Regional housing markets boom as capital city values splutter back to life

Australia’s regional housing market is booming, with combined dwelling values outstripping their capital city counterparts.

The latest Core Logic Hedonic Home Value Index, released this morning, found that the regional housing market, overall, had recorded a rise in dwelling values of 7.9 per cent over the past year, compared to just 1.7 per cent across the capital cities.

MORE NEWS: Aussie rental market finishes 2020 with unexpected decade-high growth

The QLD suburbs expats, offshore buyers want to call home

Why 2020 is ‘comparable to a boom year’

That astounding figure comes one year after the global COVID-19 pandemic first reared its ugly head, forcing international and domestic border closures, social distancing and wide-ranging restrictions on workplaces and business.

“Housing values continued to rise through the first month of 2021 with CoreLogic’s national home value index up 0.9 per cent over the month,” the report said.

“The January movement takes Australian home values to a fresh record high.

“Housing values have surpassed pre-COVID levels by 1 per cent, and the index is 0.7 per cent

higher than the previous September 2017 peak.”

The findings fly in the face of earlier predictions of a housing value crash at the start of the pandemic, with all of Australia’s regional centres, with the exception of the Northern Territory and Western Australia, recording strong growth over the past 12 months.

Regional Tasmania saw the biggest annual growth — up 12.1 per cent.

It was followed by the regions in South Australia (+10.6%), New South Wales (9.5%) Queensland (+7.7%), Victoria (+6.5%).

Over the past month, the combined regional dwelling value rose 1.6 per cent, according to the report.

By comparison, the combined capitals dwelling values rose just 1.7 per cent over 12 months and 0.7 per cent over the past month.

Darwin recorded the biggest increase in dwelling values over 12 months, up 11.4 per cent off a low base, followed by Canberra (+8.5%), Hobart (+6.8%), Adelaide (+6.5%), Brisbane (+4%), Perth (+3.4%) and Sydney (+2%).

Melbourne’s dwelling values contracted 2.1 per cent over the 12 month period, but clawed that back over the past three months and recorded a dwelling value increase of 0.4 per cent over the past month.

Mr Lawless said the regional housing market had well and truly outperformed the capital cities during the past 12 months.

He said houses performed better than units – a nod to the changing preference of buyers seeking out room to move and work/life balance.

“Better housing affordability, an opportunity for a lifestyle upgrade and lower density housing options are other factors that might be contributing to this trend, along with the new found popularity of remote working arrangements,” he said.

Mr Lawless said 2021 was shaping up to be the year of the “regional renaissance”.

“Quarterly growth rates across regional Australia are at their highest since 2003,” he said.

“It is a boom year for the regions … capital city values are rising but the growth is no where near as remarkable.”

Looking to each state’s regions, Mr Lawless said affordability and lifestyle were big drawcards in all markets.

In terms of Tasmania, he said the regional areas had come out from behind Hobart’s spotlight.

For regional Victoria and NSW, the surge in values was being driven by buyers moving away from the congested capital cities, spurred on by their new-found freedoms around working.

“Those regional markets that offer commutability are all showing strong growth,” he said.

He pointed to Ballarat, Bendigo and Geelong, with values in those regional centres up by between 5.5 per cent and 7.2 per cent over 12 months.

In South Australia, some outback regional areas saw growth of 17 per cent over 12 months, albeit off a low base.

But in lifestyle locations like the Barossa, values were up 11.4 per cent over the same period, while in the southeast, values were up by nearly 9 per cent.

“In both those areas, those are record highs,” Mr Lawless said.

In the Sunshine State, strong growth was continuing in the southeast corner hot spots of the Gold Coast, Sunshine Coast and even Toowoomba, Mr Lawless said.

“For example, Sunshine Coast house values are up 9.3 per cent over 12 months and the Gold Coast is up 8.4 per cent, and most of that has been over the past three months,” he said.

Elsewhere, Cairns is also seeing some rises in values, but the tourist region has struggled more than others due to international and domestic border closures.

Mackay, which was hit hard by the resources downturn, is also bouncing back, and in Townsville, which has struggled for a decade, also due to the mining downturn and other factors, is also performing strongly, albeit house values have “a long way to go” to get back to its peak.

Mr Lawless said regional areas with diverse economies would continue to perform strongly.

“The trend towards regional markets existed before COVID-19, but the pandemic fast-tracked it,” Mr Lawless said.

It comes as 41 experts and economists surveyed for the latest Finder RBA Cash Rate Survey tipped that house prices would continue to rise across all capital city markets this year.

Perth, which is currently in a five day lockdown, is forecast to see the biggest gains, with experts predicting the median house price to rise by 7.5 per cent.

It will be closely followed by Brisbane (+6.9%) and Sydney (+5.5%).

Hobart and Darwin were expected to see smaller gains, at just 4.5 per cent and 4.7 per cent respectively.

Finder’s head of research Graham Cooke said that this positivity in the housing market forecasts was now even higher than it was pre-pandemic.

“The market is surging on the back of low rates, government stimulus, and Aussies having more in their savings accounts on average,” he said.

“We expect this to continue through 2021, but Perth’s snap lockdown is a reminder that things can change quickly.”

All of the experts predict that the RBA will hold the cash rate at 0.1 per cent.

Source