Article by Elizabeth Redman, from our Property Partner Domain
Home buyers are negotiating deeper discounts than a year ago in a string of regional towns as the tree change boom eases.
Rising interest rates and the return to CBD offices have discouraged some potential buyers, so those who are still looking can find better opportunities.
There are also some suburban markets offering price cuts, but in many inner and middle suburbs buyers will be harder pressed to find a vendor willing to discount now compared to this time last year.
In NSW, the areas that recorded the biggest increase in the average size of discounts over the past year were the Bourke/Cobar/Coonamble region, followed by Griffith/Murrumbidgee (West), the Snowy Mountains and Lachlan Valley, on Domain data. It compares asking prices to sold prices for private treaty sales in the six months to November.
In Victoria, average discounts are deeper than a year ago in the Creswick/Daylesford/Ballan area, at 10.5 per cent compared with 7.5 per cent a year prior, and deepened in Colac/Corangamite, Shepparton, Gippsland, east, and the Wellington Shire.
Discounting is also on the increase in the Heathcote/Castlemaine/Kyneton area, the Surf Coast and Bellarine Peninsula region, and in Ballarat.
But inner-city Darebin (south) bucked the trend to record the biggest jump in average discount size in Victoria. It also had the deepest discount in percentage terms at 13.9 per cent, from 6.5 per cent a year ago.
Domain chief of research and economics Dr Nicola Powell said the deeper discounting in regional areas showed where property price growth has been stronger this year, that is, in capital cities.
“The focus has moved away from our regional areas and it’s probably why some sellers are having to make decisions to be able to shift their properties, to be able to sell it,” she said.
She also pointed to stretched affordability among local regional buyers hit by reduced borrowing capacity as interest rates rise.
“Prices have made such a vast change in regional areas and the affordability is certainly not as great as it was prior to the upswing.”
A six- to seven-hour drive west of Sydney, Elders Real Estate Griffith’s Brendan Catanzariti said there are good opportunities for potential buyers in an area with a shortage of workers and a shortage of housing.
He said Griffith’s property market had risen during the early part of the pandemic and experienced a slight drop since, as the supply of homes for sale increases.
“This year it’s probably gone back to pre-COVID, in reference to a bit more property coming on the market which has given buyers more selection,” he said.
“The ones that are sitting there have some anomalies. Whereas last year they would be sold, this year, because there’s more selection, they’re [buyers are] a bit more picky.”
He said the string of interest rate rises had slowed down some buyers in their search, but rental demand was high as workers searched for accommodation.
Reasonable quality homes on large blocks of 6000 to 8000 square metres have been selling for more than $1 million, while newly built large homes fetch about $1 million, more compact new homes settle for about $700,000 to $800,000, and established older homes trade for about $500,000 to $750,000 depending on their quality and level of renovation, he said.
He praised the area’s community feel, quality schools, restaurants, wineries and upgraded sporting facilities.
“Come to Griffith and enjoy getting out of the hustle and bustle and still live a fairly cosmopolitan regional/rural life,” he said.
In Victoria, the Daylesford area jumped in popularity during the lockdown years, but the market has since been hit with interest rate rises and a shift back to Melbourne CBD offices.
“People are saying, ‘my boss told me I have to come to Melbourne,’” Belle Property Daylesford’s Natalie Fagan said.
“There’s more stock for sale – if you are looking for a property here it is probably the best time to come up.”
She praised the area’s strong community, great lifestyle, lack of traffic lights, year-round appeal with bushwalks and lake walks that can be enjoyed in any season, restaurants and wineries.
Her cheapest entry-level offering is a three-bedroom house on a smaller block asking $549,000, but at the other end of the spectrum an acreage property is guiding $3.8 million.
First home buyers were able to take advantage of entry-level properties and avoid paying stamp duty on homes worth $600,000 or less.
“It has also given a lot of opportunities for people who can’t afford Melbourne,” she said.
Original article can be found here.
