Buninyong Property Watch Q3 2011

Scope
This report analyses the current trends and performance of the Buninyong Regions house and land markets. It further highlights the areas characteristics and demographic trends to provide an understanding of the type of real estate product in demand by the local market. For the purposes of this report the Buninyong Region comprises the eight suburbs of Magpie, Mount Helen, Navigators, Yendon, Scotsburn, Durham Lead, Scotchmans Lead and Buninyong.

Area Characteristics
Buninyong holds a rich history as Victorias first major inland communities, dating back to the pre-gold rush era. Settled in 1839 as a pastoral settlement, the region expanded rapidly after 1851 with the official finding of Gold in the area. The towns wide streets were planned in expectation of further growth, however prosperity ended with the gold rush thus the town reverted and continues to exist today primarily as a quaint, rural settlement. Being in close proximity to the growing regional centre of Ballarat, growth prospects for Buninyong are quite strong, and population growth has exceeded Victorian averages.

Buninyong House Market
The Buninyong region house market has surged to a new median price high of $332,000 for the six months to March 2011. This figure is $39,500 greater than the corresponding period from the previous year, representing annual growth of an impressive 13.5%. This continues a recent trend in strong price growth, with annual growth since March 2009 at 12.5%. When compared with the longer term ten year growth rate of 8.6% these recent figures represent a significant upward trend in price growth.

An examination of the price points table indicates a significant decrease in the sales of houses in the lower price brackets. The share of sales for houses below $300,000 has decreased by 48% since March 2009 when they represented more than half of the market, to represent only 34% of the market in March 2011. The ability to purchase a house in the Buninyong region for less than $200,000 appears to be diminishing rapidly.

In line with other Victorian markets, sales volumes were significantly lower than previous periods. The six months to March 2011 resulted in only 35 sales, this represents a 40% decrease on the five year average sales for a six month period of 58.

Between them Buninyong and Mount Helen shared almost 90% of the sales with 31 in total, whilst Navigators and Yendon shared the balance of sales. A property in Simpson Street in Buninyong represented the peak of the market when it sold for $805,000 in October 2010.

Buninyong Vacant Land Market
The Buninyong vacant land market is characterised by fluctuating median prices due to the relatively low sales volumes. In the six months to March 2011 there were only 14 sales recorded, making it difficult to draw any strong conclusions in terms of pricing trends. The softening sales level represents a 52% decrease in activity compared with the five year average of 29 sales for a six month period.

The median price closed the six months to March 2011 at $135,000, up $16,000 from the close twelve months ago, representing an annual growth of 13.4%. If we take a longer three year view the average annual price growth has been 8.7%. The ten year average annual price growth which tends to remove short term fluctuations, especially in low sales volume markets, shows a healthy 12.1% increase per annum since March 2001.

An analysis of land that has been purchased and resold in the last decade in the Buninyong region shows a remarkable average annual capital growth of 23.5%. Having come off such a low base (the median price for the six months to September 2000 was $36,000) it is not surprising that those who purchased their blocks prior to 2004 achieved the greatest gains, with these resales averaging 32% annual capital growth.

The Buninyong vacant land market is closely tied to the Ballarat market which is far larger in terms of total sales (158 sales compared to 14 for the six months to March 2011). Having been 31% below the Ballarat market (September 2000 median price) Buninyong now shares the same median as at March 2011. The increasing urbanisation of Ballarat may see the Buninyong land market eventually overtake it in terms of median price, given the appeal of Buninyongs predominantly rural atmosphere with some buyers.

The price points table at right shows a steep decline in the number of blocks being purchased in the less than $100,000 bracket. A search of domain.com.au shows that blocks are still obtainable at this price point (for example see Zoe Drive, Mount Helen), but they are certainly diminishing as a share of total sales. There has been little movement in the brackets over $200,000 as a group, whereas the $100,000 to $199,999 bracket has grown to dominate sales.

Buninyong Unit Market
Perhaps due to its low density, more rural based lifestyle the Buninyong region unit market has been very slow to emerge. It is not unreasonable to expect that this may change over time given its proximity to the university precinct of Ballarat.

The median price for units closed the six months to March 2011 at $239,000, putting the long term ten year growth rate at 7.6% per annum. An analysis of resales for units purchased and sold within the last ten years show an average return of 8%.

Reviewing sales that have occurred over the last three years the larger centres of Buninyong and Mount Helen share all of the sales between them. Buninyong had the vast majority of sales with 81% and Mount Helen the remaining 29%.

Local property managers are expecting enquiry from students as early as September for properties available in and around the university, but particularly the Mount Clear, Mount Helen and Buninyong areas.