Home buyers are yet to get a reprieve after regional Victoria’s phenomenal increase in house prices during the COVID pandemic.

Throughout 2021, regional Victorian house prices grew at the fastest rate in 20 years, with the median house price rising by $120,000, a growth of 27 per cent, according to the Real Estate Institute of Victoria (REIV).

Licensed estate agent and director of Wellington Real Estate, Tony Kiss, noticed a substantial rise in house prices during the pandemic.

“In the Wellington Shire, housing prices definitely increased over the last three years, and what you will find is the average house price has increased substantially; it’s around that five-hundred-odd thousand,” Mr Kiss said.

“We’ve probably never seen an increase as much as what we’ve had in the last three years. Prior to that, for 20 years, your market was very level, there was a slight increase, but there were never any big peaks and troughs in the area.”

The share of units fell to 73.9 per cent in October, down from 86.9 per cent at the start of the pandemic. Photos Zoe Askew.

Despite interest rates reaching a nine-year high at the start of November, followed by regional Victoria’s median house price falling by 1.7 per cent in the September quarter – the first fall since the March 2019 quarter – Wellington Shire real estate agents are yet to see a decline in median housing prices, contrary to their metropolitan counterparts.

Sale’s median house price has risen by 24.4 per cent from November 2021 to October 2022 – 18.8 per cent in Maffra, 18 per cent in Stratford and 37.8 per cent in Yarram, according to figures from realestate.com.au.

In Melbourne, home prices dropped by 7.1 per cent and apartment prices by 3.9 per cent over the year to 2022, with all 385 suburbs reporting a fall in house prices.

“At the moment, the prices are holding well; the regional areas seem to hold better than your bigger cities,” Mr Kiss said.

“Melbourne and Sydney seem to have a bit of a drop, but up here, we’re still holding well, the prices and properties are still selling, there is still a turnover of houses at the moment.

“In the area, your entry level is probably around $300,000-$350,000, but properties between $400,000-$800,000 seem to be churning over pretty well.”

The upsurge in local housing prices is attributed to the growth of Wellington Shire’s population, as during the two-year, tree-change trend (2020-21), Melburnians flocked to the regions, increasing the demand for housing, alongside low-interest rates reaching a record low of 0.1 per cent in November of 2020.

REIV president, Adam Docking, said there was a substantial demand for regional housing in the last 2021 quarter after Melbourne’s sixth and final lockdown lifting in October, with a confluence of factors including housing affordability, the ability to work remotely, and a desire for more space driving city-dwellers regional.

“What we saw in the December quarter was effectively the floodgates opening,” Mr Docking said.

“We almost had two-quarters of transactions in that quarter because the third quarter of 2021 was really the most locked-down quarter we had.”

In regional Victoria, the share of new listings below $600,000 has hit a record low, falling to 43.7 per cent in October 2022, down from 75.5 per cent at the start of the pandemic.
Photos: Zoe Askew

The share of new listings below $600,000 in regional Victoria has hit a record low, according to data from the recent PropTrack Market Insight Report, falling to 43.7 per cent in October 2022, down from 75.5 per cent at the start of the pandemic. The trend was verified across Wellington Shire by Graham Chalmer Real Estate director Mark Ventrella.

“It all relates to the price increases that happened during COVID,” Mr Ventrella said.

“Originally, we thought that COVID was going to be a bit of a problem; everyone’s staying home, nothing’s going to happen, but in fact, the total opposite happened – real estate went bananas.

“We had a lot of extra people leaving metropolitan areas, wanting to go to country areas. That increased the buying pool all over the country; we got some of that here in Sale, so our market went up.

“With the increase in prices, anything that was $600,000 before the pandemic was probably $700,000-$750,000 after and not only that, everything rose from the bottom up.

“So it is correct that the amount of houses we had above $600,000 has increased significantly.”

Wellington Shire’s population grew by six per cent between the 2016 Census and the 2021 Census, with the population standing at 45,639, according to 2021 figures.

While nine-year-high interest rates are driving down metropolitan housing prices, regional homebuyers shouldn’t hold their breath for a drop in housing prices anytime soon, according to Mr Kiss.

“Over the last three years, we’ve had a big peak, and it’s probably going to level out at present; that’s how I see it,” he said.

“I see it levelling out and probably going back to a similar market to what we had prior to what the COVID market was.”

Mr Kiss said land prices and the cost of buildings had increased, which would hold the prices fairly steady.

“The builder is not going to reduce his price, the developer selling his land is not going to reduce his price because it costs them so much to get to that point; therefore, housing prices should hold at this kind of level,” he said.