The popular Victorian tree-change towns where house prices have soared

House prices have soared in every corner of regional Victoria,new figures show,but the growth is starting to slow as the lockdown tree-change trend wanes.

The biggest price rises over the past year have been in small,relatively affordable towns as demand spills further out from major regional centres.

Warracknabeal and surrounds have recorded strong house price growth.

Warracknabeal and surrounds have recorded strong house price growth.John Woudstra

The shire of Yarriambiack in western Victoria,north of Horsham,recorded 37.9 per cent house price growth to a median $200,000 in June,up from $145,000 a year earlier,the latest Domain House Price Report showed.

Nearby shires also jumped,as the Northern Grampians rose 36.2 per cent to a median $363,750,while Buloke added 32.7 per cent to $195,000. House prices are higher than a year ago in every local government area of regional Victoria.

Domain chief of research and economics Dr Nicola Powell said thetree-change trend had passed its peak,but warned the strong price growth in regional areas since the COVID-19 pandemic hit has been displacing locals from their communities.

For regional Victoria overall,house prices rose 0.9 per cent in the three months to June,to a record high median $590,000,but this increase was slower than the peak quarterly rate of growth of 11.2 per cent reached in the December quarter of 2021.

“There’s always going to be that tree-change pull,but what we saw during the pandemic was more people were able to do that tree-change,and there was more reason to do that tree-change,” she said.

“The bulk of that tree-change exodus has probably flowed through the system.”

Major regional centres have recorded price rises,but not of the same magnitude. Greater Geelong house prices are up 13.8 per cent,Ballarat is up 17 per cent and Bendigo is up 21.4 per cent. The Surf Coast rose 20.8 per cent and has the highest median house price outside Melbourne,at $1.45 million.

Powell said prices had risen faster in smaller towns as people tried to seek affordable housing.

Bendigo house prices have risen,but not as fast as some smaller towns in western Victoria.

Bendigo house prices have risen,but not as fast as some smaller towns in western Victoria.Supplied

“It’s a result of people being pushed out of other neighbouring areas that have already seen strong upswings in price,” she said.

“It displaces residents from their communities and pushes them to purchase in other neighbouring areas that are more affordable.”

She expects the price momentum to slow,including as interest rates rise,but said that would flow through to different towns at different times.

In western Victoria,part of the price growth has been pandemic-driven,said estate agent Nick McIntyre of Elders Real Estate Warracknabeal,in the Yarriambiack shire.

“During the lockdowns we were having people making offers on properties sight unseen from Melbourne,” he said. “It has dropped off to a fair degree now.

“It’s still Melbourne buyers,but they are not buying feverishly,in some cases sight unseen. They are making the trip up here to inspect.”

He said there were few homes for sale in the area compared to the number of buyers.

“Locals that want it are having to be competitive,” he said.

East Gippsland property prices have risen as Melburnians make a tree change.

East Gippsland property prices have risen as Melburnians make a tree change.East Gippsland Marketing

The highest house price rise in the state’s east was a 31.7 per cent jump in East Gippsland,to a median $540,000.

LJ Hooker Bairnsdale principal Steve Holmes has seen an increase in buyers moving there from the city.

“It has always been a combination of local and Melbourne buyers but the percentage of Melburnians has certainly increased significantly in the last 18 months to two years,” he said.

He is still seeing tree-changers now,although the arrivals have slowed.

“More of them can work from home now,they have found a way to do that and balance their work with their country lifestyle.”

Prices are higher than a year ago on the Mornington Peninsula,technically part of metropolitan Melbourne but a favoured destination for lockdown sea-changers,although the region fell in the three months to June,down 2.6 per cent.

House prices are up sharply on last year in Safety Beach (39.1 per cent),Rosebud (33.5 per cent),Cowes on Phillip Island (31.5 per cent),Sorrento (29.8 per cent) and Rye (27.6 per cent).

KPMG demographer and urban economist Terry Rawnsley said the regional housing boom had begun to slow as population growth outside the cities flattened.

Prospective homeowners are closing the door on standard houses and turning to 'tiny homes' instead as a cheaper alternative amid Melbourne's skyrocketing housing prices.

“The number of people fleeing Sydney and Melbourne has slowed as we return to a degree of normality,” Rawnsley said.

He said house price declines would take longer to flush through as they had different dynamics such as fewer investors and smaller jobs markets.

Regional housing markets may have also reached capacity as there were very few homes left to choose from for any prospective buyer from the city,Rawnsley said,while buyers will also reassess their budgets as interest rates rise.

He said while markets within an hour or two drive from the city may have all the fundamentals for long-term growth and hold their values,towns further away may experience losses in coming quarters.

Elizabeth Redman is the national property editor at The Age and The Sydney Morning Herald.

Tawar Razaghi is a journalist working for the Sydney Morning Herald

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