High end regional property markets continue to struggle

Regional Australia’s housing market has declined over the past 12 months, with the high-end Covid hotspots continuing to lag more affordable locations.

According to CoreLogic’s Regional Market Update, high interest rates and a shift in migration patterns back to pre-Covid levels saw regional property post an annual decline in value, despite prices recovering over the past five months.

The report found that 18 out of 25 major regional areas recorded an annual decline in house values over the year to July 2023.

NSW lifestyle markets, including Richmond-Tweed (down 20.4 per cent) and Southern Highlands and Shoalhaven (down 15 per cent), posted the largest annual decline, although the pace of falls is now starting to ease.

Victoria’s Ballarat (down 11.2 per cent) and Geelong (down 10.4 per cent) also posted double-digit declines in house values over the past year.

House prices in Byron Bay are now down 25.5 per cent annually, making it the worst performed regional market in the country.

CoreLogic Australia Head of Research, Eliza Owen, said despite regional property prices rising for the past five months, values remain 5.6 per cent below this time last year, and sales volumes are down 21.3 per cent. 

She said the easiest way to characterise the markets most impacted by rate rises is the price point. 

“The higher the value of the market, the more likely it’s seen poorer performance in the past year,” Ms Owen.

“But the good news for sellers is that these markets appear to have passed through the depths of the downswing.

“Using Richmond-Tweed houses as an example, while the asset has seen an annual decline of 20.4 per cent, this is up from a year-on-year fall of 24.2 per cent in the 12 months to April. 

“In two of the past three months, houses in this market have actually increased.”

Queensland was a big winner when it came to regional market capital growth in the past 12 months, with Central Queensland (2.7 per cent), neighbouring Mackay–Isaac–Whitsunday (1.2 per cent), Toowoomba (0.7 per cent) and Cairns (0.5 per cent) all recording increases.

Bunbury, in WA (3.7 per cent) and New England and North West, NSW (1.6 per cent), also saw growth.

Houses in the South East region of South Australia, which includes tourism hotspots Kangaroo Island, the Fleurieu Peninsula and the Limestone Coast, had the largest annual growth for the fourth month in a row, with values increasing 9.1 per cent in the year to July.

Every region recorded a decline in house sales volumes over the 12 months to May.

Townsville recorded the smallest decline at 11.3 per cent, followed by Central Queensland (down 12.7 per cent). 

The Southern Highlands and Shoalhaven region recorded the largest drop in sales (down 33.6 per cent), largest vendor discounting rate (down 6.7 per cent), and longest time on market (79 days), which Ms Owen says is almost twice as long to sell than a year ago.

Unit markets have also not faired well in the past 12 months, with just five regional areas recording positive growth led by NSW’s Riverina region for the second consecutive month. 

Unit values in the Riverina region rose 18.7 per cent, more than double the second and third strongest markets Cairns (9.2 per cent) and Hume, in Victoria (9.1 per cent). 

At the other end of the scale, Launceston and North East (Tasmania) and Richmond-Tweed recorded the equal largest decline in unit values over the past year of 11.4 per cent. 

Unit sales volumes declined in all regions over the year to May. Bunbury recorded the smallest decline (down 4.2 per cent) while Southern Highlands and Shoalhaven recorded the largest (down 42.5 per cent). 

Toowoomba recorded both the shortest time on market at just 22 days and lowest vendor discounting rate of 2 per cent. 

Units across NSW’s Mid North Coast were the slowest to be sold at 62 days while vendors across the Launceston & North East region are offering the largest discounts at 6.2 per cent.

Ms Owen said while the market is starting to recover, value growth is largely being led by capital city markets, reflecting milder housing demand across regional Australia as demographic patterns normalise.

“Year-on-year growth was hard to find across regional Australia in the past 12 months,” she said.

“The markets that saw an increase were largely more affordable, and were more rural. 

“Presumably, lower value assets have been more resilient to increases in interest costs because they require lower indebtedness.”

She said targeted migration programs also tend to focus on parts of regional Australia as a pathway to permanent residence, so some of the more rural, regional parts of the country may have seen sustained housing demand as international travel restrictions have lifted through 2022.

“While there’s still a few headwinds on the horizon for housing market performance more broadly, popular high-end markets could start to stabilise as mortgage rates move closer to a peak, and capital city markets become more expensive,” she said.

Source link

About The Author

Scroll to Top