Cheap access to credit, a newfound popularity of working from home and an affordability advantage has contributed to Australia’s 25 largest non-capital city regions achieving a record increase in house values in the past year.
CoreLogic’s latest Regional Market Update, released today, shows of the 25 regions analysed, 24 recorded double-digit annual growth for house values while more than 50% of the regions recorded an annual rise of more than 20%.
Incredibly, seven regions recorded a lift in house values of more than 30% for the year to 31 October 2021.
CoreLogic’s Research Director Tim Lawless said localised factors influenced each region but common key drivers included a shift away from capitals to regional areas, low interest rates and access to credit, higher household savings and relatively affordability housing values compared to capital cities.
“There has been a broad demographic shift where more Australians are prepared to consider housing options outside of the capital cities, which has seen net internal migration rates to regional Australia reach record highs,” he said.
“Working from home looks to have some degree of permanency post-COVID and is one of the catalysts of this trend, with more people basing themselves in regional locations to work remotely or balancing office work with home working.”
The best performing regional area was the Southern Highlands and Shoalhaven region in NSW, recording an annual growth rate in house values of 35.9%, followed by the Richmond – Tweed region in northern NSW (32.8%) and Queensland’s Sunshine Coast, which recorded an annual growth rate of 32.3%.
“The top performing regional areas were all coastal or lifestyle markets generally within a two-hour commuting distance of a capital city,” Mr Lawless said.
“These areas fit within the broad trend where demand has surged for lifestyle properties that offer a blend of liveability and commutability.”
At the other end of the scale, Queensland’s Townsville region saw the lowest yearly growth rate for houses, increasing by just 8.0%, despite moving through the strongest housing market conditions since 2007.
Across the regional unit market, 18 of the 22 regions recorded at least a 10% rise in values, while 12 regions saw unit values rise more than 20% over the year.
Queensland’s Wide Bay region recorded an annual growth rate of 29.2%, making it the best performing unit market, followed closely by the Sunshine Coast region (29.1%).
Houses on the Gold Coast in South East Queensland were the quickest to sell with a median time on market of 18 days in the 12 months to October 2021 compared to New England and North West in NSW where houses took around 62 days to sell during the same period.
Days on market and vendor discounting rates both fell substantially, a reflection of tighter stock levels compared to strong buyer demand. Mr Lawless noted advertised listings across regional Australia were currently 37% below the five-year average compared to the number of home sales, which sits about 24% above the five-year average.
“This mismatch between available supply and demand has created a heightened level of urgency amongst buyers, generating strong selling conditions where homes are snapped up quickly with minimal levels of negotiation,” he said.
The longevity of regional Australia’s boom will largely depend on affordability Mr Lawless said, although as more companies formalised hybrid working policies those areas within practical commuting distance of the major capitals are likely to remain the most highly sought after.
“If housing values across regional parts of the country continue to outpace the capitals, the obvious outcome will be that regional markets lose their affordability advantage,” he said.
“We can already see this trend taking shape in some of the most popular regional coastal markets such as Byron Bay where median house values are $1.7 million and Noosa on the Sunshine Coast in Queensland, where median house values are $1.2 million, much higher than comparable capital city values.”