All across Australia, real estate prices are booming. Geelong is no exception. According to CoreLogic, average home prices in Geelong have increased an average of $45,000 year over year in the region since January 2021.
Further, CoreLogic reports indicate that Geelong's median residential real estate price increased 5.1% over the quarter or 25.7% year over year. This is slightly ahead of national trends, which are up 21.6% year over year as of October 2021. Geelong is also outpacing Melbourne where house values rose 19.5% year over year.
And sales volumes are still rising, according to news.com.au. Low interest rates are behind some of the high volume of sales, with the Guardian reporting that the country's average home loan rate sits around 2.3%. The cost of inflation is currently at 3.8%.
So how can these trends impact your small businesses? Like so many answers, it depends on your sector. Many of those businesses even tangentially tied to real estate — from the trades to furniture retailers or financial services — could see an uptick in demand as the turnover of properties continues and the population of new residents swells.
Real estate lens
First, real estate pricing and trends are a useful way to think about the economy and gain insight into deeper trends. For example, why might Geelong be garnering more growth than Melbourne? This will have to do with trends in workplaces and the value of lifestyle amenities. For example, surfing spots and lovely beaches like Thirteenth Beach and Ocean Grove are an easy reach from nearly all residences in Geelong. Traffic congestion isn't a problem in Geelong like it is in Melbourne — but the frequent opportunities to find frequent interesting eateries and cafes are similar, making for a rather enjoyable environment.
The city is located about 45 minutes from Melbourne, making some commuting possible. If you are a local business owner thinking about how to benefit from these consumer preference shifts in the marketplace, it can be wise to step back and re-examine some of these factors. Your insight may lead to ideas and strategic shifts in your business.
Public sector insights
Considering real estate trends can likewise offer insight into overarching economic conditions including government decisions. For example, the housing-focused stimulus has expired on a national level. This factor, combined with the gentle tightening of credit assessments as of early November 2021, suggests that perhaps the housing market will begin losing momentum in the near future.
If you are considering purchasing real estate in light of the current trends, WMC Accounting can help you identify the tax consequences of various options. Contact us today to learn more.