For the first time in more than 15 years, the price of homes in Australia’s regional areas has increased faster than for the capital cities.
As usual, the culprit for this unusual turn of events is – at least partly – the pandemic, with researchers saying work-from-home opportunities have increased the appeal of living away from the major metropolitan areas.
New data shows that, while capital city property prices went up by an average of 2 percent in 2020, those in regional Australia went up by a significant 7 percent.
Popular regional markets are close to capitals
Annual statistics released yesterday by real estate analysts, CoreLogic, indicates that the most sough-after regional markets are those that are relatively close to the major capital cities. These markets include Gold Coast, Sunshine Coast, Geelong, Daylesford, Ballarat, Wollongong and Newcastle.
“They’re leading the pack in terms of strongest growth,” said Tim Lawless, Research Director at CoreLogic.
“People can have the best of both worlds and live in a marketplace with lifestyle benefits and lower prices, as well as commute back to the big cities if they need to.
“Regional markets haven’t outperformed the capital city markets since 2004, so this is quite a new phenomenon.”
Covid not the sole cause of reverse-migration
Lawless pointed out that the pandemic is not the sole cause of this reverse-migration, but was instead accelerating a trend that was already happening in the property market.
While Australian Bureau of Statistics (ABS) population data released late last year did indicate rising regional relocation trends during 2020, it also showed this had been happening in some areas prior to Covid’s arrival.
As an example, Melbourne had been losing home-buyers to regional Victoria for several years, which was evident from the city’s house prices as far back as 2017.
Affordability in regional markets may diminish
“We are seeing [increasing] demand going into those regional markets. Supply is low. Homes are selling quickly,” Lawless noted.
“Perhaps as we go into mid-2021, we will start to see affordability diminish between capital and regional markets.
“If we look at the trend where regional house prices and rents are rising quickly at a time when incomes are quite stable, if not falling, [and] with JobKeeper declining as well, I think we will see affordability issues creep into these [regional housing] markets.”