Open for inspections are now once again permitted. It’s great news for Melbourne’s resurgent property market, as it continues to gather momentum into 2021 and rebound from COVID-19. It's also a timely moment to pay tribute to property industry workers and customers alike, and their ability to successfully overcome what’s been a very challenging year for Victorians.
Sea change property buying - good idea?
SeaChange was recently back on the TV and it gave me a slight sense of trepidation. Although the show’s original run was a mere three years between 1998 and 2000, its impact on the imagination and ambition of the property-trading public lasted far longer.
The fictitious exploits of erstwhile citysider Laura Gibson in isolated Pearl Bay inspired many prospective downsizers. In the early-to-mid noughties, I would regularly sit across from couples contemplating trading in their suburban homes and lifestyles for a place beside the seaside or its tree change equivalent.
My unease stems from my memory of the somewhat sketchy planning I would encounter: professionals intending to leave well-paid roles in the city and dispose of quality town-based assets to take their chances in sleepy villages often several hours’ drive from the nearest capital.
Perhaps I worried too much. There’s evidence that some sea changers from twenty years ago did quite well financially. For instance, Barwon Heads on Melbourne’s Bellarine Peninsula was the shot location for the original SeaChange. According to Domain Group, the median price jumped from just $116,250 in 1998 to $897,000 in 2018. That’s an average annual price growth of over 10.5%, superior to the performance of many city suburbs. And especially impressive if one had also traded down from a comparatively expensive suburb beforehand.
Proponents of the sea change approach could no doubt point to tens of other waterfront regional locations around the country delivering similar results: say Noosa Heads and Burleigh Heads in Queensland or Avoca Beach in New South Wales.
But the hard data shows that these places were the exception rather than the rule. CoreLogic has been tracking annual changes in dwelling values for the combined capitals versus combined regional areas over several decades. Since the mid-nineties there have only been two sustained periods when annual growth for the combined regionals has outshone the combined capitals. The first was the early noughties – when no doubt the SeaChange-inspired phenomenon was a factor – and the second occasion was the last two years.
Moreover, the regional places that did outperform tended not to be the far-flung and isolated nooks idealised by SeaChange’s Pearl Bay, a place literally cut off from the nearest metropolis because the bridge was always down. They aren’t half-a-day drive from a capital city. Rather they tend to be within commuting distance of a capital city like Sydney or Melbourne or major satellite town like Geelong or the Gold Coast.
Look at genuinely remote seaside towns like Eden in NSW, Warrnambool in Victoria and Hervey Bay in Queensland and the performance is far poorer, somewhere between 2 and 4 per cent average annual price growth over the last ten years.
Of course, money isn’t everything and there are many sea changers at peace with the trade-off they made. But I’ve also spoken to several long-time sea changers who would like to come back to the city – say to be closer to grandchildren or medical specialists – but now feel locked out.
Indeed, the best-placed sea changers are generally those who were able to retain a wealth-generating asset in the city, typically as a rental property.
So I hoped you enjoyed SeaChange: Paradise Reclaimed, but be careful of forming any romantic plans that burn your bridges to the city. Richard Wakelin