Daylesford remains popular, but the cost of living is cutting into travel budgets and demand for property. After the post COVID boom, inflation and rising interest rates forced many people to tighten their budgets on discretionary spending like travel.

There are signs that increasing costs are shifting consumer preferences, including for local and international travel. Local demand for accommodation is down 20 – 30 per cent. Many visitors are now waiting to pick up last minute discounts. For some, that is the difference between travelling and not travelling.

At the same time, the cost of owning a holiday rental has gone up. Interest rates, insurance and, in Victoria, land tax have all increased. Not surprisingly, combined with fewer bookings, more owners are selling up.

Commenting on the local real estate market,  Belle Property Director Will Walton said, “There are a very high number of properties on the market with properties taking between 4-6 months to sell. After COVID there were five buyers for every property. Now it’s the reverse.”

CoreLogic’s national Home Value Index shows that nationally property prices continue to rise, but that prices in regional Victoria have gone against the trend and declined by 0.3 per cent in the first quarter of this year.

According to Mr Walton, properties that are realistically priced are still selling locally and there are signs of renewed interest heading into Autumn. About half of houses are selling above $890,000 and half below. Renovated three bedroom, two bathroom properties on a good size block go for between $1.2 and $1.5 million.

Most economic commentators expect interest rates to remain stable during 2024. It is predicted that inflation will slowly decline to below three per cent into next year.

In the medium term it is expected that average mortgage interest rates will fall to between five and six per cent. The impact on local property prices will depend on a number of factors, including the supply of properties, the trend toward flexible work, government regulations on short term accommodation and tax policies. Nationally, the shortage of housing remains the major reason for high property prices and rents.

Although times are tougher at the moment, Daylesford and Hepburn Springs remain attractive destinations for visitors and residents and it is likely that demand will continue to be robust over the medium term.