Regional property surge ‘to continue for a decade’

A shortage of property supply in the capital cities is set to fuel a decade-long shift to regional centres, as Australia’s regional housing market continues to outpace the state and territory capitals. 

Property Council of Australia chief executive Ken Morrison told Australian Property Investor Magazine that a lack of affordable urban supply would ensure a population and capital shift to the regions would continue in most states over the next ten years or so.

His comments came as CoreLogic reported the regional housing market has far outperformed value growth across Australia’s capital cities in the last 12 months, rising 13.0 per cent compared with a 6.4 per cent gain in capital city values.

The quarterly Regional Market Update examined the 25 biggest non-capital city markets and revealed Richmond-Tweed in the far north of New South Wales had the greatest gains for houses and units, with 21.9 per cent and 15.5 per cent annual growth respectively.

This region includes high profile beachside destinations such as Byron Bay, Suffolk Park and Lennox Head as well as popular hinterland villages such as Bangalow. 

The median house value across the Byron council area is now $1.4 million, which is higher than Greater Sydney’s median of $1.147 million

The worst performer across both market segments was Bunbury in Western Australia, where house prices rose just 3 per cent, while unit values declined 4.4 per cent over the year.

The South West town, however, had the highest change in sales volumes, up a huge 51.4 per cent.

Mr Morrison said the flight to the regions would continue but also presented problems for locals priced out of their own markets and burgeoning strains on infrastructure as small towns contended with bigger populations and changing demographics. 

“Infrastructure pressures are being felt right across Australia, but particularly in some of our faster growing regions,” he said.

“State governments need to focus on increasing the efficiency of releasing supply. 

“The coordination of agency approvals and utility connection in new suburbs are a major obstacle to well managed growth in many regions.”

Reforms were needed across the country he said, but some states were managing the rapid regional transition better than others.

“Tax setting needs to be a core consideration to keep housing affordable across all parts of Australia, with more a quarter of the cost of a new home being made up of taxes, fees and charges from all levels of government.”

“While no agency is perfect, the Victorian Planning Authority is an efficient model of delivery with the right leadership and cultural approach to further improve housing supply to meet community demand in coming years.”

“Governments need to empower bodies of this kind to clear planning bottlenecks where local politics gets in the way of regional or state need to find homes for their growing populations.”

Lifestyles changing

CoreLogic’s research director, Tim Lawless, said the faster pace of growth reflected stronger demand flowing into the regional areas of Australia through the COVID-period to-date.

“This can partly be explained by the new popularity of remote and flexible working arrangements, but also increased demand for lifestyle oriented properties and holiday homes,” Mr Lawless said.

“No doubt the more affordable housing options across many of Australia’s regional markets is another incentive; in April there was a $247,400 difference between the median value of capital city dwellings and regional dwellings.

“Playing into the lifestyle trend, it’s no surprise to see the Richmond-Tweed area topping the list for capital gains,” he said.

As with the Property Council, Mr Lawless said regional housing markets remained well placed to record higher than average levels of demand.

“Prospects were especially strong for those markets located close enough to capital cities to provide a commuting option, and those lifestyle markets that are popular with sea and tree changers,” he said.

“While surging values are probably good news for homeowners in these regions, for those that don’t own a home, affordability is being stretched, particularly for long-time locals whose incomes are unlikely to be rising at anywhere near the pace of house price appreciation, and they may be forced to seek out housing options further afield.”

Counting the days

Looking at days on market, the quickest selling region for houses over the year to April 2021 was Ballarat in Victoria, where it is currently averaging 24 days to secure a sale, followed by Newcastle and Lake Macquarie in NSW (26 days), and Illawarra, NSW (27 days). 

The region with the longest days on market over the year was the New England and North West region (NSW) where houses are taking around 84 days to sell. 

The Hume region in Victoria is offering the lowest discount to secure a sale (-2.3 per cent), while the highest discounts are being offered across the Townsville region (Qld) with vendors offering a discount rate of -5.4 per cent in order to secure a sale.

Across Central Queensland, sales volumes for units increased by 76.0 per cent over the year to February 2021, while

Sales volumes for units were down across the Launceston and North East region of Tasmania, falling 27.9 per cent over the same period. Hume (-5.4 per cent), Cairns (-4.4 per cent) and Ballarat (-1.8 per cent) were the only other regions to see sales volumes decline across the unit market over that period.

Units across the Launceston and North East region currently sell quicker than any other region with the median time on market sitting at 24 days over the year to April, followed by Ballarat, (27 days) and Illawarra (34 days).

Meanwhile, selling conditions remain much more challenging across Central Queensland where units are taking around 92 days to sell. The Townsville region is offering the largest discounts to secure a sale (-6.5 per cent), while the lowest discounts are being offered across the Ballarat region (-1.8 per cent).