Uncertain times ahead for regional property prices

With a mortgage cliff looming, the supply of regional properties for sale could have a major effect on house prices this spring.

Regional and rural Victorian property prices have experienced a “correction phase” during the past 12 months, but what comes next is uncertain.

In the June quarter of this year the rolling annual median sale price of regional Victorian property was relatively stable, decreasing by 0.8 per cent from $608,000 to $603,000, REIV statistics show.

Median regional home values have also remained relatively flat during the past year dropping from a high of $613,000 in the third quarter of last year to $603,000, a 1.6 per cent decrease.

Ray White Ballarat director Will Munro said he had seen a level of confidence return to the market in recent weeks.

“The market has definitely gone through a correction phase, but it feels like it is coming to the end of that,” Mr Munro said.

“We have had two months with no rate rises, so the confidence is getting there.”

The state’s Ballarat, Latrobe and North East regions have all experienced a decrease in house values since July last year, according to CoreLogic’s August regional property update.

Ballarat property prices have decreased more than 10 per cent compared to July last year, according to CoreLogic data.

In the North East, house values have dropped by 6.9 per cent to a median of $575,974, in Latrobe there was a 7.6 per cent drop to a median of $589,142, while in Ballarat there was a drop of 11.2 per cent to $592,369.

Mr Munro said Ballarat properties priced less than $600,000 had received more interest, but those in the $900,000 range were harder to move on.

“A bit depends on fixed rates and if there is a bit of a mortgage cliff. If there is, there might be more stock on the market during the next six months,” Mr Munro said.

“Land sales have also dropped right off, with the cost of building so high. I think this has helped with the demand for established homes, helping them hold their value.”