The Christmas we had to have

WITH GARETH KENT, DIRECTOR PRESTON ROWE PATERSON

As we head into Christmas, I would like to thank you for reading my articles this year and wish you and your family a happy and safe holiday season.

It’s been a tough year for everyone in property and for that matter anyone in small business. Unfortunately, as we head into Christmas, our property markets locally appear to be continuing in decline, with far too much stock available and very limited buyer demand, this is especially the case along the coast. When will we hit the bottom of this cycle?

This week I have researched demand by suburb, looking at the number of properties available for sale vs the current sale rate, determining how long it would take to sell the existing stock in each suburb. Using the CoreLogic data, I researched 26 suburbs around Geelong, Surf Coast and Bellarine.

The best-performing suburb has the lowest time to sell the existing stock. Corio is performing the best, with 82 properties on the market for sale, 59 for rent, and an average sale rate of 20.2 sales per month over the last 12 months. It would take only 4.1 months to sell all the existing stock in Corio.

In contrast, the worst-performing suburb is Queenscliff, with 41 properties on the market for sale, and an average sale rate of 1.2 per month, it would take 35 months to sell all existing stock.

Overwhelmingly the locations with the longest time to sell, showing the lowest levels of buyer demand, are coastal areas Lorne 30.9 months, Port Fairy, 25.1 months, Ocean Grove 12.7 months, and Torquay 11.3 months.

The statistics don’t lie: the best-performing suburbs are those in the affordable bracket, with a median house price of $666,000 or below.

What is staggering is the amount of stock on the market – in Ocean Grove there are 284 properties on the market for sale, and 73 for rent. Torquay is the next highest with 272 properties on the market and 51 for rent.

It is very clear supply has outstripped demand, and this is the cause of our latest decline in median property prices. However, I keep reminding people, although we are in a declining market, and we may yet not have hit the bottom, the overall long-term growth is where your sights should be set. As I have said before, over the past 42 years property prices have grown by 540.1 per cent, averaging out at 7.62 per cent per annum; just not right now.

In my opinion, the dampening in demand and declining market is a direct result of the increased pressure we are all feeling in the cost-of-living crises, coupled with higher borrowing costs, and the ongoing cycle of Victorian property taxes, giving no comfort to property buyers.

However, Treasurer Tim Pallas on Friday announced a new tax hike with the Emergency Services and Volunteers Fund, which will replace the present Fire Levy, paid by ratepayers, and included in your rates costs. This announcement effectively doubles the price of the fire levy which every property owner will have to pay on your rates notices. The fire levy is made up of a fixed rate and a variable rate, based upon the property classification, however for a residential property, the fixed rate in July 2024 was 8.7 cents for every $1000 of CIV (capital improved value), and as at 2025 will increase to 17.3c per $1,000 (CIV).

Looking forward to next year, I am much more optimistic. I think we may see a pre-federal election rate cut, somewhere in March or April, and this will have a great impact on the confidence within the system, I think there are some signs that change is in the air for the first half of 2025, but maybe this market has a month or two of decline left in it, I think till February at least. Getting in before it turns is my only advice!

Again, merry Christmas, and I will leave you with the following table.