Australia’s major regional housing markets have held up stronger than capital city properties during the COVID-19 downturn, new data showed.
Real estate values across the combined regional areas edged down by 0.1 per cent between March and the end of July, according to CoreLogic figures. Meanwhile, properties in capital cities fell in value by 2 per cent in the same period.
Tim Lawless, CoreLogic’s head of research, said when compared with capital city markets, properties in regional markets have “held firm” during the pandemic.
“While the region by region data shows diversity, the relatively steady conditions across the regional markets of Australia can probably be attributed to factors such as less impact on housing demand from stalling overseas migration; close to 85 per cent of Australia’s net overseas migration flows into the capital cities.
“Also there likely remains some momentum in the trend towards rising demand for lifestyle properties that was prevalent prior to COVID-19.”
Regional areas where housing prices are growing and properties are selling fast
Despite the COVID-19 downturn, three quarters of Australia’s major regional housing markets have risen in value in the past year.
CoreLogic research found that of the 50 house and unit markets in 25 of the country’s biggest non-capital city regions, values increased in 37 markets in the 12 months to July 2020.
House markets outperformed unit markets during this period. House prices went up in 20 regional areas but dropped in five regions. Meanwhile, unit values increased in 17 regional areas.
Unit prices in Tasmania’s Launceston and north east region grew the most across the non-capital city markets, leaping by 14.8 per cent in the past year. This made it the top performing housing market overall across the 25 regional areas in the same period.
Launceston and the north east region was also where units are being sold the quickest, with units listed in the year to July snapped up in roughly 26 days.
NSW’s Illawarra region recorded the highest annual growth in house values across the non-capital city markets, with house prices shooting up by 12 per cent in the 12 months to July 2020.
The regional area where houses were on the market for the shortest time was Victoria’s Ballarat, where it takes about 30 days for a house to be sold.
House and unit prices in Ballarat are also being discounted the least across the regional markets, with buyers only able to secure a median discount of 2.4 per cent on houses and 2.1 per cent for units.
The Illawarra region also saw the biggest jump in house sales volumes, which surged by 14 per cent in the 12 months to May 2020.
For units, transactions climbed the most in Victoria’s Latrobe – Gippsland region in the year to May, with deals up by about 35 per cent.
|Houses – best performers||Units – best performers|
|Highest yearly growth||Illawarra, NSW: 12.0%||Launceston and north east, TAS: 14.8%|
|Highest change in sales volumes||Illawarra, NSW: 14.0%||Latrobe - Gippsland, VIC: 34.6%|
|Shortest days on market||Ballarat, VIC: 30 days||Launceston and north east, TAS: 26 days|
|Lowest vendor discounts||Ballarat, VIC: -2.4%||Ballarat, VIC: -2.1%|
Pros and cons of buying property in a regional area
Mr Lawless said there were both positive and negative factors to consider when buying real estate in non-capital city areas.
An obvious advantage is that property prices in regional areas are generally lower than capital cities, where it can be challenging to secure an affordable home. This could make it easier for first home buyers or investors looking to enter the property market sooner or with less savings built up.
“Population densities are generally lower (in regional areas), which is something that might be even more appealing as we move through this pandemic, and in many examples, regional areas will offer some lifestyle advantages, either via the location’s proximity to the coastline or wide open spaces,” Mr Lawless said.
However, purchasing a home in regional markets may be risky in some situations.
“On the downside, regional economic conditions can be more volatile, especially those areas that are heavily dependent on a single industry for economic prosperity, and some areas may not show the same level of amenity and access to essential services as a capital city or major centre,” according to Mr Lawless.
Whether you’re thinking about buying a home or an investment property, you should always do your research on the local area of the property you’re considering purchasing before you make a decision. To help assess whether your numbers stack up, it could be worth your time to speak to a mortgage broker or property expert for advice on purchasing in a regional market.