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The pursuit of affordability has driven a price boom in Victoria’s cheaper regional housing markets, with the median doubling in parts of the western area in the past five years.
The agricultural heartland of Hindmarsh, about 350 kilometres north-west of Melbourne in the Wimmera-Mallee region, recorded the largest five-year median house price growth of any LGA in the state, data shows.
Hindmarsh, home to the towns of Nhill, Dimboola and Rainbow, has recorded a 101.8 per cent spike since 2021, according to Domain’s most recent House Price Report.
Five years ago, a typical house in Hindmarsh cost $137,500, but today, following the COVID pandemic and a period of record-low interest rates, the median is $277,500.
The strongest performers bounced off a low base in 2021, and all in the top 20 had median house prices under $450,000 five years ago.
The leading four for growth – Hindmarsh, Yarriambiack (towns including Warracknabeal, Minyip and Murtoa, up 91.3 per cent), Gannawarra (Cohuna, Kerang and Koondrook, up 75.5 per cent) and Mildura (Red Cliffs, Merbein and Irymple, up 65.2 per cent) – are 3.5 to six hours from Melbourne.
Other member of the top 20; Latrobe, Pyrenees, Corangamite, Ararat, Campaspe and Benalla are about two to three hours from Melbourne.
Absent from the list are coastal and lifestyle-driven destinations that were in hot demand during the pandemic.
“It is about the deep affordability play in these LGAs,” says Dr Nicola Powell, Domain’s chief residential economist. “I would say that tree change is not necessarily driving the growth in these locations.
“They are led by specific industries, whether it’s health, education, agriculture. Some of these regions would have experienced an inflow of tree-changers, but I don’t think it’s the core of these markets.”
Powell says smaller populations can experience sharp price rises from relatively minor buyer activity.
“They are much lower priced, and they’re also thin markets where those small demand shifts can have a big impact in price. That helps the market to reprice quite quickly.”
Director of Wimmera Property Agents Chris Schirmer meets buyers who are casting a wide net.
“What we’re seeing in the last five years is that people aren’t necessarily searching in a specific location,” he says. “They have their price parameters that they are working with, and they look to see where the best value for money is.”
He worked with one who travelled about 6000 kilometres in the hunt for the right property.
“People don’t want large mortgages, they want to be able to enjoy their lifestyle now as well,” Schirmer says.
The purchaser profile is vast, including retirees from Melbourne and Adelaide, mature-age people buying their first home and investors attracted by job-generating industrial, renewable energy and mining projects in Horsham, Schirmer says.
Investor competition has compelled owner-occupiers to move to smaller towns such as Dimboola, where their money goes further.
“Dimboola is only 20 minutes away from Horsham, where you could be paying an extra $100,000, $150,000 for a similar house,” he says.
“People say, ‘I’d rather live in a remote area, I still have opportunities for work, and there’s enough going on in the town’.”
Hindmarsh is building a reputation for tourism, such as Dimboola’s Australian Silo Art Trail, the whimsical Imaginarium and Steampunk festival.
KPMG urban economist Terry Rawnsley says larger regional centres are sponges for buyers from smaller towns.
“Those cities are soaking up the population from the more remote areas,” he says. “People are saying, ‘My local school’s closing down, or there’s no health services. I’m going to move into the biggest centre where I can access those’.
“Places like Mildura, Wodonga, Shepparton, even Horsham, have a diversified economy where people can work as teachers and nurses, and in construction, hospitality and tourism.”
He has noted a “ripple effect” as buyers fan outwards from even Melbourne’s fringe suburbs.
Despite the significant price increases, Rawnsley expects local first home buyers still see a way in.
“Even if you’ve gone up 100 per cent from $200,000 to $400,000, first home buyers are still well placed,” he says.
Latrobe, which comes in at number five, has the fundamentals that economists say underpin growth.
Agent Jorjesen Demetrios of Stockdale and Leggo in Traralgon says the area had been underestimated, but gained attention during COVID and when interest rates were ultra-low.
“I don’t think people fully realised what the region has to offer in terms of schools and healthcare, and our sporting facilities,” Demetrios says.
“With the retail, and cafes and restaurants at nighttime, Traralgon has a bit of a buzz to it.”
Coal-fired power stations might be the dominant mental image of Latrobe Valley for some buyers, but the success of its property market is in the lifestyle that supports employment opportunities and education options, Demetrios says.
“We’re only two hours from the city, an hour from the beach, and an hour from the snow. There are beautiful national parks and outdoor recreation.”
