Beachside towns in New South Wales and Victoria have seen house prices drop by up to $108,000 in the past year as lockdown-driven demand slows down, according to a recent article from View.
Coastal areas in Victoria's Gippsland and Warrnambool regions have experienced the steepest falls in Australia since May last year.
Suburbs such as Port Fairy, Venus Bay, Portland, and Metung have seen prices decline by up to 12%, according to CoreLogic data.
Other towns on the list of the most discounted coastal areas include Fyansford in Geelong and Inverloch, also in the Gippsland area.
Despite the recent price drops, these areas saw significant growth in the four years since the pandemic began, mainly due to people escaping locked-down capitals during 2020 and 2021.
CoreLogic’s Head of Residential Research, Eliza Owen, noted that this trend might tempt some to reconsider their sea-change or tree-change decisions, especially younger Australians facing higher interest rates and potential return-to-work policies.
Ms Owen pointed out that regional markets often follow trends from their respective capital cities, making it unsurprising that Victorian coastal towns are heavily discounted.
She added:
“It broadly reflects the national trend, with the Victorian housing market being weaker over the past few years compared to WA"
Victoria has consistently had the highest number of dwelling completions, keeping values low but making the market more affordable and accessible over time.
Areas like Inverloch and Venus Bay are experiencing a correction after high demand during COVID.
This is driven by rate rises, but people have realized they don’t need to be in the regions anymore, even if another pandemic occurs.
Notably, the state’s land tax on holiday homes has discouraged investors, impacting the local economy heavily reliant on holiday rentals.
In Port Fairy, which saw the biggest price drop of 12% over the past year, homes are being discounted significantly.
For instance, a three-bedroom property on acreage with coastal views was reduced from $950,000 in February to $850,000 this month.
Similarly, in Venus Bay, which experienced an 11.2% price drop, a cosy coastal home is now listed at $529,000.
On the rise
Meanwhile, the 10 coastal areas with the strongest price growth were primarily in WA's Bunbury region, except for Vincent and Cranbrook in Townsville, Queensland.
These areas saw house price growth between 24% and 31% over the year, with prices still relatively affordable, ranging from $370,000 to $670,000.
Ms Owen said:
“The past few years have seen strong performance in these markets.
“But if you look at the past decade, WA has been among the weakest performers.
The current strong growth in Western Australia is partly because values are coming off a low base.”
A final note for investors
As always, these "short-term" high-growth suburbs aren’t necessarily the suburbs I would recommend investing in.
That’s because when it comes to property investment, it's most important to look for an investment-grade property in the ‘right area’ rather than chasing ‘top hotspots’ or growth areas.
But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.
You see…property investing is a process, not an event.
Things have to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
The fact is, the property you will eventually buy will be the result of a sequence of questions you will need to ask and answer and a series of decisions you’ll need to make before you even start looking at locations.
Long before we talk about a property or the right location with our clients at Metropole, we look at factors including their age, their timeframes, and the desired end results in other words, what do they really want the properties to do – are they looking for cash flow, capital growth, or a combination of both.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.
