Big drops in the property sales in the past 12 months may have shielded Geelong from greater home price declines, but points to a slow recovery in the housing market.
Analysis of the annual volume of properties sold in Geelong over the past five years shows last year was the lowest in the region’s biggest residential suburbs.
The figures from PropTrack reveal five-year lows in suburbs such as Belmont, Corio, Lara, Newtown, Ocean Grove and Torquay.
In Belmont and Corio, sales dipped more than 20 per cent year-on-year and were also well below the pre-pandemic volume.
Annual sales volumes peaked across the region at the height of the pandemic, when many buyers locked down in Melbourne were purchasing properties sight-unseen.
But outside of the Armstrong Creek growth corridor, sales volumes remain significantly below the peak recorded in January 2022.
Highton and Leopold were the only large suburbs where home sales were steady or increased throughout 2023.
Rising interest rates and cost-of-living pressures were key factors blamed for the fall property sales, but slowing confidence created a snowball effect on quality listings as more homeowners put off upgrading plans.
Gartland, Geelong agent Nathan Ashton said the depressed prices meant investors looking to sell on a strong yield were deciding to hold on, while a fall in activity on the development front also robbed the city of more stock.
He said changes to planning rules which meant properties previously open to three-lot subdivisions could now only be divided in two, eating in to developer profits.
“Some of the projects that have been touted to be built haven’t got off the ground because they just can’t afford to do so.”
Mr Ashton said higher changeover costs due to the risk of an extended wait to buy back in to the market was also leading to some trepidation among potential sellers.
Potential sellers could be waiting for the middle of the year when the consensus was showing that interest rates could start to come down, he said.
But Mr Ashton said the market needed to accept the reality that record low interest rates were behind us and that the price correction impacted both what people bought and sold for.
“Buyers are educated, if they see value and it’s a good home and a good location and it’s fairly priced, they’ll compete for it,” he said.
“If it’s overpriced or if the expectations are higher than what the market is prepared to pay, they’ll still make offers in line with where they see value.
“It’s a real sense of normality. They understand what their capacity to borrow is, and understand that rates are not going to change too”.
Geelong buyers advocate Tony Slack said the reduction in stock was being keenly felt in a fully developed suburb such as Belmont, one of the city’s biggest suburbs with more than 6500 residential properties.
“I’m probably most active in Belmont, or have been in recent years, but I’ve noticed a dramatic decrease in stock, and especially at that larger family home market,” he said.
It meant there was fewer opportunities for people looking to upgrade, which was holding back people putting their own properties on the market.
“You just don’t have the choice,” he said
“That’s probably one of the biggest reasons that in a climate of rising interest rates and uncertainty about your serviceability, that banks are more inclined to say you sell first before you get off to an auction and put your hand up.”
But Mr Slack said more first-home buyers were confident they’d picked the bottom of the market.
“There’s been quite a few first-time buyers going, if we keep saving, the market’s not going up, so it’s a good strategy so when the right property comes along we’ll be ready to go.
“Two things that give first-home buyers confidence is maybe we’ve seen the prices correction and maybe we’ve seen the peak in the interest rate cycle.”