Bendigo vs. Ballarat

Hi all,

I'm a 24yo junior doctor looking at purchasing an IP with my partner. (Junior doctor also) We have worked with Empower Wealth to have a property plan created and they have suggested our first property be worth 650k in mid 2023.

Looking at our current savings and earning forecasts for the next 12 months we will almost certainly have that money mid 2021 vs mid 2023.

In addition to that it's likely we will be living in Bendigo for ~12 months sometime between 2023-2025 (complex reason as to why we know this but not the year - it's to do with the way medical training works).

A few questions for the group that we would love some help with. (We will be working with a Empower Wealth buyers agent but our own research has pushed us towards Ballarat and Bendigo as being good locations for long term investments)

1) looking at an IP in Bendigo vs Ballarat what do you think comes out on top in terms of yield and capital growth over the next 10-20 years (ultimate plan is to generate 3k/week passive income through property and this will be step 1). The demographics and economics of the areas are similar, but in terms of future potential it looks like Bendigo comes out slightly on top (5 years ago we would probably say Ballarat).

2) Does anyone have experience with moving into their IP for a 12 month period as a PPOR then swapping it back to an IP?

 

Both and neither. It depends on which day you pick and which location , a good location will be better than an ordinary location in either. Worry about what you can control. For CG buy a tightly held location that ticks your boxes when and where it is available at the price that suits your metrics the place your offer is accepted is where you may want to buy. For yield your are in control off that by what you are willing to offer, it has nothing to do with what we think. All cities have the same 3 drivers Location, Location and Location, get the best location you can which town doesnt matter as "best " will vary at different points of time. Most people worry to much about where and when instead of just buying the gem when opportunity presents it. Why not rent in Bendigo and do some research when you are there than you will have a better understanding of the market. Generally walking distance to hospitals and CBD's or easy fast transport to them can give good yeilds and have tightly held areas that have good growth and seemingly ever growing demand from expanding medical services. I would expect Bendigo market like other places is red hot and good properties are sold before or with in days of listing, perhaps there will be better buying in 2 or 5 years when the stimulus has gone, FHB demand satiated, interest rates are rising government debt has to be repaid .

 

Both very similar, and traditionally have had comparable markets. Perhaps in the last 10 years Ballarat has pulled ahead, perhaps because of its proximity to Melbourne. Long term I don't see that trend reversing. However, Bendigo is 18-24 month earlier in the cycle, so chances are Bendigo still has a fair bit of growth left in it

 

I wanted to add a couple of IPs in regional Vic- looked at geelong, ballarat & bendigo and decided to invest in bendigo for a whole variety of reasons. Purchased a large block opposite Latrobe uni campus and then picked up 2 TH sitting on another large parcel of land. Even though they are all large dev blocks, they still offer >5% yield as-is so can hold them indefinitely and further sub dev will have an incremental impact on those yields.

Key to my decision making was where all of those were in the prop cycle, population trends, rental market/ vacancy rates, rental yields (especially for dwellings on large blocks) etc however as others have stated the more important bit is 'where' within those towns you end up purchasing. Keep as close to the centre of those towns as you can (endless land supply at the peripheries of each) - very close to public transport and near good schools/ or a uni campus.

The best-bit is that you are starting very young and regardless of where you buy, time is on your side and for a long game, you are likely to do well in any of those markets.

 

Historically, Bendigo's House prices are slightly higher than Ballarat's.

In 2017/18, Ballarat start to see growth in House prices and soon, it over took Bendigo in terms of Average House prices. Bendigo in turn was pretty much stagnant until late last year when House prices start to see rises.

Currently Bendigo's average House prices is still lower than that of Ballarat's. Plus Bendigo is still in the midst of growth, with no signs of slowing down. As such, I would place my bet in Bendigo rather than Ballarat, which seems to be nearing it's peak.

 

Both towns probably reasonable options for investment. I have IPs in Bendigo. But I also live here, so I didn't consciously choose it over other places to invest. Being local makes you somewhat biased. Hopefully though I have used my close proximity though to my advantage and made good choices.

Property is a long game and it's still only early days for me. So time will tell whether I've made good choices.

Having said all that. Purchasing an IP and a PPOR are often quite different ventures. Trying to achieve both in the same purchase could be tricky.

As for Bendigo, right now the market is very hot. I'm not sure if that's a good thing or not. I wonder if it will cool down in the next month. I envisage more properties will be listed because the market is so strong. But I'm not sure if there will be enough buyers to meet the increased supply.

 

The thing that killed our last boom in around 2012 was the enormous deluge of NRAS properties hitting the market all at around the same time. Prior to that, vacancies were low and prices did naturally quite well. The huge NRAS supply probably took the wider market the best part of 5 years to absorb, and goes a long way to explaining why Bendigo lagged most of Victoria between that time and 2019.

The current 'boom' has also seen very low vacancies and an absolute shortage of land...there's hardly any around anymore. I'm probably a little more optimistic than you @Bendigus, and am hoping there's a bit more left in this cycle - maybe 18 months? My biggest concern is the state government's big public housing spend - here's hoping that addresses community needs rather than throwing the balance out of kilter, and here's hoping it doesn't all come at once (but probably will, over time and over budget!)

 

For short to medium term, Bendigo should have some steam left. But for long term, Ballarat would be my choice. Not an advice, but a personal opinion as someone who owns IPs in both places.

Shouldn't be a problem, unless you are claiming First Home Buyers Concession as PPOR.

 

Hi guys,
I am working through a similar strategy atm, 400-500k, 4.5-5% gross yield. Does everyone still see more growth in Bendigo over the next 2 years & beyond or will Ballarat's closer proximity to Melbourne prove the long term winner? Noting, the Bendigo market is very hot currently

 

Yeah Bendigo still has a bit left to go. Was chatting to a local builder last week who said they have seen dozens of new clients simply because people are missing any existing housing stock going for overs. Problem is there is next to no affordable land left, and the blocks which are left are increasing at about 1%-1.5% per month.

As I mentioned above, Ballarat probably has more long term potential, but because they are further along in their cycle, I'm confident Bendigo will outperform from this point.