Only 12 months ago, the prospect of million-dollar sales in Australia’s Victorian regional center of Geelong was unfathomable.
But the area’s affordability, proximity to Melbourne, relaxed lifestyle, and nearness to beaches has made it the hottest regional real estate spot in Australia.
The former working class port city, 75 kilometers southwest of Melbourne’s central business district, has earned the title of the country’s fastest growing regional area, according to experts, due to its falling supply levels and increase in buyer demand.
In the 12 months to March, Geelong house values have increased 15.8% to A$720,000 (US$534,240) while apartment values have risen 12.2% for the same period, according to the CoreLogic Quarterly Regional Market Update.
Geelong’s strength is in contrast to Australia’s capital city markets, where home value gains fell annually in May for the first time since 2012, CoreLogic’s monthly index report shows. The figures also show that the number of transactions in the city across has fallen 3%, indicative of tightening stock levels.
As Victoria’s second largest city behind Melbourne, Geelong was at the forefront of Australia’s heavy manufacturing scene for most of the 20th century until many industries moved offshore. It has since repositioned itself as a hub for the emerging health, education and advanced manufacturing sectors.
Post-war housing, predominantly a mix of bungalows and single-fronted villas, form the bulk of the city’s original—and most sought after—suburbs, including the gentrified streets of Geelong West, Newtown and Belmont.
An ‘Astronomical’ Rise
Whitford Property broker John Moran describes Geelong’s residential real estate growth in the past year as “astronomical.”
“There are a lot of driving factors we are seeing as great value,” he said. “it’s only about 45 minutes’ drive from Melbourne and there are several large employers relocating to the area.”
A fall in the time it takes to sell a property in Geelong—about 14 days, according to Mr. Moran—a lack of stock and an increase in buyers are underpinning the increase in prices.
A renovated house Whitford Property took to auction on Mayfair Drive in Newtown, less than 5 kilometers from Geelong’s central business district, sold at auction in late May for A$1.55 million (US$1.15 million)— A$320,000 (US$237,330) above reserve.
Both the buyer and under bidder were Geelong locals looking to trade up.
Although Mr. Moran said the sale was “out of the box,” there had been several million-dollar sales in the past 12 months.
A renovated 1904-built cottage on Waratah Street in Geelong West in one of the city’s most sought after areas, sold for A$1.3 million (US$960,000) within two weeks this month. It last traded for A$975,000 in 2015.
“People would have laughed 12 months ago if you’d asked for A$1 million for a property around here but now there’s been 15 or 20 million-dollar-plus sales,” Mr. Moran said.
Years in the Making
The interest in Geelong hasn’t been an overnight success, RT Edgar Bellarine broker Andy Ingham said, with steady growth occurring over the past few years.
“The influx has come from out of town, especially Melbourne buyers because of the affordability,” he said. “It’s only an hour to the CBD or 20 minutes to the Bellarine Peninsula and Surf Coast. There are good road links and employment opportunities have increased.”
He recalls a house on McDougall Street in Geelong West selling five years ago for A$450,000 that was considered “huge money” at the time. The same property was worth twice that in 2018.
“I remember that really set the tone for other homes in the area and changed the values but that was five years ago so looking back now we think it’s cheap,” he said.
Incentives for first-home buyers to purchase in regional areas made Geelong more attractive than Melbourne suburbs on a similar radius from Melbourne’s CBD, according to CoreLogic research analyst Cameron Kusher.
“With the regional markets, our view is they’ll still be fairly strong, Mr. Kusher said. "Geelong, Latrobe, Gippsland, Bendigo and Ballarat are alternatives to Melbourne. The regional rail links are better now, so if you have to come into the city it’s not so bad, and they haven’t had the same kind of escalation in cost of housing we have seen in Melbourne over the past seven to eight years.”
He added that lifestyle markets on the Surf Coast and Bellarine Peninsula were also contributing to the growth, as Melbourne homeowners realize the significant increase in value of their homes, allowing them to buy an investment or holiday home.
The “25 Years in Housing Trends” report, released in early June by Aussie Home Loans and CoreLogic, showed Geelong’s inner ring and nearby coastal destinations have delivered the best value gains in the region.
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The report found Barwon Heads’ median value increased from A$103,000 in 1993 to A$940,000 (US$693,105) in 2018, an average annual increase of 9.2%, outpacing the greater Melbourne average of 8.1%.
Heavy Demand for Second Homes
There are slim pickings at the top end of the market, with a prestige listing on Carr Street, Barwon Heads, a rare example. On 1,400 square meters of riverfront land, its asking price is A$4.65 million to A$4.9 million (US$3.45 million to US$3.64 million).
The Cape Cod-style home, with four bedrooms and four bathrooms, is one of only 25 properties directly fronting the river and has attracted international interest, with prospective buyers from Hong Kong flying in to inspect the property.
RT Edgar Bellarine
“Affordability and lifestyle has bought many people from Melbourne, and we’ve been seeing half the buyers arrive from out of town,” Mr. Ingham said. “We’re seeing a lot of people buying holiday homes so they have an income stream now, but who are taking a long term view of one day retiring down here.”
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