Home values across Australia’s regional markets are still rising but at a slower rate, according to CoreLogic’s latest quarterly report.
Affordability challenges in coastal and country towns where home values have grown significantly in recent years are one factor slowing price growth today.
Another is a better balance between supply and demand. The number of homes coming onto the market is normalising and demand has eased off a bit as fewer people leave the cities.
The value of regional real estate changed dramatically during the pandemic.
Many Australians, particularly millennial families, chose to reinvent their lives with a move to the coast or country because they gained the freedom to work from home.
The resulting surge in population permanently reset price thresholds for both home values and weekly rents across the regions.
Overall, home values in regional areas are now 52.5% higher than where they were at the onset of the pandemic. This compares to a 33.4% uplift across the capital cities.
Regional rents are up 39.1% compared to 35.4% in the cities.
Orange in regional NSW has seen a notable increase in home values, with prices rising by 4.2% over the past year. This growth reflects continued demand in the area despite broader market cooling trends.
After that sort of growth, it’s inevitable that affordability constraints will start to cool the market. Higher interest rates are also playing a role because they’re limiting people’s borrowing capacity.
Over the three months ending July 31, regional home values rose by 1.3%. This represents a slowdown following 2.2% growth over the three months ending April 30.
The same trend is occurring across the combined capital cities, where home values grew by 2% in the April quarter and by 1.8% in the July quarter.
If we drill down on the data, 60% of the 50 biggest regional markets recorded a rise in values over the three months. Eleven regions saw values rise by more than 3%, which is very strong.
Regional Queensland was the best performer of the quarter, pulling ahead of regional Western Australia where incredible price growth has occurred over the past few years.
The strongest regional Queensland market for price growth was Gladstone, where home values rose by 9.2%. Other strong performers were Townsville (7.8%), Rockhampton (4.8%), Kingaroy (4.5%) and Mackay (4.3%). There was also about 3% growth in Toowoomba, Hervey Bay and the Gold Coast.
In regional NSW, the best markets for price growth were Lismore (3.1%), Ulladulla (2.6%), Muswellbrook (1.8%), Singleton (1.7%), and Wollongong (1.4%).
In Victoria, the top markets were Swan Hill (3.1%), Bairnsdale (2.9%), Sale (1.5%) and Horsham (0.4%). Victoria is a buyer’s market, with more regions experiencing price declines than uplifts over the quarter. The biggest falls were in Ballarat (-3.4%), Wangaratta (-2.7%) and Colac (-2.4%).
In regional Tasmania, home values lifted by 2.9% in Burnie-Somerset and by 2.2% in Devonport.
The busy Spring period has now begun. It will be interesting to see how the usual seasonal uplift in listing numbers impacts price growth across both the regional and capital city markets.
By John McGrath, Chief Executive Officer of McGrath Estate Agents.
