VIC Ballarat Tip: The Capital of Western Victoria

Discussion in 'Where to Buy' started by Ko Ko Naing, 22nd Sep, 2018.

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  1. Ko Ko Naing

    Ko Ko Naing Well-Known Member

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    Hi PCers,
    After several years of real world investing experience in Ballarat, owning 3 investment properties there at the moment and having accumulated invaluable amount of knowledge from this forum, I feel that I need to give something back to the community. I hope the readers get some insights out of this post and find some good investment properties or first homes to live in. Please make sure that you do our own due diligence as well.

    Location

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    The city of Ballarat is located 110-ish km in the north west of Melbourne. It normally takes me 1.5 hours drive from Melbourne CBD. It’s just over an hour by V/Line train to get there. Known to be the capital of western Victoria, Ballarat serves as a regional hub around the western Victoria regions. As the third largest city in Victoria, it is in fact a main city that sits along M8/A8 western freeway towards Adelaide, South Australia. So distance-wise, it is a little bit further to Melbourne, when compared to Geelong, but closer, when compared to Bendigo.

    Population
    Current Population around 107,000. Population growth projected to 144,000 by 2036 (Population forecasts | City of Ballarat | forecast.id). So a population of more than 100,000 is good enough to be considered as a place to put your money in to invest, you reckon?
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    Source: .id community

    Demographic
    It is interesting to see that emerging groups of people are from India, China and Philippines. Aren’t we all following where Indians and Chinese live and expecting those areas to grow?
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    Source: .id community

    However, the most common ancestries in Ballarat were English, Australian, Irish, Scottish and German, according to Australian Bureau of Statistics.
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    It also states that, of the families in Ballarat, 40.1% were couple families with children, 41.3% were couple families without children and 17.3% were one parent families. So your investment property really needs to be able to provide a shelter for families, be it with children or without children.
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    Economy
    Service industries such as health care, government organisations, retail trades (Myer, Target, Big W, K-Mart, Harvey Norman), supermarkets (Coles, Woolies, Aldi, IGA), Federation University are the main drivers of Ballarat economy.

    Tourism is also another industry and Ballarat is known as the Historic Gold Mining Town among millions of visitors. A visit to Ballarat wouldn’t be complete if you missed “Sovereign Hill” among other tourist attractions such as Kryal Castle, Ballarat Botanic gardens and Lake Wendouree.

    Manufacturing is the next largest industry in Ballarat. Australian headquarters of Mars is in Ballarat that manufactures Mars bars, Snickers and M&M's, Maltesers.

    Renewable energy sector is also another growing industry in Ballarat.

    Employment
    Healthcare and Social Assistance is the main employer in Ballarat, followed by Retail Trade and Education Training.

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    Interestingly, mining is the lowest percentage of all. I thought Gold Mining was a thing in the past for Ballarat. Be mindful of this when you dig something at your IP in Ballarat. You might end up hitting a gold nugget. See 'Destiny' gold nugget goes under the hammer

    Development
    GovHub/Civic Hall
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    Development of a new government office precinct on the Civic Hall site in Ballarat’s CBD
    Cost: $100 million
    Details: Ballarat GovHub

    Ballarat Major Events Precinct
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    Upgrades of Eureka Stadium, Ballarat Sports and Events Centre, the C.E. Brown Reserve redevelopment and the Ballarat Showgrounds.
    Cost: $31.5 million
    Details: http://www.ballarat.vic.gov.au/media/3378946/bmep_masterplan_final_report.pdf

    Ballarat Station Precinct
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    Development of an integrated Hotel and Exhibition/Convention Centre
    Cost: $25 million
    Details: Ballarat Station Precinct Redevelopment Project - Regional Development Victoria

    Ballarat West Employment Zone
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    A long term project to unlock land for industry and has the potential to deliver 9,000 local jobs for our community & inject $5 billion into the economy annually.
    Cost: $30 million
    Details: City of Ballarat - BWEZ Documents

    Sebastopol Library Community Hub
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    New and improved Sebastopol Library
    Cost: $2.95 million
    Details: Why only the facade remains of this historic Sebastopol building

    I won’t list other projects that cost less than $1 million here. You may see them all here (City of Ballarat - Major Projects) if you wish to explore more.

    House types
    Period/Federation/Victorian Style Houses
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    Timeless characters of these houses are very popular among home owners and renters in central areas like Ballarat Central, Ballarat East, Soldiers Hill, etc. Especailly, renovated ones are very sought-after and the price points people pay to get a hold of one of these are unbelievable. They tend to come with smaller land size. For those with good land size, they are quite expensive. If you are chasing growth, this type of house could be good. But for yield-chasers, I’d suggest you to crunch the numbers really well before going ahead.

    Weatherboard Houses
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    Houses of this type are quite cheap, compared to the other types. It’s important not to confuse this type with the Period-style houses mentioned above. There is no characters or interesting features in this type. However, from investment point of view, if land content is large enough, yield could be good with this one and you won’t feel that much if you need to knock it down in future.

    80’s - 90’s Brick Veneer Houses
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    Solid brick houses like this are appealing to many investors. Visually they look strong and naturally bricks are more durable than wood. It’s good for long-term investment and would give a lot people some feeling of security, durability and sturdiness. In my own opinion, this type of houses can be a balance between growth and yield.

    Off-the-plan Houses
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    They are newly-built houses that can be found in outer suburbs such as Lucas, Delacombe, Alfredton, Canadian, etc. Unless you are expert in land releases and new builds like a few PCers here, limited growth aspect should be something that you really need to consider, when buying this type of property in outer areas. Some investors are after piece of mind that comes with new build warranty and good feeling of owning a shiny new house. I won’t open up yet-another (new vs. old) argument here again, which is a decades-if-not-centuries-old argument among property investors.

    Ko Ko’s rating on each suburb
    This is purely my personal view. Do you own due diligence to see whether a suburb will fit your investment strategy and risk profile. 5-star rating on investment rating means this is the suburb I would seriously look at buying at this moment in time, where 1-star suburb means that it doesn’t fit for investment in my personal point of view. However, 5-star rating on lifestyle means that I would happily live in this suburb without any consideration on numbers or investment feasibility at all, where 1-star rating on lifestyle means a complete opposite. The listed suburbs are the key ones that I personally spent a lot time on the ground. It's not my intention to cover all the whole municipal area in Ballarat.

    Ballarat Central
    Investment rating - ☆☆☆☆
    Lifestyle rating - ☆☆☆☆☆

    Ballarat East
    Investment rating - ☆☆☆☆
    Lifestyle rating - ☆☆☆

    Eureka
    Investment rating - ☆☆☆
    Lifestyle rating - ☆☆

    Ballarat North
    Investment rating - ☆☆☆☆
    Lifestyle rating - ☆☆☆☆

    Brown Hill
    Investment rating - ☆☆☆
    Lifestyle rating - ☆☆☆

    Black Hill
    Investment rating - ☆☆☆
    Lifestyle rating - ☆☆☆☆

    Lake Wendouree
    Investment rating - ☆
    Lifestyle rating - ☆☆☆☆☆

    Soldiers Hill
    Investment rating - ☆☆
    Lifestyle rating - ☆☆☆☆☆

    Lake Gardens
    Investment rating - ☆☆
    Lifestyle rating - ☆☆☆☆

    Newington
    Investment rating - ☆☆
    Lifestyle rating - ☆☆☆☆☆

    Golden Point
    Investment rating - ☆☆☆☆
    Lifestyle rating - ☆☆☆☆

    Canadian
    Investment rating - ☆☆☆
    Lifestyle rating - ☆☆☆

    Redan
    Investment rating - ☆☆☆☆
    Lifestyle rating - ☆☆☆

    Sebastopol
    Investment rating - ☆☆☆☆☆
    Lifestyle rating - ☆☆

    Delacombe
    Investment rating - ☆☆
    Lifestyle rating - ☆☆

    Wendouree
    Investment rating - ☆☆☆☆☆
    Lifestyle rating - ☆☆☆

    Invermay Park
    Investment rating - ☆☆
    Lifestyle rating - ☆☆

    Alfredton
    Investment rating - ☆☆☆
    Lifestyle rating - ☆☆☆

    Lucas
    Investment rating - ☆
    Lifestyle rating - ☆☆

    Mount Pleasant
    Investment rating - ☆☆☆
    Lifestyle rating - ☆☆☆☆

    Mount Clear
    Investment rating - ☆☆
    Lifestyle rating - ☆☆

    Which Rat would I pick to invest?
    At this stage of the property cycle, the northern part of Sebastopol that is close to Redan
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    and the yellow area of Wendouree would be my picks for those who can’t afford to be highly negative-geared.
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    But for those, who are after capital growth and do not worry much about properties being negatively-geared, Ballarat Central and Soldiers Hill will be my picks.

    As usual, always consider investing fundamentals like avoiding properties close to highways/busy streets, next to train lines, right next to shopping centres, etc. Also, no two properties are the same even on the same street in the same suburb, so each needs to assess individually.

    For more tips around the Great City of Ballarat, stay tuned! :)
     
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  2. Dalos

    Dalos Member

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    I've been reading here a while now. Saw this and thought "another Ballarat thread, really?" but it's actually a fairly decent overview of Ballarat, and a good springboard for some deeper analysis and opinions. Some of the suburb historical growth data would help for context.

    I personally think Ballarat East (parts anyway) has the best legs, not as fond of Sebas and Redan.

    Soldiers Hill and, to an extent, central have already had a large jump. The nicer parts of Ballarat East, north of Humfrey street especially, have similar properties, distance from CBD and the train station, decent blocks, decent yield, room to extend/reno and closer to Melbourne to boot. Admittedly some poor properties (old two bed miner shacks) on smaller blocks in the western parts of the suburb though. Far less competition than the throng of Melbourne Investors hoovering up Soldeir's Hill properties.(You really shouldn't be looking where everyone else has already jumped IMHO)

    I'm expecting those priced out of central and Soldiers Hill (there's a large price disparity just a few hundred meters over, with similar street appeal) to start in there. Wouldn't be surprised to see a similar 30%+ jump there as well in the coming years if the external environment remains relatively stable (that's a big assumption).

    Redan is arguably in the midst of similar growth to the earlier days of Solider's hill, may be time to get in still but better to pick the next growth area. Sebas could be next off the block there too. You're getting far from the train station and CBD though.

    Wendouree is great for yield, I'm just not seeing the level of gentrification expected with the new station, proximity to the lake and prices of neighboring areas. Logic would have you think it should go at some point. It lacks the period charm and still has a poor reputation with locals. (That could have been said of Redan and Sebas before though). If you're thinking long term I think it's a good call and a period of explosive growth can be expected sometime over the next two decades. Pretty easy to hold for that with decent yield and if it fills a need in your portfolio.

    If you could get a bargain the lakeside of Gregory street (Not really Wendouree and near the train tracks though) you could be well set long term. Last part of the Lake area that's good for investment over lifestyle and some huge blocks there but potential to develop.

    Central is great for lifestyle (we've just moved to the pocket between Creswick street and Sturt) and still some opportunities there, but you really need to be looking to add value through renovation and those are hard to come by these days. Don't have to entirely forego half a eye on investment when looking at your PPOR at least in the area. A lot of streets are similar to by the lake now and are hard to make a case for investment. (Frank, Webster, Mill, Mair etc.).

    Not getting into new builds and the growth areas, not for me those.

    Overall with the amount of population growth and investment coming and (hopefully) the rail changes over the coming years it's a good prospect for the longer term. If you're being hard nosed about it though it has to face up against Melbourne after it hits bottom and the next cycle starts there. (who knows how long that will be though). If you're really risk adverse at look at the overall macro environment in Aus and take a view that a recession is likely at some point within the next decade or two then all bets are off. Personally I'm no longer looking in Aus property and investing elsewhere, hard to break old habits and keep an eye out locally though. (For instance parts of Northern Ireland had 12%+ gross yield with so-so capital growth prospects after the crash there at the turn of the decade. Makes Some of the current Aus investment options look horrible. Watching and half hoping for a Brexit wipeout to open the door to some fun there again.)
     
  3. TMNT

    TMNT Well-Known Member

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    I wouldn't rate Sebas that high either.
    It's far from central. And won't have the spill over affect. Blocks are bigger and develooment has started, but overall not much else
     
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  4. Ko Ko Naing

    Ko Ko Naing Well-Known Member

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    With Sebas, you can still find some good yields even with bigger blocks for potential development down the track. I believe property development is the way to make serious money, compared to just normal buy-and-hold-hope-for-growth type investing. Nothing's wrong with buy-and-hold strategy. With the area gentrifying and Redan getting expensive, deals are more likely to be found in Sebas, compared to Redan, during this boom period. If it was last year when the market was not hot, I wouldn't even rate Sebas 3-star.
     
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  5. MikeyBallarat

    MikeyBallarat Well-Known Member

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    Wow. @Ko Ko Naing you are truly a legend! Brilliant write up.

    As you may know from my constant posting, I live in Ballarat East and I study the market closely. I agree with you @Dalos on the observation you make about Ballarat East north of Humffray St. it’s probably the most upmarket part of the suburb location wise, as it’s near premium suburbs like Soldiers Hill and Black Hill. However, I haven’t been able to find anything in the area that isn’t a dilapidated two bedroom weatherboard shack! I am finding many more suitable properties in the southwestern part of the suburb, between Victoria and Eureka Streets.
     
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  6. MikeyBallarat

    MikeyBallarat Well-Known Member

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    To be honest I think you are the first person I’ve heard mention Sebas seriously as an investment area. Then again, I never thought Redan would become as desirable as it has.
     
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  7. Ko Ko Naing

    Ko Ko Naing Well-Known Member

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    Thanks, @G TOWN :)

    Spot on! The proximity to city centre and timeless beauty of Period homes in that part of Ballarat East are attracting buyers, who are priced out of Soliders Hill and Black Hill. One of my IPs is right on Humffray St Nth, so I seriously spent a lot of time on the ground on that street.

    For those, who are looking to buy on that street, be mindful that north side of Humffray st Nth is actually in Bush Fire prone zone. Not that I’ve experienced bush fire at my IP, I’ve heard that when it comes to renovating or building, you’ll need to take into account bush fire prevention compliance.
     
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  8. TMNT

    TMNT Well-Known Member

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    Ko ko naing, thanks for your write up, one of the best write ups of a suburb I've seen!

    I have 11 ips in Ballarat and would love nothing more to see it boom

    But cmon guys, settle down! It's still a regional town, I think you're getting a tad over excited!

    Don't turn it into a Frankston thread!
     
  9. apk

    apk Well-Known Member

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  10. Dalos

    Dalos Member

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    Yeah, that's the rub. Some decent places that could be converted, and there's are a few around already (completed renos, decent 3/4 beds) my brother in-law has a couple (PPoR is one), but hard to come by, crowded out by a lot of pretty poor miners cottages in the west. Until prices start rising you won't see as good a return on the work needed on them either. I had thought the shacks would be a drag at first, but seeing some of the prices they can go for, even on small lots, when close to the station in Soliders Hill, I was actually expecting them to be some of the first to hit rises if some bright spark starts buying them up and catering to the Melbourne commuting crowd with a simple cosmetic lift for those pushed out of Soliders Hill.

    Could come to nothing, or could be early doors before spillover gets to close to Soliders hill prices, hard to predict. I haven't seen any signs on the ground yet that it's starting to bite anyway. One drag I'm thinking is that keyboard investors won't see a huge jump in the suburb as a whole if only one part lifts off so you might not the get FOMO effect that I have an inkling saw Solider's hill boom as big as it did. (Appeared in a lot of media as a top performing place to invest).

    Tried to convince the other half on a couple of places there for the our PPoR as there's much more chance of growth than Central IMO, but she didn't fancy a big reno.


    Something like this for the shacks:

    24 Hunt Street, Ballarat East, Vic 3350 - Property Details

    I tried to find a link to a similar one I saw in Soliders hill that sold for 395k from memory. Went for a nosey and it had over 40 through the first open, mostly Melbourne folk. Just don't see that in the east yet.
     
  11. virhlpool

    virhlpool Well-Known Member

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    Great overview.. considering that there's been some hype about Ballarat for a while post Melbourne boom, has the boat been already missed in any suburbs yet?
     
  12. MikeyBallarat

    MikeyBallarat Well-Known Member

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    I see Ballarat East starting to bite in places, but it seems to be the better homes that are selling for more. Such as this one:
    107 Eureka Street, Ballarat East, Vic 3350 - Property Details

    That said, I’ve seen a couple of shantytown shacks get good results too, like this seriously pokey little thing:
    9 Princes Street South, Ballarat Central, Vic 3350 - Property Details
    Yup, those are aluminium windows! And yes that is a bed squeezed into the main living area...

    And this little thing on small land:
    6 Princes Street South, Ballarat East, Vic 3350 - Property Details
    It only has a ‘side-yard’ that’s actually had most of it taken up by a big stupid deck!

    I’m keeping an eye out. There are some encouraging sales in the area.
     
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  13. MikeyBallarat

    MikeyBallarat Well-Known Member

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    Soldiers Hill.
     
  14. TMNT

    TMNT Well-Known Member

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    It's times like this I wish I had purchased more central than what I did.
    I was lured by the cheaper entry price points
     
  15. MikeyBallarat

    MikeyBallarat Well-Known Member

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    Where did you buy?
     
  16. TMNT

    TMNT Well-Known Member

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    Redan, wendouree, Ballarat East, Canadian, Golden Point, Brown hill
     
  17. Ko Ko Naing

    Ko Ko Naing Well-Known Member

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    Out of these, I believe you don't regret buying in Ballarat East, Redan and Golden Point.

    In Redan, there has been a couple of encouraging sales recently as well:

    I personally inspected this one; neat and tidy, but a basic one. It was advertised as 2 bathrooms, but it's more like 1 bath and 2 toilets. As an investor, I'm not sure if I would pay $440,000 for that. But for an OO, it's a different story.
    102 Hampden Street, Redan, Vic 3350 - Property Details

    A small 2-bedroom house on a decent land sold for $392,000
    505 Sebastopol Street, Redan, Vic 3350 - Property Details

    Depending on when you made your purchase, you'd label the above purchase prices as 'overpaid' even in mid last year for Redan.
     
  18. TMNT

    TMNT Well-Known Member

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    It's not a complete regret but in my aggression to accumulate a higher yield, I did go cheaper and further out, I never actually looked at any in central central Ballarat who seem to have gone up more in recent times in terms of percentage
     
  19. Toon

    Toon Well-Known Member

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  20. Ko Ko Naing

    Ko Ko Naing Well-Known Member

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    @Toon It would be good to see changes in value for 12-months to November or December, as in for the whole 2018, if you have access to the reports. Thanks! :)