This article is from the Australian Property Journal archive
AFTER a “regional renaissance” brought on by the global pandemic, property market conditions in Australia’s regions are beginning to follow the capitals into a slowdown.
According to the annual PropTrack Regional Report 2022, regional Australia is seeing slowing market conditions after house prices had been growing at their fastest annual rate in 35 years.
Home prices across the regions have dropped 2.2% since their April peak this year, though are still holding strong compared to declines seen in the capital cities.
Reflecting this, while home prices fell by 0.11% across the capitals over October, combined regional areas rose 0.06%.
Likewise, home prices in the capitals have fallen 2.1% from the same time last year, while still sitting 24.4% up on pre-pandemic levels.
While in regional Australia, home prices are still sitting 6.5% up on their level a year ago and are up 46.6% on March 2020 levels.
“Throughout 2020 and 2021, we saw the pandemic, multiple lockdowns and more time spent at home lead many to reassess their housing wants and needs,” said Eleanor Creagh, report author and senior economist at PropTrack.
After two years driven by a shift in preferences towards lifestyle locations, with sea- and tree-changes trending, demand for the regions has slowed as interest rates have grown over much of 2022.
“Housing markets in regional Australia thrived as people sought more space and more affordable homes. Remote working opportunities and preference shifts drove strong population growth in regional areas at the expense of the capitals, predominantly Sydney and Melbourne,” added Creagh.
“As public health restrictions have eased and interest rates have quickly risen, the boom has been replaced with slower growth and elevated uncertainty. While it remains a relative bright spot in the current housing market, regional home prices are falling.”
The number of potential buyers per listing in regional Australia has now dropped 22% from the peak recorded in January this year, though this is still almost three times levels seen pre-pandemic.
Stock in the regions is also limited, falling 37% from pre-pandemic levels, leaving far less choice for regional buyers, especially in regional South Australia and Queensland.
The opposite is true in the capitals, with options expanding in Sydney and Melbourne, where total listings are sitting above previous decade averages in recent months.
While regional prices are forecast to continue to slow, amidst monetary tightening and lowered net migration, expectations still have the regions outperforming the capitals.
“Regional markets are likely to continue to exhibit a slower pace of price falls compared to capital cities. They remain buoyed by shifting lifestyle priorities, migration trends and affordability advantages that are still in play,” concluded Creagh.
“In addition, conditions remain tougher for regional buyers, with the number of properties listed for sale still well below pre-pandemic levels, which is also seeing some markets remain more competitive and shielding home values.”
