Australia’s property downturn continues to take its toll on premium regional markets that benefited most from the mass exodus away from capital cities during the height of the pandemic, with softer values, longer days on market and bigger vendor discounts.
CoreLogic’s quarterly Regional Market Update, whichexamines Australia’s 25 largest non-capital city regions, shows the number of areas where house values increased in the year to April has been slashed to just seven.
The South East region in South Australia, which includes areas such as Kangaroo Island, the Fleurieu Peninsula and the Limestone Coast, remains the best performing regional house market on an annual basis, with value growth of 10.8% in the 12 months to April 2023.
The New England and North West (NSW) and Bunbury (WA) regions were the next best performers, up 4.9% and 4.8% respectively. In contrast, NSW lifestyle markets, including the Richmond-Tweed (-24.2%), the Southern Highlands and Shoalhaven (-16.0%) and Illawarra (-13.7%) regions recorded the largest annual declines in house values.
CoreLogic Australia Economist Kaytlin Ezzy said it was not surprising that some of the largest annual declines were recorded across several of the country’s most expensive regional lifestyle markets.
“Over the past year, premium lifestyle markets have been hardest hit by softer market conditions and rate increases,” she said.
“These markets were among the largest beneficiaries of regional migration through the COVID-induced upswing and, as a result, became significantly more sensitive to the rising cost of debt and the normalisation in regional migration trends.”
House values in Richmond-Tweed, on the NSW far north coast, surged 51% during the pandemic before the region’s relatively higher price tag, rising cost of debt and lingering impacts of the 2022 flood, saw values fall -24.2% over the year to April.
The region also recorded the biggest fall in annual sales activity (-39.9%) and highest vendor discounting rate (-7.9%).
Houses in Toowoomba in Queensland’s Darling Downs sold fastest during the quarter, with a median time on market of 21 days. The Southern Highlands and Shoalhaven region, south of Sydney, recorded the longest days on market, with houses taking a median of 79 days to sell.
Unit markets
Across Australia’s regional unit markets, the Riverina region in NSW, recorded the largest annual increase in values, up 19.8% over the 12 months to April 2023, followed by Cairns (QLD) and Toowoomba (QLD), up 15.2% and 13.0% respectively. Units in Richmond-Tweed, NSW (-13.9%) and Geelong, Vic (-10.6%) recorded the largest yearly decline in values.
Mackay – Isaac – Whitsunday was the only region to see an increase in the volume of unit sales over the year to February, up 3.7%, while seven regions saw the volume of sales fall by -30% or more. The three areas with the largest year-on-year decline in sales volumes were the Southern Highlands and Shoalhaven, NSW (-51.0%), Wide Bay, QLD (-37.5%) and Illawarra, NSW (-37.3%).
Units across Cairns (QLD) continued to sell quicker than any other region, recording a median time on market of 20 days over the three months to April 2023, down from 32 days over three months to January. Hume (Vic) recorded the second lowest days on market (27 days), followed closely by the Gold Coast, QLD and Newcastle & Lake Macquarie, NSW, at 28 days each.
Ballarat units were the slowest selling across the regions, with a median time on market of 64 days, followed by Richmond-Tweed (NSW) at 60 days. Vendors in Geelong (Vic) were offering the largest discounts in order to secure a sale (-5.5%), while discounts were lowest across the Latrobe Gippsland region (-2.0%).
Regional outlook
Affordable rural markets continue to show some resilience, Ms Ezzy said, having recorded only mild declines through the recent downswing, with a few regions still recording values at peak.
“Despite two interest rate rises over the first few months of the year, these markets offer relative affordability, have low listing levels, increased regional migration inflows and strong economic activity off the back of mining, agriculture and tourism. This has all helped support mild value growth,” she said.
“Values are influenced by more than just interest rates, such as stock levels, migration, local economic factors and an improvement in consumer sentiment, which are helping to stabilise values across some regional markets.”
There has also been some positive improvements in the quarterly house figures within the desirable commuter markets, such as the Gold Coast in South East Queensland, and the Illawarra and Newcastle in NSW.
Ms Ezzy said multiple factors such as low stock levels, a perceived end to the rate tightening cycle and an improvement in consumer sentiment, are helping to keep a floor under values across some these markets.
“Similar to Sydney and Melbourne, these more expensive regional commuter markets typically lead the cycle. Although mild, the positive growth seen over the three months to April may suggest we have moved through the trough in value declines and signals the start of a recovery phase across the regional markets,” Ms Ezzy said.
“It’s likely strong regional migration is also helping bolster demand in these regions. The Gold Coast recorded some of the strongest internal migration rates across the country through 2022, while Illawarra and Newcastle saw some outflow of residents back to the capitals over that time. Data from the first three months of this year is likely to show a reversal of this trend, with the strong return of overseas migrants to Sydney likely to 'spill over' into these regions.”
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CoreLogic Australia