Area Specialist Geelong City August Market Update

1. Shifts in Geelong Rental Market: Where Rents Are Rising and Falling

In the latest PropTrack quarterly data, Geelong's rental market has shown mixed trends. Over the past three months, rents have decreased in 10 suburbs while remaining steady in 20 more. However, 27 areas experienced rent increases, with rises between $3 and $40 weekly.

Key suburbs where rents dropped include Barwon Heads, Hamlyn Heights, Newtown, Ocean Grove, Waurn Ponds, Herne Hill, and Winchelsea for houses, and Ocean Grove, Herne Hill, and Geelong West for units. On the other hand, Fyansford, Anglesea, East Geelong, Armstrong Creek, and Portarlington saw significant rent increases. Despite these changes, the rental market remains highly price-sensitive. Homes priced around $500 per week are being leased quickly, while properties above $750 per week are experiencing slower demand. However, this is expected to change by November, when higher-priced rentals typically see increased activity as families prepare for the new school year. Additionally, the market has witnessed a sell-off of ex-rental properties, leading to an influx of new investors who are bringing fresh rental stock to the market, which could help stabilize prices in the long run.

2. Major Development Site Sale in Geelong

A significant transaction has taken place in Geelong with the sale of a 7111 sq m "supersite" located at 33-41 McKillop Street, 36-40 Little Myers Street, and 107 Gheringhap Street. While the exact sale price remains undisclosed, it is speculated to exceed the $22.6 million paid for Geelong’s Civic Centre Car Park in 2022.

This prime site, situated in Geelong's health precinct, offers a unique opportunity for future development, with potential for commercial, medical, residential, or mixed-use areas. The site comprises eight titles, with its strategic location at the entrance to the CBD making it highly desirable. The property's existing buildings include the office headquarters of Gforce Employment and Recruitment and the Geelong Bank, providing immediate income opportunities while the new owner plans the site's future. The sale attracted significant interest, with six formal bids from local, Victorian, and national groups, reflecting strong confidence in Geelong's growth potential. The new owner is expected to explore a range of development options that could significantly enhance the area's services and infrastructure in the coming years.

3. Growing Trend: More People Moving to Geelong

Geelong continues to attract new residents, particularly from capital cities, as people seek to escape the hustle and bustle of city living. According to the latest Regional Movers Index, there has been a 27% increase in people relocating to regional Australia, with 8% of new Geelong residents coming from capital cities. The Surf Coast is also seeing significant growth, becoming one of the fastest-growing areas in the region.

This trend is part of a broader pattern that has been building over the past decade, with the COVID-19 pandemic serving as a major catalyst for increased migration to regional areas. Many Australians have reassessed their living arrangements, prioritising space, lifestyle, and community over proximity to city centres. Geelong's combination of coastal living, growing infrastructure, and proximity to Melbourne makes it an appealing destination. This sustained influx of new residents is likely to fuel continued growth in the local property market, with increased demand for both housing and rental properties.

4. RBA Update: Cash Rate to Remain Steady

The Reserve Bank of Australia (RBA) has recently indicated that the cash rate is likely to remain steady for an extended period. While there was consideration to raise rates, the decision was made to keep them unchanged to balance the risks. The RBA emphasised the need to remain vigilant about inflation, stating that the policy would need to stay restrictive to manage any potential risks.

For the Greater Geelong and Surf Coast areas, this decision brings some stability to the housing market, particularly for potential buyers and investors who might have been concerned about rising interest rates. With the RBA’s cautious approach, borrowers can expect a period of relative stability, which may encourage more activity in the property market. However, the RBA also hinted that an immediate rate hike could be warranted if inflationary pressures rise, which means the current environment is still one to watch closely. The potential for long-term steady rates could support continued investment in the region, contributing to ongoing growth and development in Geelong and the surrounding areas.