House prices are falling faster in Geelong than anywhere else in regional Victoria, according to the most recent market report from property data analysis and valuation company PropTrack.
While property prices in Victoria have dropped by an average of 2.45 percent since peak prices in February this year, home prices in Geelong have dropped by 4.5 percent in the same period.
PropTrack senior economist and report author Eleanor Creagh said while interest rate rises were the most important factor in house prices, in Geelong’s case the figures represented a natural correction to prices after such explosive growth through the pandemic period.
“Interest rates are the primary driver of prices at the moment, but we’re seeing this happen in areas, like Geelong, that were incredibly popular during the pandemic,” Ms Creagh said.
“As a whole, regional areas are holding up better than capital cities, but more in-demand lifestyle regions – Geelong, the Sunshine Coast in Queensland, the Richmond-Tweed area in New South Wales – which have higher value property types, are seeing prices fall the fastest.”
Ms Creagh said it was important to bear in mind the huge boom in prices over the last couple of years, as home prices in Geelong remain over 33 percent higher than before the pandemic.
“It’s important to put what we’re seeing at the moment into the context of the past two, two and a bit years, which is an extraordinary price growth,” she said.
“But we do expect that interest rates will continue to rise, which will reduce borrowing capacities. So it’s likely that will weigh further on home prices in the period ahead.
“I think it’s an important distinction to make, that the downturn we’re seeing is very much about reduced borrowing capacities rather than about mortgage stress and distress sales, and we think it’s likely to remain that way.”
But ultimately, Ms Creagh said property values would remain well above what they were before 2020.
“You’re looking at regions, some of which are up 50 percent on pre-pandemic levels, so you’d have to see values drop by a third before you get back to those prices,” she said.
“There have only been five years since 1990 where home price growth has been negative, and never by more than 10 percent.
“A 30-50 percent drop in home values is a statistically unlikely event.”
