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Affordability Drives Growth in Regional Towns

By Rachael Vrana

As Melbourne’s reach extends further into the countryside, once-outlying towns have been incorporated into its suburbs. Others further out – once a day trip away – are flourishing because of their commuting distance to the city. An REIV analysis of regional Victoria’s top ten capital growth areas for the first three months of this year has thrown up an apparently diverse list. But several have one thing in common: Housing there is in demand because cash-strapped buyers, unable to afford to buy in Melbourne, are looking further out for space and affordability.

Top of the list is Drouin, in West Gippsland, a major service centre 90 kilometres west of Melbourne where new housing estates have boosted residential growth. Once virtually a village – it had just 700 people in the early 1900s – its population is more than 13,000. At the end of March the $315,000 median price for a three-bedroom house in Drouin was up 7 per cent on the 2013 final quarter. On the other side of the city, the $367,000 median three-bedroom house price in Lara was up 5.6 per cent and in Ocean Grove it was up 5.1 per cent.

Ocean Grove is increasingly sought-after and the median price for a four-bedroom house there also made the top 10 list, increasing 4.7 per cent to $592,500 in the three months. Despite being up to 90 minutes drive from Melbourne, residents do commute from Ocean Grove – and it’s a misconception that those buying in such towns are doing so because they cannot afford to live closer to the city. Ocean Grove is just one of the seaside and regional towns increasingly popular with those wanting space and beach – or in the case of Drouin, bush – surroundings after work.

Others on the list included the fast-growing Latrobe Valley centre of Traralgon, with 4.9 per cent growth for a four-bedroom home and 2.4 per cent for a three-bedroom house.  In East Gippsland the median price of a three-bedroom house in Sale grew by 4.8 per cent over the quarter and a four-bedroom by 2.2 per cent.

And on the outskirts of Ballarat, which has faced a housing shortage, a Wendouree three-bedroom home grew 2.5 per cent. The suburb is one of the city’s most populous and has its own train station, linking in to Ballarat’s fast train service to Melbourne. Another centre which recorded very high median growth was Morwell, which has also benefitted from its efficient train link with Melbourne. The median price for a four-bedroom home in the Gippsland hub grew 15.5 per cent for the quarter.

It’s interesting to also note that some other country growth areas, which are a further step away from Melbourne. While it may be beyond commuting distance to the city, Benalla’s median continued to increase, with the price of a three-bedroom house growing by 14.4 per cent in the March quarter. Warrnambool experienced a similar rise, with the median price for four-bedroom homes increasing by 15.2 per cent, while in Bairnsdale, a three-bedroom house was up by 3.1 per cent.

As these figures show, it is not only in Melbourne where demand has driven house price growth. Properties in regional Victoria can be an excellent investment, particularly in service centres and in areas sought by those willing to commute for a foot on the property ladder.

Source: www.reiv.com.au

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