Focus On Period Grandeur In Ballarat - On A Budget

Investors have traditionally looked to Ballarat for higher rental yields, tighter vacancy rates and premium housing opportunities for a relatively lower cost when compared to capital city prices. Cate Bakos explains.

Focus On Period Grandeur In Ballarat - On A Budget
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Just shy of 120km over the Westgate Bridge and down the national highway west-bound is Ballarat, a provincial city with 1850’s gold rush era hallmarks and resplendent Victorian elegance. Home to circa 100,000 people, characterised by superb architecture, impressive schools, a large hospital precinct, a wide variety of employers (both public and private), and the Eureka Stockade flag (in one of my favourite regional art galleries), this city is unsurprisingly on the map when it comes to recent capital growth.

In the face of difficult lending changes, Melburnians (and others) have turned to some of our beautiful regions for sea-change, tree-change or sheer affordability solutions. Dating back to 2014 APRA (our prudential regulator) tipped off our lenders that things had to change in relation to investment lending numbers. Fast-forward to 2018, not only have APRA’s instigated changes gripped our investor market, but the credit tightening has adversely impacted many home buyers too. Servicing calculations, (the projected interest rate repayments at hiked conservative levels, combined with stricter scrutiny of lifestyle expenditure and financial commitments) have impacted borrower numbers and borrowing capacity, and as a result, we’ve witnessed stronger numbers of sub-$500,000 buyers.

In addition to the credit tightening, our State-based stamp duty concession for first home buyers has played a part in the growth trajectory of our more affordable regional centers.

Ballarat, Bendigo and Geelong have all experienced out-performance growth, but it is Ballarat that attracts many tree-changers, commuters, local buyers and downsizers. The art-centric city boasts beautiful period housing at a fraction of Melbourne’s period housing price tags. It’s not uncommon to find stunning Colonial-era brick homes and old pubs, Victorian stunners, Federation beauties on large inner-city allotments, miner’s cottages in traditionally poor (yet up and coming) areas, and mid-century triple fronted brick homes, all within a ten-minute drive. Ballarat is an eclectic, homely and cold city with an emerging food and wine culture that is enticing people to live in the city.

Aside from the owner-occupier drawcard however, investors have traditionally looked to Ballarat for higher rental yields, tighter vacancy rates and premium housing opportunities for a relatively lower cost when compared to capital city prices.

Between 2010 and 2014, six per cent gross rental yields were not uncommon for the sub- $250,000 priced homes, but since our recent capital growth run over the last four years, Ballarat’s impressive house price increases have adversely impacted the median rental yield figures. The rising rents have not kept up with the rising house prices; and this is not unusual. Take a property in Wendouree as an example; a well-maintained, triple fronted brick 1960’s dwelling near to shops and train station that sold for $245,000 in 2014. It has been rented for $275pw per week and sold in May 2018 for $305,000 without any capital improvements conducted. 

A particularly memorable acquisition this year was this subdivided half-pub featuring rear garaging and courtyard. Established in 1868, the Argyle pub has an interesting history involving the supply of liquor outside of licensed hours, and a fantastic story of a publican’s wife taking over the management of the hotel.

These days the high ceilings, intricate entry hall arches, enormous rooms and outlook of Doveton Street through the grand floor to ceiling Victorian windows grip most professional tenants and ensure that this dream home ex-pub remains in strong demand for all professional renters alike. Secured for $450,000 mid 2018, this stunning ex-pub remains a favourite client acquisition of ours.

Soldiers Hill is the favoured suburb for most Melburnian investors who aspire to a Fitzroy styled suburb with turn of the century buildings, brick terraces and wide, tree-lined streets and the beautiful city center within short walking distance. Soldiers Hill has enjoyed a reported 8.2% average annual capital growth of late and the popularity of postcode 3350 continues to attract newcomers to the area.

The underlying growth prospects for Ballarat as a city relates to job growth, increased employer options, new government contracts and easier commutes to Melbourne. Rail upgrades that have enabled faster train travel, increased services and the continued introduction of government de-centralised services have enabled Ballarat to become a stand-out option for first home buyers, upgraders, downsizers and local buyers.

Provided new Ballarat inhabitants can withstand the cooler temperatures, this beautiful inland city deserves an expedition, even if it’s just for a long weekend and a Sovereign Hill visit. Things have come a long way in Ballarat since I was a kid.

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