Regional centres Geelong, Ballarat and Bendigo offer best sub-$500,000 property investment opportunities in Victoria: HTW

Victorian property investors looking for opportunities under $500,000 should look at apartments in the inner-Melbourne suburb of St Kilda East and also cast their nets as far as Geelong, Bendigo and Ballarat, according to analysis by Herron Todd White (HTW) valuers in the latest Westpac Property Report.

“Throughout Victoria and Melbourne there are abundant opportunities for buyers in the under-$500,000 price range, and in this sought-after end of the market prospects for future capital growth look good virtually across the board,” HTW chief executive Brendan Hulcombe.

HTW says St Kilda East is very appealing to investors on a tight budget and would provide change on $500,000, with apartments trading at a median unit price of $465,000 and yields ranging from 4% to 4.5%.

According to HTW, affordability – particularly in the apartment market, is encouraging investor interest in St Kilda East, which is just six kilometres from the Melbourne CBD.

Other factors keeping rental demand high are good transport connections via trams servicing the main shopping hubs like Chapel Street and Acland Street and the cosmopolitan feel of Carlisle Street, as well as a predominantly young local population “creating a compelling urban lifestyle that should underpin future capital growth”.

There are currently a spate of new developments being marketed off the plan to investors, including the Hotham Street Apartments, due for completion in 2013, which will offer 18 dwellings with basement car parking with prices starting from around $380,000.

Geelong

Geelong also offers opportunities under $500,000, with the key drawcards of this market being a manageable commute into Melbourne and more affordable prices.

“Employment opportunities are strengthening in Geelong, and a population shift away from Melbourne towards the urban growth boundary has seen Geelong’s population continue to increase.

“Geelong is viewed as an investment hotspot and a good all-round performer for 2012. Rental yields range from 4.5% to 5% and median house prices rose by 5.7% last year giving investors a healthy overall return,” says HTW.

Geelong has a median house price of $530,000, with apartments ranging from around $290,000 to $390,000. Vacancy rates are also low at 2.3%.

Bendigo

HTW notes that the Bendigo residential market has stabilised over the last quarter with demand remaining buoyant alongside reasonable sales turnover providing good opportunities for investors to take advantage of the city’s current rental shortage.

Bendigo yields are generally between 5.5% and 7%, with a current median house price of $277,500 and $227,500 for apartments, meaning investors could quite possibly by one of each and still stick to their budget of $500,000.

“Latrobe University plays a key role underpinning demand for rental accommodation in Bendigo, and yields are higher than for other nearby regional centres like Echuca and Shepparton. Proposed investment in the city’s health infrastructure by the state government will continue to promote Bendigo as a major regional growth centre,” notes HTW.

HTW valuers say a land shortage is emerging in Bendigo and price growth in residential house lots has become quite noticeable in recent months.

“As a guide, some new developments such as the Evergreen Links Estate in Eaglehawk have experienced price rises of 25% over the past year. This shortage points to good prospects for further capital growth in the future,” says HTW.

Ballarat

A growing population and a very low vacancy rate at around 1% make Ballarat a good option for investors.

“Ballarat property prices have remained stable and affordable with median prices of $285,000 and $223,750 for houses and apartments respectively,” says HTW.

“Investors are experiencing yields ranging from 4.75% to 5.5%, and the vacancy rate is very low at around 1%,” says HTW.

Ballarat’s current population of around 96,000 people is forecast to rise to 130,000 by 2030 due to regional employment opportunities.

According to HTW, the desirability of Ballarat is further enhanced by its mix of period houses and modern homes, with the one hour commute to Melbourne attracting buyers priced out of the metropolitan market.

“The Ballarat West Growth Area and the Alfredton West Precinct Plan have resulted in significant rezoning of land, and this will lead to the development of new major activity centres along the lines of Lucas – Ballarat’s newest suburb, which is expected to release up to 2,300 new land plots over the next 12 to 14 years,” says HTW.