Warrnambool's housing market has settled after two years of rapid price growth while the rental squeeze remains tight heading into 2023.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
As the year comes to a close, real estate experts have weighed in on how they saw the city's house sale and rental markets playing out.
According to latest Real Estate Institute of Victoria (REIV) data, Warrnambool's median house price sat at $600,000 for the third quarter of 2022.
While the median price hovered around this mark for most of the year, it was up almost $90,000 when compared to the same time in 2021.
The price of a unit had also increased by a similar amount in Warrnambool with the median floating around $440,000 in the September 2022 quarter - up from $346,000 at the same time last year.
Ray White Warrnambool director Fergus Torpy said the house sale peak at the start of the year was a record for Warrnambool and was likely attributed to the easing of pandemic restrictions.
"The easing of COVID restrictions allowed us to see greater inspection numbers than we've ever seen before," he said.
"We saw more million-dollar sales in the residential space, more transactions and shorter selling times."
Mr Torpy said this activity slowed towards the middle of the year - where the median house price dipped from $602,000 in the June quarter to $600,000 in the September quarter - which he linked to the year's eight interest rate rises.
"As the year went along, (increased market activity) continued to trend but slightly eased with the interest rate increases that we saw," he said.
"There was still buyer confidence but not to the swiftness that we saw in the first half (of the year)."
Brian O'Halloran and Co director Brian Hancock said he thought the Warrnambool housing market had "held up quite well" during the pandemic but was expecting prices to come down from its peak.
"Through the pandemic, prices had a fair hike," he said.
"It probably hit its peak at the end of last year and the start of this year, and is sort of settling now."
Mr Hancock said rate rises had caused buyers to reassess what they could borrow from banks which had slowed the growth of house prices.
"There are still buyers looking for properties," he said. "They just do their (assessments) on what they can borrow and their loan structure a bit differently now."
He said the December quarter had indicated some house price growth deceleration while the south-west market was seeing more demand coming from locals.
"(The demand) was mainly driven by sea changers and people wanting to escape the large cities and relocate to the seaside," he said. "But we're seeing more from the area now."
Ray White's Mr Torpy said he'd seen rising interest rates cause some buyer hesitation and an influx of properties to the market in the latest quarter.
"People's borrowing capacity was changing more frequently because of the changes in banks nearly every month (which) meant buyers had to do a bit more due diligence," he said.
"With the rate rises, we've seen more properties come to the market in the last 12 weeks than we've seen in two and a half years."
He said the latter might be attributed to people holding onto their properties due to the unpredictability the pandemic presented rather than people defaulting on their mortgages and needing to sell.
"If people had bought properties pre-rate rises, then they'd be on a fixed rate," he said.
"People may be looking to sell to go travelling, invest, or downsize or upsize (and) previously didn't want to be caught in that flurry we were seeing through COVID."
IN OTHER NEWS
Meanwhile, those navigating the Warrnambool rental market faced fierce competition as CoreLogic real estate data had the city's vacancy rate sitting below 1 per cent for the entire year.
According to the Australian Bureau of Statistics, a rental vacancy rate of around 3 per cent is required for a balanced market.
Median rent prices also rose marginally, starting the year at $433 per week in January and finishing at $457 per week in November.
Mr Torpy said the persistence of rental shortages was likely due to the increased amount of landlords and investors cashing in on their property value growth during the pandemic.
"Investors saw great growth in their assets through COVID so a lot of them took that opportunity to sell their investment properties to make profit," he said.
"This would have put an initial tightening on the availability of rentals."
He said people who sold their properties then chose to rent while they built their new home, and rate rises which deterred people from buying, would have also populated the contest for rentals in Warrnambool.
"There's been a lot more demand than there's been supply," he said.
"Warrnambool's (housing) ecosystem is that people might sell, build, but while their building (they) might rent.
"If they're selling to upsize or downsize, they might rent for six to 12 months before they find something."
When compared to the rest of the state, CoreLogic research head Eliza Owen said Warrnambool's market had not experienced as much volatility as Melbourne but had a steeper decline compared to other parts of regional Victoria this year.
"Compared with regional Victoria - which has seen a decline to date of -5.3 per cent (from its peak) - the Warrnambool market has seen a slightly steeper decline of -5.7 per cent from a peak in July," she said.
"But since peaking in February, the Melbourne housing market has seen a steeper decline at -7.1 per cent through to the end of November."
Ms Owen said she expected the "initial shock" of rate rises to fade which would slow down the decrease in house values but warned the market to be wary of potential interest rate hikes in the new year.
"There is risk of the market decline re-accelerating in 2023," she said.
"There will be some renewed uncertainty around further rate rises and the risk of slightly more forced sales amid the expiry of fixed rate terms over the year ahead."
She said while Warrnambool's rental market seemed unaffordable and inaccessible for locals due to the spike in the demand from sea-changers, this trend would likely plateau with the easing of pandemic restrictions.
"The resumption of working from offices, studying on campuses or holidaying overseas could help to relieve some pressure on rent markets," she said.
"Other cost mitigation strategies like the reformation of share houses or migration to more affordable rent markets could be triggering the start of a rental market downturn in Warrnambool."
Our journalists work hard to provide local, up-to-date news to the community. This is how you can access our trusted content:
- Bookmark https://www.standard.net.au/
- Make sure you are signed up for our breaking and regular headlines and newsletters
- Follow us on Facebook, Twitter, Instagram and LinkedIn
- Tap here to open our Google News page
- Join our Courts and Crime Facebook group and our dedicated Sport Facebook group
- Subscribe
Have you signed up to The Standard's daily newsletter and breaking news emails? You can register below and make sure you are up to date with everything that's happening in the south-west.