Property Pricing in Gippsland

Is residential, retail or commercial a better choice?

The residential market in Gippsland has softened in the past 12 months. The demand is weaker due to the significant tightening of home loan credit. The Australian Prudential Regulation Authority (APRA) has significantly changed the rules for home buyer lending on the tail of the banking commission – focussing on ability to repay (P&L) rather than equity (Balance Sheet).

In the Casey / Cardinia growth corridor residential block sales are slowing, residential homes are sitting on the market longer (median: 52 days to state of 41 days) (Bradley, 2019) and the market values are down a genuine 10% and, in some parts, up to 15% down.

Commercial properties have remained very strong for quality assets with low vacancy history or strong lease covenants – weaker for secondary assets or vacant industrial assets.

West Gippsland

The residential market was “white hot” and growing strongly in West Gippsland in late 2017 to early mid 2018 but has plateaued since. Approximately 600 residential lots sold in Warragul in that 12-month period ‘off the plan’, and jumped $50k to $70k in value despite high supply. Added to this Changes to First Home Buyer Grants and Stamp Duty Concessions for the regional shire assisted demand uplift.

However, the demand curve has turned with residential homes sitting on the market for longer, for example median 49 days to the state 41 Days. (Bradley, 2019)

West Gippsland – Englobo & Retail Commercial

There has been very strong demand from metropolitan based developers for Englobo land in Warragul and Drouin. A range of very large Englobo land sales have occurred in the past 12 months, mostly on terms of 3 to 8 years.

The new commercial precinct on Hazel drive is a substantial investment in Warragul. Bunnings Hardware Store Group has entered into a conditional contract of sale of the vacant land on the north eastern corner of Queen Street and Hazel Drive for the construction of a new large scale Bunnings Store, (circa 11,000 m2), a Kmart Department Store (6,400 m2), a Kmart Tyre and Auto Store (319 m2) together with a further 4,400 square metres of retail accommodation, which may occupied in part by Dan Murphy’s Liquor Store chain.

The development is now being undertaken by the Troon Group and has received Planning Permit approval. This project commenced construction in February and is expected to be completed by the end of 2019.

Latrobe Valley – Residential, Commercial & Retail

The residential market can be broadly classified as being stable.

The commercial sales market is strong for leased assets but weaker for shorter term tenancies and secondary assets.

The retail market is soft with increased vacancies in the major retail strip trading areas.

Latrobe Valley– Government Projects

Major State Government investment continues in Morwell with the major project being the Proposed Morwell ‘Gov Hub’ at 65 Church Street, Morwell. This will consist of 3,805 square meters of commercial office building and 111 carparks. This is supported by a 15+5+5-year lease pre-commitment by the Victorian State Government.

There are major changes to the Zoning of the Traralgon CBD area via the ‘Traralgon Activity Centre’ Plan C106 (La Trobe City Council, 2018). The rezoning will include

  • Rezoning 14-22 Grey Street, Traralgon (PC353187, Lot 1 PS313145) and Grey Street, Traralgon (Lot 1 PS313144, Lot 1 TP411206) from the Public Park and Recreation Zone to the Activity Centre Zone Schedule 1.
  • Rezoning George Street, Traralgon (CA 23 of 18), from the Commercial 1 Zone to the Public Park and Recreation Zone.
  • Rezoning George Street (CA 2008), Traralgon and 1 George Street (CA 2011), Traralgon from the General Residential Zone Schedule 1 to the Public Park and Recreation Zone.

There continues to be investment opportunities, particularly in the retail and commercial sectors, so for more detail and specific insight do not hesitate to call us.


Bibliography

Bradley, A., 2019. State of the property market. [Online]
Available at: https://www.realestate.com.au/news/state-of-property-market/
[Accessed 1 April 2019].

Core Logic, 2019. Housing Downturn Loses Some Steam With CoreLogic National Home Value Index Down 0.6% In March. [Online]
Available at: Housing Downturn Loses Some Steam With CoreLogic National Home Value Index Down 0.6% In March
[Accessed 1 April 2019].

La Trobe City Council, 2018. Latrobe Planning Scheme Amendment C106 Part 2. [Online]
Available at: www.latrobe.vic.gov.au/files/39622336…/Latrobe_C106_Part_2_Panel_Report.pdf
[Accessed 1 April 2019].