Median house prices in Ballarat have slumped, partly due to a lack of first home owner incentives.
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News of the decline comes after the release of the Australian Housing Outlook 2014-17 report on Tuesday which suggested that first home buyer demand continued to decline after showing signs of steadying in the first half of 2014.
The report said there had been a short-term impact on the market as incentives for buying a first home were progressively removed, leaving a “vacuum of first home buyers in the established market immediately afterwards” and a “delay in the next round of first home buyers who now have to accumulate a larger deposit to compensate for the lack of financial assistance”.
The report said that median house price growth in Ballarat was 3.9 per cent, below Geelong at 7 per cent and Bendigo at 8 per cent during the 2013-14 period, and was reflected in the weakness of new dwelling construction.
The figures were backed by Cunnington Homes builder Terry Cunnington, who said his clientele was skewed towards investors.
“I found it slowed down when state government pulled out the home buyers grant. Now I’m really catering to the investment buyers,” he said.
The report said that the growth was impacted by the timing of the residential cycle in Melbourne, which helped drive migration between the capital and regional cities, citing that Ballarat house prices would increase 11 per cent in the next three years to 2016-17.
Real Estate Institute of Victoria spokesman John McMahon said Ballarat could not expect to see the 20 per cent housing growth seen in Melbourne during the same period.
“Regional centres in general don’t see the massive dollar growth seen in Sydney in Melbourne. Those two markets have really been hit by overseas investment,” he said.
“We saw spurts of significant growth in the last decade, which was somewhat artificially created because of government policy.”
While the report said “tight” vacancy rates were the result of the fewer developments, Mr McMahon said Ballarat would turn to different types of housing to meet demand.
“More and more people are in houses with less and less people,” he said.
“We will see more medium and high density housing, with large numbers of properties with only one or two occupants.”
The report cited that the completion of the Regional Rail Link in 2014-15 would create potential for house buyers to live in regional Victoria while commuting to Melbourne for work.
alex.hamer@fairfaxmedia.com.au