EOFY – a trigger for activity

THE end of the financial year means a great deal to people in small businesses but not much to anyone else, I have discovered.

For us small business owners, it’s the end of a very turbulent year. Another one. What will the new one bring us, more taxes? More wars? More challenges? It’s now been almost three years since the peak of the property market (2022), and it’s been tough for everyone involved over this period of correction.

As Valuers, we gain a better understanding of the market than most, as we are exposed to not only transactions but also refinances, taxation, legal matters, anything that involves property. And property is the bedrock of the Australian finance system.

The last three years have been mentally taxing; I am a bit sick of telling people their property values have fallen. They are not easy phone calls to make. Hopefully in the later part of 2025 we can start giving people good news again.

We have been resilient to say the least. Over this correction journey from 2022 to today we have seen:

· An increase in delinquency rates for mortgage repayments missed, rising from 0.5 per cent to 1.5 per cent, but this is still a very low number

· Commercial markets that are very flat, with stagnant growth and low transaction volumes, yet rental growth over the same period

· House prices stagnate, grow, fall back, stagnate again, and in recent months, sustain some growth

· A significant divergence between markets and locations, with some areas, such as the coast, being severely impacted

· 19 per cent of investors leave the state, driving up household rentals and reducing demand for commercial assets, allowing owner-occupiers to make up the vast majority of purchases

· Migration to our region peak, fall away, and then peak again

· Approximately 16 new taxes introduced by the State Government and nine new taxes by the Federal Government

· Lending becoming difficult due to changes by APRA to bank policies, with an emphasis on increased pressure on serviceability. This means borrowers must prove they can repay loans with high-risk buffers of three percent above the current rate

· Over this period, we had 14 RBA rate increases and two decreases.

Looking forward though, I can smell a change. A bit like a farmer can smell the rain; if you are close enough to the environment, you can sense that things have changed. I am optimistic that we have passed the worst of it. Over the last two months, confidence has slowly begun to trickle into our property markets. Most noticeably, there is a significant increase in the number of transactions involving commercial property, and these transactions are showing growth in certain sectors.

We have seen:

· Two recent sales of industrial land in Norlane with value rates of $963 psm (for a 1000 sqm parcel) and $896 psm (for a 2000 sqm parcel), an increase from the previous average value rate of $750 psm

· Eight retail properties transact in the last eight weeks when we had perhaps 15 sales for the previous 12 months

· The sale of some major sites: Sailor’s and Soldiers’ Wool Mill selling for $32.5m, Queenscliff Brewhouse, and AVC taking over the leasehold of Eureka Hotel bringing a large national player to the region

· A significant uplift in commercial listings as vendors start to sense that the time has come to move and not hold. St. Lords Hotel and the Telegraph Hotel have both come on the market, indicating that the hospitality sector is also starting to get moving

· The developers are reporting a significant increase in land sales in the estates, rising by 72 per cent in March 2025 alone, making it the largest sales month since June 2022

The year ahead isn’t without risk. Amazon has built a new logistics outlet at the Ford site in North Geelong and this is likely to create competition for our local traders. Why the Government still allows these overseas giants to come in an decimate local business is beyond me!

Don’t expect to see Amazon sponsoring any local sports clubs anytime soon! Perhaps the new Free Parking in 2P spots in our CBD, from July 1, will offset this new competition and attract people back to the city centre.

With a predicted further rate cut on July 8 looking likely, all the statistics are moving in the right direction for a continuation of the easing cycle.

I think the latter half of this year will prove to be a much more active market across all property sectors; fingers crossed for a return of discretionary spending to assist our beleaguered retail and hospitality.

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