The homes with some of the fastest growing values were in regional towns based in Tasmania and New South Wales, outpacing that of cities and hinting at a lifestyle shift influencing the buying decisions of Australians.
Regional properties were generally appreciating in value quicker than city counterparts, Corelogic’s Regional Market Update found, which analysed property values in the country’s 25 largest non-capital city markets.
“In the year to October, combined regional Australian dwelling markets rose 4.8 per cent, compared with a 3.9 per cent lift in the capital cities,” Eliza Owen said, head of research at CoreLogic.
About 10,500 people left city areas to live in regional ones by the end of the June quarter, according to figures from the Australian Bureau of Statistics (ABS), the largest shift over a three month period in recorded history.
Where values went up
Houses appreciated in value quickest in Tasmania’s Launceston and North East regions in the year to October, CoreLogic found. They increased by 10.5 per cent for a median sales price of $365,338.
But Tasmania lost its hold on highest yearly growth for units. Apartments in New South Wales’ Southern Highlands and Shoalhaven regions grew by 8.6 per cent over the year, pushing median unit prices to $452,549.
People were taking advantage of the space and affordability regional properties had to offer now that more of them were able to work from home, Ms Owens said.
“‘Commutable’ regional areas within a reasonable travel distance to the major metropolitan
centres have seen particularly extraordinary increases in demand,” she said.
“House sales volumes (in regional NSW) increased by double digits across the mid north coast, Illawarra and the Hunter Valley.”
Where values dropped
The value of properties went up in the majority of regional areas analysed by CoreLogic. Out of the 50 house and unit markets, six continued to show declines over the year.
Housing values experienced the steepest drops in the Bunbury region of Western Australia. Values were down two quarters straight by 4.5 per cent, leading to median prices of $386,880.
Units fell sharply in the Hume region of Victoria. Values fell 7.8 per cent for median prices of $240,779.
Factors that played a role
A few factors have contributed to the trend of people moving away from cities and towards regional areas.
Key among them is the ability for people to work from home during the COVID-19 pandemic, as it’s allowed them to live in areas further from the city, where properties are big on space and generally smaller on price.
Another reason concerns the basic laws of supply and demand, Ms Owens said.
“Movements to regional Australia increased, while departures from the regions slowed,” she said.
“As a result, demand for dwellings in regional Australia will have risen at a time when the stock available for sale is relatively low.”
Let’s not forget how cheap mortgages are now
The cost of debt -- bottoming out on record lows due to pandemic relief measures -- has made it easier to secure a mortgage at a lower price.
About 31 lenders are offering mortgages with interest rates below 2 per cent. This is three times as many lenders when compared to the week before the RBA announced an extraordinary rate cut to 0.10 per cent.
“For the average borrower, refinancing to a low fixed rate could save them thousands of dollars a year but locking in is not for everyone,” Sally Tindall said, research director at RateCity.
“Don’t rush into fixing. Make sure you’re happy with the rate but also with the terms and conditions that come with a fixed rate.”
CoreLogic doesn’t expect house and unit prices in regional areas to drop anytime soon.
“With record low mortgage rates and confidence returning to the Australian economy, there is
likely to be a broader-based upswing across both regional and capital city markets into the first quarter of 2021,” Ms Owens said.