Property price gains may have slowed in a number of Australia’s capital cities, but regional markets continue to surge ahead at a remarkable pace.
CoreLogic’s latest regional market update outlines the staggering rate of growth seen in regional areas across the country but raises the key question—can it be sustained?
Which regional markets have performed best?
Looking at CoreLogic’s latest numbers, it’s clear to see that the regions’ stellar run is still ongoing.
January’s figures show astounding annual growth in NSW, Tasmania, Queensland and Victoria especially.
CoreLogic’s regional market update looks at the country’s top 25 non-capital city markets, and on an annual basis they have “continued to achieve unprecedented increases in value.”
Drilling further down into peak house price performance, some of the biggest winners for the year were NSW’s Southern Highlands and Shoalhaven (up +38.2 per cent), and Queensland’s Gold Coast (up +36.3 per cent) and Sunshine Coast (up +35.4 per cent).
Eliza Owen, CoreLogic’s head of research, said “positive interstate migration trends may have acted as a tailwind for these popular lifestyle regions, even amid affordability challenges and fixed rates starting to move higher.”
Other top growth regions for house prices included the Hunter Valley (+35.3 per cent), Newcastle (+32.4 per cent) and Illawarra (+31.5 per cent) in NSW, Geelong (+27.7 per cent) and Latrobe – Gippsland (+25.9 per cent) in Victoria, and Launceston and North East Tasmania (+33.6 per cent).
In terms of speedy sales, Sunshine Coast houses were snapped up in just 15 days on average, illustrating incredible demand. Launceston and Tasmania’s North East, the Gold Coast and Toowoomba were close behind on 16 days.
And topping the price charts was the Byron Shire on the NSW North Coast, where the median house price is up at $1,838,286, nearly $450,000 higher than Sydney’s.
While these are all the standout markets from the past 12 months, the fact that Townsville’s +7.8 per cent annual growth represents the worst performance of any regional area in the report shows the broad-based strength of property outside the capital cities.
How have regional sellers benefited from the trend?
Since the beginning of the pandemic, the rush from capital cities like Sydney and Melbourne to regional locations has been the key driver in this once-in-a-generation price growth.
The ‘race for space’ mentality, thanks in large part to remote working trends and extensive lockdowns, has meant property owners in regional markets have seen their homes explode in value.
“Regional areas previously benefited from the easing of social distancing restrictions, which boosted buyer interest and a surge in interstate migration, and that may have continued in the final months of 2021 and into the new year,” Ms Owen said.
Capital city growth has been on a downward trend since the first half of 2021, but the regions have hit a strong second wind. Source: CoreLogic
To put things into perspective, in January 2020 the median regional property price was $386,618.
In January 2022, that number has shot up to $551,887, an increase of around $165,000 or +42.7 per cent.
The capital gains regional owners have enjoyed over the past two years are still yet to die down, so it’s put sellers in a powerful position that hasn’t been seen outside of the capitals before.
Will the regional housing boom continue?
With most of the capital city markets cooling off, the big question is whether the regions will keep this historical growth up.
Ms Owen noted that it’s common for the capital and regional markets to roughly mirror one another, but the current divergence between the two markets is relatively unique.
She said that, although “there may be some room left for growth amid rate hikes in more affordable, peripheral areas to popular hot spots… the expectation is there will ultimately be few regions that can avoid a downswing over the next few years.
“Despite the recent exuberance, I would expect growth rates in regional Australia to start slowing early this year.”
Ray White’s chief economist Nerida Conisbee suggested that the regional markets that continue to deliver strong performance will be within a commutable distance to cities.
“Since the start of the pandemic, we’ve seen the biggest move of Australians to regional areas ever recorded,” she said, adding that lifestyle shifts and demand for second homes have been driving factors.
“Many of these will change in 2022 and as a result, it’s unlikely we’ll see the same strong conditions we saw over the past two years in regional areas continuing over the next two years.”
While the prioritisation of lifestyle and space could be here to stay for many Australians, it seems that only some of the most desirable and convenient regional areas may maintain growth in the coming months and years.
Of course, every market and every property is different, so it’s best to speak to a top local agent to get the strongest understanding of localised conditions and what the future might hold.
Article Source: www.openagent.com.au
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