Gippsland house prices surge

Close-up on a real estate agent giving the keys of a beautiful house in the suburbs to a customer

Liz Bell

FINDING a home in Gippsland is slipping out of the reach of many local residents, as tree changers put pressure on the rental market and metro buyers move in to snap up cheaper housing.
The real estate frenzy which began soon after the first lockdown in 2020 has taken even seasoned agents by surprise, defying initial economic forecasts of a COVID-inspired falling market and plunging house prices.
House prices in many parts of Australia are now at an all-time high, with data showing Victorian house prices have risen by more than 13 per cent over the past year and are outpacing metro areas.
For renters, it is just as bleak. In the Latrobe Valley and Wellington Shire, rental prices rose by up to 25 per cent in 2020, while the reduction in supply and increase in demand has increased rents.
Sale-based agent Christine Haylock, from Wellington Real Estate, said demand for houses for sale and rentals was strong and showing little sign of easing.
“We have lots of buyers on our books who are ready to go, and it terms of rentals we have at least 20 people waiting for a property,” she said.
Ms Haylock said a mix of buyers were jostling for properties, including first home buyers and investors, who saw rental income as a better way to get a return on their money that low interest rates from the banks.
In some cases, prospective buyers and renters were even paying more than asking prices to secure a property, with Dutch auctions — where buyers informally outbid each other — were increasingly common.
“Houses have increased in value but if there isn’t enough stock people are prepared to pay more than the asking price,” she said.
“There are also cash buyers, which vendors prefer because they don’t have to wait.”
One prospective buyer told the Gippsland Times she recently enquired about a three-bedroom house newly-listed for sale in Maffra only to be told half an hour after booking an inspection that a buyer from Melbourne had snapped it up sight unseen offering full price and a cash payment.
“What chance have locals got to get into the market when people from Melbourne with bigger wallets and bigger borrowing power outbid us and are willing to buy over the phone,” she said.
Gippsland Real Estate director Pat Weatherley doesn’t see a cooling of the market any time soon after the Reserve Bank indicated interest rates would stay low until 2024.
“Money is so cheap, the local market is strong, construction is strong and local businesses are doing well,” he said.
Where houses would have spent around 90 days on the market a few years ago, some are are now selling in as little as two hours.
But, Mr Weatherley said buyers shouldn’t give up hope, with opportunities often arising where people have to sell, and subdivisions continuing to come onto the market, especially in Maffra.
“We just had a 41-lot subdivision in Maffra that sold in three weeks, but we have another 22 lot subdivision coming onto the market in about 22 weeks, so there are always opportunities coming up,” he said.
While the agency has had some level of interest from Melbourne buyers, Mr Weatherley said 90 per cent of buyers were local.
“I know people worry that everyone from Melbourne is coming up and buying up properties, but it is mainly local people buying their first, second or third home,” he said.
Mr Weatherley also questioned whether rental vacancy rates were under pressure from people moving to the regions, and said it was largely “over regulation” that had seen landlords leave the industry in droves.
“There is strong demand for rentals, with our own vacancy rates the lowest I’ve seen them in my 22 and a half years in business, but some of that is because landlords are selling up, the new regulations making it too expensive and difficult,” he said.
“For instance, the landlord has to pay the tenant $30 for every house inspection when trying to sell the property, which meant in one recent instance where we had ten inspections the landlord had to pay $300.
“So with the tightening of the regulations, it’s obvious that rents will go up and it may even get harder and narrow the market.”
Consumer Affairs Victoria said the new laws made it fairer and safer for everyone, and included a ban on rental bidding, new rental minimum standards, no eviction without a reason, and allowing modifications by renters and urgent repairs.
They also require rental providers to ensure an electrical safety check of all electrical installations and fittings in the premises is conducted every two years by a licensed electrician, and gas safety checks are made on all gas installations and fittings on the premises every two years by a licensed or registered gasfitter.
But with vacancy rates in regional Victoria hovering around one per cent, compared to six per cent in metro areas, according to the Real Estate Institute of Victoria, regional migration could be having an impact.
Real Estate Institute of Victoria president Leah Calnan said increasingly city dwellers were looking to regional Victoria to find the lifestyle they wanted.
“The growing interest in regional towns is welcome news to local business, particularly in tourism and hospitality, struggling from the pandemic,” she said.
“House prices have been boosted by incentives for first home buyers, mortgage repayment holidays, and low interest rates and the increased demand for properties in Regional Victoria.
“The extended lockdown in metro Melbourne will no doubt nudge even more interest in regional living.”
REIV data shows the annual median house price in March in Sale was $371,000, which was a 15.1 per cent rise from 2019.
Stratford house prices jumped the most in that time, with the average house price jumping by 25.8 per cent to $373,500, while Maffra experienced a 22.7 per cent price rise, and Loch Sport recorded a 17 per cent rise to bring the average price to $292,000.
Rosedale was the only town which bucked the trend, with average house prices dropping 9.2 percent to $265,000.
While it’s been great for sellers and for buyers who got in quick, it’s not so good for renters.
Anglicare Vic said COVID-19 had crushed rental affordability in regional Victoria, with the availability of affordable new housing for low income earners is at its lowest level since 2000.
Its Rental Availability Snapshot report analysed 33,710 Victorian rental listings from March 27, 2021, and found that less than half the number of rental properties were available in regional Victoria compared to the same time last year. Fewer than 10 per cent of these were suitable for any type of low income household without putting them into housing stress.
Some landlords were even turning to Airbnb to lease their properties to short term travellers, reducing supply even more, the report found.
It has joined welfare agencies around the country calling for more targeted government assistance to make property affordable for renters, including raising the rate of welfare payments for good and increasing rental assistance.
National data from the Australian Institute of Health and Welfare shows that the second most common reason people at risk of homelessness accessed services was ‘housing crisis’ (14.2 per cent).
In a submission to a parliamentary inquiry into homelessness, Chris McNamara from the Gippsland Homelessness Network said that based on data from the AIHW, evictions from private rental properties contribute to about 40 per cent of homelessness in Victoria.