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While house prices in regional Victoria remain well below their city counterparts with a median of $358,000, towns within commuting distance of Melbourne have experienced strong price growth in recent years, the Real Estate Institute of Victoria has said.
This includes Geelong, where the median house price increased more than 11 per cent in the past year to $680,000. The regional city is one of just 20 regional towns with a median house price above $600,000.
Meanwhile more than 210 regional towns recorded a median house price below $600,000 in the December quarter.
“[This will] provide choice for first home buyers looking to get a foothold on the property ladder at a price they can afford,” the REIV said.
“It’s likely that the recently announced new first home buyer initiatives in Victoria combined with the relative affordability offered by many towns in regional Victoria will encourage more buyers to purchase in areas further from the city, enabling many Victorians to move from the rental market to home ownership."
Strong capital growth across the state in recent times, particularly in metropolitan Melbourne where the median house price is now $770,000, has made access to the housing market more difficult for first home buyers and prompted new moves by the Victorian state government to help them get started.
The REIV has lauded the government's initiative, but also flagged an “unnatural consequence” of it being the removal of concessions for off-the-plan investment.
The changes include the removal of stamp duty for new and established homes under $600,000 as well as scaled duty reductions for homes valued between $600,000 and $750,000.
In addition, the First Home Owners Grant (FHOG) has also been doubled for buyers of new homes in regional Victoria, from $10,000 to $20,000.
They will take effect from 1 July.
Meanwhile both the REISA and REINSW have praised the Victorian government and called on their own state governments to take the same steps.
REISA CEO Greg Troughton called stamp duty a “heavy burden” on home buyers, one that is “severely” influencing the issue of housing affordability around the country.
REINSW president elect Leanne Pilkington said the NSW government has missed its chance to take a national leadership position in improving affordability for first home buyers - but that it's not too late for it to address the issue.
"Stamp duty concessions are essential at the lower end of the market to avoid the deposits of first home buyers being eaten up by such a pointless tax,” she said.
Ms Pilkington will become the REINSW president from November 2017.
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