AFTER a long pandemic where regional housing market experienced a consequential boost, property value is beginning to decline at a rapid pace outside Australia’s capital cities. It comes after surging growth in the regional market in the past two years that have led to further issues with affordability. CoreLogic’s regional market update looks at the 25 largest non-capital city regions in Australia and their performance in the housing market. This past quarter has resulted in a decline of house values across 22 of these cities, with SA’s South East, WA’s Bunbury staying the same and Central Queensland with an incline of 0.1%.
Southern Highlands and Shoalhaven have lost significant popularity according to these figures. They’ve recorded the lowest change in housing sales (-27.5%) and unit sales (-35.8%) in the past 12 months. The region has also had the most vendor discounts at -4.9%. Regional Queensland has been affected less than regional NSW. Townsville, QLD is the highest performing regional area in sales volumes with an increase of 21.6%. Meanwhile when it comes to how long a house is on market for, Toowoomba has taken the shortest amount of time with houses on average going after 13 days.
Regional NSW have witnessed the lowest yearly growth within Richmond-Tweed (-7.8%) and houses have taken an average 43 days to leave market in New England and North West, more than any of these 25 regions. Six of the most popular lifestyle markets all recorded falls of -6% or more in the last quarter – Richmond-Tweed (-11.7%), Southern Highlands and Shoalhaven (-7.1%), Sunshine Coast (- 7.1%), Gold Coast (-6.4%), Illawarra (-6.1%) and Newcastle and Lake Macquarie (-6.0) Economist at CoreLogic, Kaytlin Ezzy says there are a number of causes that have led to the quarterly decline of values in 87.8% of the regional house and unit markets in this report.
“Consecutive interest rate rises, persistently high inflation, and waning consumer sentiment saw the pace of value declines accelerate across regional Australian property markets,” Ezzy said. “It is unsurprising the Richmond-Tweed region recorded the strongest decline in house values.” “Throughout the COVID period, values skyrocketed, rising more than 50% and taking the median house value to more than $1.1 million. However the impact of this year’s floods, coupled with seven consecutive rate rises, has seen house values fall in the region by nearly -16% since April,” she added. Along with SA’s South East, other areas to achieve growth in value over the past 12 months are Riverina (20.5%) and New England and North West (19.8%). Unit values have all increased annually in 14 of the 16 regions analysed however, 14 saw a quarterly fall.
“While unit values have not been immune to the downturn, units have largely been more resilient than houses through the downswing to date,” Ezzy says. “If this trend of house values falling at a faster pace than unit values persists, we could see some demand shift towards the detached segment as the value premium for houses shrinks,” While it is a stunningly rapid decline, sales activity is down across the country and has been slowing for a few months – especially after such a busy sale period we experienced last year. “Sales activity has continued to soften over the quarter, with only a few regions, predominantly in northern Queensland, recording an increase in annual sales volumes. While down compared to the previous year, it’s important to remember that last year was one of the busiest sales periods on record, and the majority (76%) of regional markets analysed are still recording higher annual sales volumes compared to their previous five-year averages,” Ezzy added.