Regional house prices on track to rise by 20pc this year
Nila Sweeney, 17 MAY, 2022
Australian Financial Review
The housing boom is far from over in the regions, with prices in some areas expected to rise by another 20 per cent this year as demand continues to outstrip supply, experts say.
House prices in some popular regions such as the Gold Coast and Sunshine Coast in Queensland, Shepparton in Victoria and the Hunter Valley in NSW, had already shot up by around 10 per cent since the start of the year, said Nerida Conisbee, Ray White chief economist.
“At the rate prices are rising in these areas, it’s quite possible for them to climb by around 20 per cent this year,” she said.
“Many regions are still on track for a 10 per cent rise this year, so I think the housing boom is definitely not over for areas that are relatively close to capital cities.”
The Hunter Valley, excluding Newcastle, in NSW was the best- performing house market, with an annual growth rate of 34.3 per cent, according to CoreLogic.
Tim Lawless, CoreLogic’s research director, said while growth rates were clearly easing from record levels across most parts of regional Australia, prices were still rising strongly.
“We’ve already seen regional housing values across Australia increase by 6.6 per cent over the first four months of the year, so a further net growth of 4.4 per cent over the next eight months doesn’t seem unreasonable, especially considering the quarterly growth rate of 4.7 per cent over the most recent three-month period,” he said.
High internal migration rates
“This is well above average and, in anyone’s book, a very strong rate of growth. Anecdotally, we are still seeing strong demand for regional housing supported by high internal migration rates.”
The number of homes available for sale across the regions is sitting at 40 per cent below the five-year average and 20.5 per cent lower than a year ago, data from CoreLogic shows.
At the same time, sales activity lifted by about 20 per cent above the five-year average across the regions.
“Clearly we are still seeing a disconnect between available supply and demonstrated demand,” Mr Lawless said.
“We are continuing to see advertised stock levels remain extraordinarily low across regional Australia and settled sales activity looks to be holding firmer relative to the capitals.
“Arguably some regional markets will be somewhat insulated from a material downturn in housing values due to an ongoing imbalance between supply and demand.”
The Hunter Valley, excluding Newcastle, in NSW was the best-performing house market in the past 12 months, with an annual growth rate of 34.3 per cent, followed by Southern Highlands and Shoalhaven, also in NSW, with 33.3 per cent gain.
Gold Coast posted a 33.1 per cent rise in house values while the Sunshine Coast rose by 30.1 per cent.
Affordability was a big factor pulling buyers into the regions, although some of the most popular locations such as Southern Highlands had already become unaffordable, Mr Lawless said.
In the Newcastle and Lake Macquarie region, house prices are still $250,000 cheaper than Sydney, while the Illawarra region’s median dwelling value is $143,000 lower.
In Geelong, dwelling values are $5350 cheaper relative to Melbourne and $203,000 lower in Ballarat.
Areas that offer a blend of affordability and commutability to the major capitals were likely to provide some of the strongest growth opportunities this year, Mr Lawless said.
“Toowoomba is a good example of an affordable market that is within a two-hour drive of a major capital city,” he said.
“With a median house value of $537,897, it’s also very affordable and well-placed to benefit from the strong population growth evident across south-east Queensland.”
Kent Lardner, founder of Suburbtrends, said demand for regional homes would not only come from budget-conscious younger families, but also from a new wave of retirees who were not yet ready for apartments, townhouses or retirement villages.
“Some regional markets have seen massive price increases, which has impacted the relative affordability to some city markets. However, other well-located regional markets within 100 kilometres or so that are affordable will continue to appeal to buyers who don’t want a city unit and can’t spend over $750,000,” he said.
“Sadly, Sydney and Melbourne are now permanently out-of-reach for a very large cohort of buyers seeking houses.”