Lifestyle regions drawing a city crowd

Real Estate Institute of NSW chief executive Tim McKibbin is literally well placed to comment on the prospering property market in Australia’s regional and lifestyle-focused cities and towns.

From Western Australia’s South West to northern Tasmania and coastal towns dotting the east coast, an urban exodus has fuelled a COVID-induced property boom in regional Australia.

Speaking from Great Mackerel Beach where he is working remotely, Mr McKibbin told Australian Property Investor Magazine that locations within 200 kilometres of Sydney were in high demand and experiencing plummeting rental vacancy rates, while towns further afield were also active.

It was a story being played out across the country.

“Like so many city workers I’m now working remotely, about 50 kilometres outside Sydney and only going to the city once a week or fortnight,” Mr McKibbin said.

“Not long ago I didn’t know what Zoom was and now I can’t live without it – it’s a change to the way we work and interact and it’s difficult to know when or if things will revert to normal again.”

Around the country, regional vacancy rates in so-called lifestyle locations have fallen from around 4 per cent to below 1 per cent. In NSW, Mr McKibbin put this down to an exodus of people leaving western Sydney for a safer, cheaper and improved lifestyle.

“Closer to Sydney, locations on the Central Coast region are thriving, while beyond 200 kilometres away, places like Albury and Coffs Harbour are doing well.”

In the latter, the rental vacancy rate went from a high of 4.5 per cent in February to 0.9 per cent in September.

Close to the Queensland border, Byron Bay’s world-class beaches, lush hinterland, foodie scene and creative industries were luring buyers and renters from Brisbane and Sydney.

Bridie McKelvey, marketing manager at First National Byron, said growth in sales, values and volumes were up in all price ranges.

“It’s across the board, with the rural, hinterland, small acreage, and larger town blocks particularly popular for buyers seeking safety, comfort and space in a COVID-affected market,” she said.

The flight to the regions comes at the expense of the cities. In September, Melbourne was Australia’s weakest performer over the month, with its lockdown affected market producing a 0.9 per cent fall in median house prices. Sydney’s median was down 0.3 per cent for the month, while Darwin was the strongest performer, with a gain of 1.6 per cent.

Melbourne has experienced tougher lockdowns than any other city in Australia. As a result, the Mornington Peninsula has consistently appeared at the top of property internet search activity this year.

Island escapes

If you’re wanting to escape a pandemic, an island is probably not a bad place to head to.

Enticingly located between the township of Airlie Beach and the Great Barrier Reef off the central Queensland coast, the Whitsundays comprise 74 mostly uninhabited islands. Those that are inhabited are proving a magnet to fleeing city-dwellers.

Principal at Ray White Whitsunday, Mark Beale, said the strongest growth in the islands’ market is currently in vacant land and houses above $800,000. 

“Most of these are southern buyers wanting to escape the city, have a holiday home they can live in full-time the next time there's a pandemic,” Mr Beale said.

“The 25,000 building grant has pushed land sales very well and we have small amount of first home buyers, a lot of mining families preferring to live here rather than Mackay and holiday homes are very popular and will become more popular on the back of a big tourist season, bringing in high returns for property owners."

Across Australia’s largest island there were some standout Tasmanian municipalities that experienced considerable growth over the previous quarter for house sales, driven in part by renewed mainland buyer interest, and focused heavily on the north and north east of the island state.

“Mainland investors retreated from the market in Tasmania earlier in the year by approximately 10 per cent but the enquiry rate has increased considerably over the previous month,” said Real Estate Institute of Tasmania president Mandy Welling.

The highest growth areas were Dorset, which experienced a median price increase of 17.5 per cent, Devonport 17.3 per cent and the Central Coast 14.2 per cent over the past three months. The regional lure was far stronger than in the south, where prices still rose but not as dramatically in Hobart (5.9 per cent) and Glenorchy (4.3 per cent).

Borders have been closed to all non-essential travellers since March, with mainland buyers resorting to online viewings.

On the opposite side of the country, in WA’s South West, the lifestyle and hobby farm market had been recovering from a long property decline when COVID-19 hit.  But the lifestyle market across the southwest has gained momentum in the past three to four months.

Most buyers have been Perth people looking for a permanent or holiday property, including retirees and semi-retired workers who can do their work online. Lifestyle properties in this region generally vary from less than one hectare to 80ha, with most enquiries in the 2ha to 20ha range. 

Regional development

The surge in regional interest is also driving property development, fuelled in part by young buyers from the city seeking a different lifestyle.

Australia’s oldest private property developer, Lewis Land Group, sold out its latest land release within 24 hours, highlighting the extraordinary interest and growth in demand for the Port Macquarie area.

Sovereign Hills is a $500 million, 2400 lot master planned community 10 minutes’ drive from Port Macquarie CBD, on NSW’s mid-north coast.

Lewis Land Group chief executive Matthew McCarron said growing interest in the area, combined with government assistance for first home buyers and home construction, all contributed. 

“The new federal government HomeBuilder grant, existing NSW First Home Buyer support programs and early access to superannuation are making it easier than ever for young Australians to get into the housing market. 

“First home buyers have accounted for 26 per cent of purchasers of this release, which is about double our usual experience” Mr McCarron said.