Kyneton Property Watch Q4 2013

The following Property Watch report is the result of an investigation into the historic and current market trends within the Kyneton area, comprising the suburbs of Kyneton, Carlsruhe, Malmsbury and Tylden (collectively the Area or Kyneton). This report analyses the performance and behaviour of the residential property market in the Area, and highlights key historical performance characteristics and factors which are likely to be of influence in the future.

The Area

Kyneton and its constituent suburbs, located in central Victoria and to the North- West of the state capital, comprise a total land area of approximately 376 square kilometres and form a predominantly rural-residential district within the Macedon Ranges Local Government Area (the LGA). With 10 established townships throughout the LGA, Kyneton serves as one of the regions primary hubs with a high degree of connectivity afforded via the Calder Freeway. Kyneton is currently undergoing a demographic transition, with a notable increase in the number of weekend commuters, investors, families and holiday makers seeking the quintessential country lifestyle or getaway.

Kyneton Town Structure Plan and Urban Design Framework

One of the key drivers of the demographic and economic transformation currently underway in the Area is the gradual implementation of the local councils adopted Town Structure Plan for Kyneton, with an outlook to the year 2036, and the Kyneton Urban Design Framework (the Urban Design Framework). The Town Structure Plan aims to foster economic growth and develop and improve infrastructure while retaining and strengthening town character. Key issues informing the plan include consolidating land uses (retail, education, medical, agricultural and industrial) and respecting environmental and heritage characteristics of affected areas. The Town Structure Plan will facilitate the development of the land within the Area, including pockets of land bordering the Calder Freeway to the north and railway line to the south, for residential, commercial and other related purposes.

Detached Housing

There has been a structural change in the market for detached housing in Kyneton, driving a notable upward shift in the price point composition of transaction volumes. An influential factor underlying this movement is the expectation-driven demand arising from the adoption of the Town Structure Plan and Urban Design Framework. Specifically, comparing the six-month period to August 2013 with the same period in 2009, price points including and above the range of $300,000 to 399,000 have generally recorded increases in volume (by as much as 71 per cent), while all price point ranges below this have recorded reductions in volume of at least 76 per cent. The most significant volume of transactions, as measured by price point, was recorded in the range of $300,000 to 399,000, accounting for approximately 48 per cent (28 discrete transactions) of all detached housing transactions during the period. The total volume of detached housing transactions rose 16 per cent from the prior period, to 58. The median price recorded for detached housing sales fell approximately 9 per cent during the current period (to $341,500) which is indicative of the variety of new stock being released onto the market. As such, the level of significance of this fall is relatively low. It is likely that a reasonable level of median price volatility will be evident in the medium term, generally around an increasing trend, as the Area gradually develops in accordance with the Town Structure Plan and Urban Design Framework. Since the six-month period to February 2011, the median price recorded for the area has trended within a range of approximately $357,375 +/-5.3 per cent. Potential buyers should take note of both the quality of stock and potential development opportunities when making a purchasing decision in the Area.

Vacant Land and Agricultural Property

Transaction volumes for vacant land in the Kyneton area increased during the period, up approximately 21 per cent (17 discrete transactions), while the median price recorded fell approximately 2 per cent (to $170,000). This is again consistent with the gradual release of new stock, and is more likely indicative of the specification and quality of the transacted stock than the overall direction of median price growth in the Area. Since the six-month period to August 2009 the median price for vacant land in the area has risen over 78 per cent, and the five year average growth rate of more than 13 per cent compares favourably with most regional areas in the domestic market. The 10 year growth rate is similarly impressive, with the median price of vacant land in the area appreciating at an annual average rate in excess of 9 per cent.

Transactions involving agricultural land in the Area are of particular interest given the ongoing development of land for residential purposes in line with the Town Structure Plan and Urban Design Framework. While relatively low transaction volumes have been recorded historically, these properties are inherently larger in area and in some cases represent significant opportunities for change of use redevelopment. The median land size recorded for agricultural property transactions during the two years prior to August 2013 was 83,400 square metres.