Pandemic fuels regional migration and pushes property prices up

Across the country, prestige and regional property markets have seen incredibly positive results over the past year, but other areas have also experienced prominent changes.

Regional and prestige property markets have been major winners over the past year and a half, according to Ray White Chief Economist Nerida Conisbee.

In 2020, Australian Bureau of Statistics data showed Australia experienced the highest level of net migration into regional areas ever recorded.

This led to a significant increase in property prices.

“For decades, government policy has aimed to move people out of congested capital cities and into regional Australia,” Ms Conisbee said.

“While this has had some success, it was nowhere near as successful as COVID.

“Since the start of the year, we have seen this price growth continue in regional areas, however capital cities have taken off far more quickly than they did in 2020. At the most extreme has been the change in price acceleration in regional New South Wales and Sydney. 

“Regional area growth has been far more consistent over COVID-19 than capital cities. A quarter of suburbs that hit $1 million medians last year were in regional areas, ranging from Anglesea in Victoria to Redhead in Newcastle. Most of them were beachside.”

Meanwhile, the prestige market has also seen significant changes since the beginning of 2020.

Ms Conisbee said this time last year, there were 462 suburbs in Australia with median prices above $1 million.

Since then, 106 additional suburbs have been added to this list, with most of them located in Sydney, south-east Queensland and Melbourne. 

“High-end property has done well during the pandemic. The drivers of demand for our most expensive properties have been consistent with the general market – very low interest rates and high savings rates,” Ms Conisbee said. 

“The other key feature of luxury property demand during the pandemic has been the accelerated growth in the highly sought after regional areas.”

However, Ms Conisbee stressed that the rental market was the most adversely impacted by the pandemic. 

“While prices were hit a little in the early months of the pandemic, growth began again fairly quickly,” she said.

“Meanwhile, rental declines were far more sustained.

“Nevertheless, the rental market has recovered in most parts of Australia, driven by better economic conditions and increasing wealth. 

“The areas that are seeing the strongest rebound are Darwin and Perth, both cities are heavily dependent on mining conditions which are booming.

“Canberra has also done well off the back of big increases in government employment. In sharp comparison are the apartment markets of Melbourne and Sydney.”

In Perth, house prices are 12.5 per cent below the last peak in June 2014. However, rent is only two per cent below the May 2013 peak.

Darwin is now the strongest market for price and rental growth, according to Ray White.

That means Hobart is no longer the most affordable capital city, with its median price higher than Darwin, as well as Adelaide and Perth. While Hobart is the largest city in Tasmania, the entire state has seen strong growth over the pandemic.

Auctions in different property markets

Ms Conisbee said Australia’s property auction market has fared well over the past year with momentum still increasing throughout July despite most of the country experiencing a lockdown at some stage.

In July to date, the Ray White Group has kept the auction clearance rate above 75 per cent while average registered bidders and average active bidders have increased from last month at 6.4 and 3.6. 

In Melbourne, the strict lockdown will be over by this weekend. However, restrictions will still be in place for auctions, which can now take place onsite.

Ms Conisbee said online auctions have become a staple in Sydney and this weekend they will continue.

Unlike Melbourne, real estate agents in Sydney have been fortunate enough to still be able to serve customers in need through private inspections.

This week marks the second Saturday of auctions being conducted off the back of campaigns run entirely through lockdown, but Ms Conisbee said that hasn’t slowed buyers down.

In Brisbane, onsite auctions are still able to take place with restrictions but Ray White has seen an increase in potential buyers bidding over the phone from interstate and overseas.

In Adelaide, lockdown has ended but some restrictions are still in place.

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