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Regional areas where property prices are over $1 million: how much could regional mortgages cost if rates keep rising?
The cost of moving to the seaside or making a tree change could cost you over one million dollars in some popular regional areas, according to new data from Domain. And with interest rates rising across the country, would-be buyers may be curious to know how much a mortgage could cost in these areas.
New figures from Domain illustrate the regional areas that have seen the greatest annual change in property values and many popular destinations now have median house prices over $1 million.
Regional council median house prices above $1 million
| LGA | June 2022 | Annual change |
| Byron | $1,810,000 | 19.9% |
| Kiama | $1,595,000 | 22.2% |
| Wingecarribee | $1,300,000 | 28.7% |
| Ballina | $1,100,000 | 31.3% |
| Tweed | $1,020,000 | 26.2% |
| Wollongong | $1,010,000 | 18.8% |
Source: Domain House Price Report June 2022.
The regional council area that recorded the greatest median house price in the June 2022 Domain House Price Report was Byron, at almost $2 million - which includes the coveted Byron Bay area. This was followed by Kiama, in New South Wales south coast and Wingecarribee, part of the Hawkesbury–Nepean catchment.
It’s not entirely surprising that prices in these popular seachange and treechange areas have climbed to such astronomical levels. Demand with the regional housing markets has skyrocketed in recent years, with the COVID-19 pandemic, and work-from-home flexibilities, pushing more people to leave big cities. The number of Australians that moved to regional areas grew by 16.6%, to a five-year high in the March 2022 quarter, according to CommBank and RAI’s Regional Movers Index released in June.
The news comes days after CoreLogic’s Regional Market Update showed that regional values overall have recorded their first quarterly fall since August 2020. The largest value decrease was recorded in the Richmond-Tweed region (including Byron Bay), according to CoreLogic, falling by 4.5% for houses and 3.8% for units.
After four consecutive months of hikes to the cash rate by the Reserve Bank of Australia, rising mortgage costs may be beginning to ease price pressures in these regional areas for would-be buyers.
And the latest property forecast from ANZ exemplifies this, with economists suggesting the housing market may fall by almost 20% in the next few years, and regional areas will join the capitals in this decline.
How could rising rates impact regional mortgages?
Mortgage interest rates are predicted to continue to rise throughout 2022-23, as the Reserve Bank of Australia (RBA) continues to fight rising inflation, and other macroeconomic factors.
For would-be buyers still hoping to nab a house, and those who purchased homes in these regional areas recently, you may be wondering how high your mortgage repayments could climb.
Big four bank’s cash rate forecasts
- CBA: 2.60% by November 2022, then dropping to 2.10% by November 2023
- Westpac: 3.35% by February 2023, then dropping to 2.35% in 2024
- NAB: 2.85% by November 2022, staying steady into 2023-24
- ANZ: 3.35% by November 2022, then dropping to 2.85% in late 2024
The latest forecasting from the big four banks suggests that the cash rate may climb as high as 2.60%-3.35%, then potentially fall, or stay steady, depending on who you ask. Regardless of which prediction comes to fruition, it’s clear that mortgage repayments on these million-dollar-plus mortgages may put some strain on your household budget.
Mortgage payments on median-priced houses in regional areas: how will rate hikes impact repayments?
| LGA | Property Value (Domain) | Loan Size (assumes 20% deposit) | Current repayments (August 2022) | Repayments at peak (end 2023) |
| Byron | $1,810,000 | $1,448,000 | $7,427 | $8,648 |
| Kiama | $1,595,000 | $1,276,000 | $6,545 | $7,621 |
| Wingecarribee | $1,300,000 | $1,040,000 | $5,334 | $6,212 |
| Ballina | $1,100,000 | $880,000 | $4,514 | $5,256 |
| Tweed | $1,020,000 | $816,000 | $4,185 | $4,874 |
| Wollongong | $1,010,000 | $808,000 | $4,144 | $4,826 |
Source: RateCity.com.au, Domain.com.au.
Note: Repayments based on 25-year loan term at big four bank average rate of 3.73%. Loan size assumes 20% deposit for median property values as per Domain research in regional areas. Based on Westpac forecast rate hike predictions of 3.35% cash rate by Feb-23.
As you can see, if the Westpac cash rate hike predictions proved accurate, a home buyer looking to purchase property in these regional areas could see their monthly repayments rise by up to $1,221 by February 2023.
If regional prices continue to fall, home buyers may see the value of their homes decrease as their mortgage repayments hike. This could see many regional buyers at risk of being in negative equity. If these borrowers were intending to refinance to a lower rate loan at this time, they may find their application is rejected, as their loan-to-value ratio (LVR) may increase to a risky percentage.
Whether you’re an investor or an owner-occupier, if you’re considering purchasing in these regional areas, it may be worth estimating if you can comfortably service your mortgage repayments with a higher interest rate, based on the cash rate hike predictions from the big four banks.
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Product database updated 20 May, 2024
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