Mildura Property Watch Q4 2011

Scope
This report analyses the current trends and performance of the Mildura Region house, unit and land markets. It further highlights this regions characteristics to provide an understanding of potential future trends and the type of product in demand by the local market. For the purposes of this report the Mildura region comprises the neighbouring suburbs highlighted in the map to the right.

Area Characteristics
Positioned alongside the banks of the Murray River, Mildura is located in the far north-west corner of Victoria, with many of its neighbouring suburbs crossing the river boarder into New South Wales. Located approximately 475 kilometres north-west of Melbourne, Mildura is more easily accessed from Adelaide City in South Australia, which is only 330 kilometres south-west. The Sturt and Calder Highways provide access to both capital cities, however Mildura stands as a self-efficient and sustainable community in its own right. Understood to be the centre of Victorias food bowl, the regions economy is heavily reliant on agriculture, with a focus on citrus fruits.

Mildura Region House Market
The Mildura region house market median price closed the six months to June 2011 at $205,000, a 2.5% increase on the previous year. This continues a trend of subdued price growth in the region, which has seen the ten year growth rate figure close at a relatively modest average of 5.1% per annum.

Sales volumes for the six months to June 2011 fell to their lowest level in the past ten years, when 309 transactions were recorded. This represents a decrease of 32% on the five year average number of transactions for a six month period. Whilst still significant the 32% is at the lower end of decreases seen across the Victorian market over this period.

The price points table at right shows relatively little movement between the price brackets since June 2009, reflecting the modest price growth over this period. The only significant change has been the decrease in sales under $100,000, from 12% to only 4% in June 2011.

Of the 14 houses purchased under $100,000, twelve were shared equally between Red Cliffs and Ouyen. The $400,000+ bracket saw seven of the nine sales recorded in Mildura and surrounding suburbs. A property sold by PRD nationwide in Merle Court, Mildura represented the peak of the market when it transacted for $580,000 in February 2011. The lowest price paid was $27,000 for a property in Rowe Street, Ouyen in May 2011.

Mildura Region Unit Market
Having reached a peak of $170,000 in the previous period, the median price for units lost all of this gain to return to its previous levels, when it closed the six months to June 2011 at $156,000. This has contributed to a very flat five year average annual growth rate of only .8%. The ten year growth rate stands at 4%, reflecting the stronger price growth in the early 2000s, particularly between December 2001 and December 2003.

An analysis of properties purchased and resold since the start of 2001 shows a much healthier return of 9%. The early 2000s again proved to be the stronger growth period, with resales occurring before 2006 returning on average 13% average capital growth, and those after returning 7% on average. The discrepancy between returns for resales (9%) and all units (4%) can partly be explained by assuming some capital improvements on properties before the resale. The other factor is a relatively strong supply of new unit stock coming onto the market at what appear to be very competitive prices.

The price points graph at right shows some relatively subtle movement towards the higher price brackets. The share of sales below $150,000 has barely moved over the five periods shown, however in the six months to March 2011 the share below $100,000 has decreased markedly to 3%. At the higher end of the market, sales above $200,000 have moved from 25% of all sales to 37% over the five periods.

The 34 transactions for the six months to June 2011 represented the lowest number of transactions in a decade. Mildura dominated transaction numbers with 28 sales, Merbein (4), Irymple (1) and Red Cliffs (1) made up the balance.

The peak of the market for a single dwelling was realised in February 2011 when a property in Commercial Street, Merbein sold for $395,000. A unit in Wade Avenue, Mildura represented the low price point, when it sold for $80,000 in June 2011.

Mildura Region Vacant Land Market
The Mildura Regions vacant land market median price has fluctuated significantly in the last five years. The six months to June 2011 has seen the median price close $4,000 lower than the previous six months, at $84,000. The five year average annual growth rate stands at a negative 1.4%. This is in stark contrast to the previous five years which showed an annual average growth of 12.4%. These figures suggest significant changes in the supply/demand balance over the last five years.

Transaction numbers in the last five years have averaged 168 for a six month period, whereas the previous five years averaged 223 transactions. The combination of softening demand from first home buyers for house and land packages and the loss of some agricultural activity in the region, particularly in the Viticulture area, has seen demand falling whilst supply has remained strong.

Another factor affecting the volatility in the median price is the larger than normal range in prices. There were five transactions below $40,000 for the six months to June 2011, on average these sales represented a price of $53m_. A waterfront property sold in January 2011 for $800,000 representing a price of $1,401m_. Few markets see such significant variation in price.