Green shoots or weeds?

BY GARETH KENT

The Geelong and Surf Coast housing market continues to be a watch-and-see game in 2023, with notable purchaser groups missing from the market.

Agents and valuers alike are noticing the number of first home buyers in the market has dropped significantly, likely impacted by increased interest rates.

The second group that has gone missing are small infill developers.

These typical two- to four-unit builders provide those infill townhouses and gobble up vacant land or dilapidated houses.

What’s more, several developments under construction have slowed due to the lack of labor and cost of materials; settlement dates on several construction projects with off-the-plan pre-sales are advising their purchaser that completion will be delayed, in some instances for 12 months!

The PropTrack Regional Australia Report released on Monday shows demand for homes in Geelong fell 37 per cent year-on-year, alongside slowing home prices.

A similar report released by CoreLogic, indicated the number of properties listed for sale across Australia at the start of 2023 is 31.5 per cent below the previous five-year average and 2.9 per cent lower than last year. Hence, the lack of demand is being matched by a lack of listings, creating a stalling effect across the market with values not dropping or being pushed up.

Unfortunately, the December CPI index (inflation) rose by 1.9 per cent, according to the January 25 December quarter report.

This is not what we wanted. Inflation now sits at 7.8 per cent, the highest since 1990. The Reserve Bank will be forced to keep putting pressure on curbing inflation, which will likely mean another interest rate rise.

But it is not all doom and gloom; there have been some very successful selling campaigns in recent weeks. One of the most interesting ones is the successful pre-sales campaign of Stella Maris, located at the old convent site on the hill in Drumcondra, overlooking the boat ramp.

The development, marketed by Jim Cross of McGraths Geelong, started sales in late November, off the back of several rate rises and many predictions of doom and gloom.

However, this campaign has gone gangbusters. The most notable is the sale of an off-the-plan apartment for $4.5 million only last week!

Since the campaign launched, 19 apartments have been sold at very high-end price points, approximately 40 per cent of the development.

This indicates that money is still in the market for the right product.

Similarly, other local sales campaigns have also gone well: the penthouse at 100 Western Beach Road sold by Seka Powell for $3.0 million on January 3rd, and 48 Rivergum Drive, Highton sold by Michelle Winkle for $2.12 million on January 17.

There is enough evidence within these local campaigns to suggest that although things are stalled, we might just be starting to see some evidence of increasing demand.

To quote Ben Riddle of Buxton Real Estate: ‘’What we do know about Geelong real estate in the past 20 years is that Melbourne people continue to come down and invest their money in our property; they’ll send their kids to the best schooling in Victoria and head to our world-class beaches.’’ He is spot on.

Lastly, my sources tell me that the long-awaited Central Geelong Framework plan is days away from being approved by the minister; this could be the very thing to create a spark, with more than $1.5 billion worth of private sector investment set to pour into inner city development in Geelong.

This will create jobs, bring more skilled workers to our region and place more demand on house prices. It could be the very thing we need to get the ball rolling in 2023.