, combined with the cost-of-living pressures, has also potentially affected buyer interest, added Owen.

“Venus Bay, which is more of a holiday destination, and seems to be a relatively high-income, popular retiree market, could be that while economic conditions are a little bit weaker some of the appeal has been lost in the holiday home sales market in Victoria,” she said.

Lawrie, however, said that recent interest from owner-occupiers, first home buyers and holiday home buyers indicates that this is changing.

“Internet views on properties are higher than we’ve seen them before, and inquiry has been strong to this point,” he said.

“Our median ‘entry-level’ home is typically a three-bedroom, one-bathroom, modest property, which in the current market tends to be listed for the $400,000 to early $500,000 – a great price for first home buyers, as well as entry-level holiday home buyers,” he says.

Looking ahead, Venus Bay, like Ballarat will probably not see a dramatic change in house values over the next six months, he expects.

“Traditionally, it may take a couple of years for prices to gain strength once again, but of course, we just never know,” Lawrie said.

“After the huge boom we experienced during COVID, to the market correcting and dipping afterwards, we feel now that things may have just started going back to ‘normal’, whatever normal is these days.”