Ballarat is a major Victorian regional city, just over 100 kms north-west of the state capital Melbourne. Jarrod McCabe, director, Wakelin Property Advisory, interviews Tim Valpied, director, Jellis Craig Ballarat, 17 September 2020, as part of the Rewarding Property Decisions series, about the nature of the city’s residential property market and its performance since the start of the covid-19 pandemic in March 2020.
– Hi everyone. My name is Jarrod McCabe. So the idea of our new video series is going to be to provide viewers with insights into different investment strategies and ways you can go about things. Now, obviously, given that we’re a property company, the bulk of it will be focused on property investment. However, along the way, I’m hoping to certainly speak to people who look at investing in different asset classes as well.
But I thought today we’d start off in regional Victoria, and more specifically in Ballarat, given that Melbourne is currently still in stage 4 lockdown, and the market is very much in hibernation mode at the moment. If you go to the regional cities like Ballarat, Bendigo and Geelong, there’s still quite a bit of activity occurring. And with a lot of discussions around remote working at the present time, it’s driving a lot of people to consider both tree and sea change. So Ballarat is a good option from that perspective. But also when you start to look at affordability of living, there’s certainly good opportunities there. So I’m joined today by Tim Valpied. Tim is a veteran of the Ballarat real estate market. He’s very highly regarded and well respected with over 30 years experience. And he’s currently a director at Jellis Craig.
Welcome, Tim, thanks for joining me.
[Tim] Yeah, thanks Jarrod. Good to be here.
Tim and I have got a long history. I actually did work experience with Tim when I was still in high school. Certainly it was a big driver of me getting into the property market.
So Tim, can you tell us a bit just, I guess, to start with one of the obvious questions around how the Ballarat market has performed since the start of this year, obviously with the market generally opening fairly well off the back of a strong finish to 2019, but then obviously with the first and second waves of COVID, how’s that impacted Ballarat?
[Tim] Well, to suggest it’s been an interesting year would be an understatement, but basically the beginning of the year we started very, very strongly. There was fantastic interest, particularly the last 10 years, but the last five years in particular the interest from people changing for we call it a tree change here has been growing year on year to approximately 50 or just a bit over 50% of our transactions come from Melbourne. In that respect, it’s been growing year on year. Then obviously COVID hit and we sort of in our office, March and April you would have thought that someone had turned the Internet off and our phones, and really, Ballarat market hit the skids. In relation to I guess the recovery from there though, May turned around to a degree. And then June, July, August, back to back we’ve had three very strong months. And talking to some of our colleagues in Melbourne, obviously a very different scenario. But having said that, a lot of the activity of recent times has been off the back of local inquiry, but the recovery has been… July and August is as good as pre-COVID, so it’s been quite, quite strong.
So that probably leads into another question I was going to ask you, particularly, as you said, that given that a large portion of your buyers are made up of Metropolitan Melbourne. How has the lockdown in Melbourne impacted on Ballarat? I mean, have you seen less numbers? Have price been impacted?
[Tim] Yeah, I think. Look, our very pointy end of the market, the top end, and when we say that in Ballarat is above $1.5m and that market has had a significant impact. There are some transactions going through, but the inquiry is not as strong as it once was. And that is probably more due to the fact that there’s very little executive level employment and medico appointments coming through with people changing roles. So when you talk about metropolitan buyers coming to Ballarat, are the bulk of those looking at a tree change or what percentage do you say of that 50% would be investors versus looking for that lifestyle change? Well, it’s interesting. If we look at the subdivisions and we manage a really large subdivision called Winterfield out in Winter Valley, which is a relatively new suburb in Ballarat.
So that’s at Delacombe Way, isn’t it? Down in the Southwest?
[Tim] Yes and it’s right next to the Delacombe Town Centre. So that we get a mix, but the interest from Melbourne has mainly been investor interest. But in terms of the housing and through the period style homes, through the city centre and also the lifestyle properties, those ones around the edges of Ballarat which are sort of on 5 and 10 acres. Acreage, yeah. Small acreage. That is more owner occupier.
So is there a rough percentage do you think as to, I mean, it’s hard to say I’m guessing, but-
[Tim] Look, it is. I think if we looked at the breakdown, I think it would be about 80% in new subdivisions would be investors. And I think it’d be a very similar number the other way in terms of the broader markets as in the more- Established. Yes, established market and lifestyle market.
So how do you typically find it with your engagement that the metropolitan buyers differ from the local buyers?
[Tim] The metropolitan buyers generally speaking seem to be… They’re usually They’re not first home buyers, traditionally. Some are but traditionally they’re not. So we’re finding they’re a bit better educated and they’re coming just with more confidence in the market and how they can… They’re generally in a position with the only condition in a contract is often maybe a building inspection. But being predominantly a private sale market we don’t do a lot of auctions up here that those conditions are fairly widely accepted. Most vendors are expecting that that will be the case.
I think you’ve said to me in the past that as a rough percentage of your transactions sort of 60, 70% of them would be subject to finance.
[Tim] Yeah, I think now it would be even higher than that.
So if we focus more on that investment avenue, what percentage of your properties under management at the moment have tenants been seeking rent relief under the new government regulations?
[Tim] Well, it’s actually been less than 10%. So it’s actually been our property management portfolio. We manage over a thousand properties and it hasn’t really been impacted that much. And I just know across the group we’ve certainly had less than our Melbourne colleagues in the Jellis Group. So it’s certainly, yeah, but it’s been less than 10%.
Do you find that you get much and it’s probably not, but the Airbnb type accommodation, do you get much of that, particularly with some of the tourist attractions that are up around Ballarat? People come up obviously for Sovereign Hill and a few other things, but is there much of a demand for that type of accommodation?
[Tim] Look, there seems to be. We don’t manage any of it ourselves. But yes, there seems to be still quite a lot out there. Some have followed back into traditional property management where they’ve decided to go back and just get a secure tenant, because obviously this COVID situation has had a pretty significant impact on that market. But we’re still leasing properties quite readily, so it’s been a pretty good safe bid for people to fall back in, and I dare say they’ll go back that way in the future.
And what’s the current vacancy rate? Do you have any idea on that in Ballarat at the moment?
[Tim] Well, it’s now 2.4%. Pre-COVID it was hovering around two, but the peak of COVID it got out to about 2.8%. Still not too bad though. No, it’s been pretty good, but we’ve been, I guess, blessed with the movement of people and people have still been able to. We’ve always right through this whole pandemic we have still been able to perform appointment at property. So one-on-one and obviously with COVID-safe initiatives and so on, but we haven’t ever been in a position like where Melbourne’s at at the moment where we actually can’t do our job, so to speak.
So I guess when we talk to a lot of our investor clients, we focus in Melbourne, we focus on period style homes. And in Ballarat, obviously Ballarat is very well known for its period style accommodation, obviously with the mining boom, for the gold rush and things. How have those types of properties, so typically in say Soldiers Hill or Ballarat Central, or even around Lake Wendouree and things, how have those periods style homes been performing? Is there still fairly good demand for those?
[Tim] There’s been huge demand for those. And I would also say pushing back over towards Sovereign Hill, so around Golden Point, Mount Pleasant, through those areas, which have traditionally often been forgotten, but they are so central. And as Ballarat continues to grow and spread, a lot of families are finding they’re looking for a bit more space and they’re quite happy to go out to schools and so forth. But the overall period style homes are still hugely popular.
Yeah, great. Well, that’s about all I had in terms of questions today. I really appreciate you joining me, Tim, and I’m sure everyone will find it very valuable, and hopefully catch up again soon.
[Tim] Thanks, Jarrod. All the best. Thank you, bye.