Regional Australia’s record run of property price growth has finally started to slow according to new data.
The latest CoreLogic quarterly Regional Market Update showed that price growth in Australia’s 25 largest non-capital city regions fell to 4.7 per cent in the three months to April 2022, down from 6.6 per cent at the same time last year.
Over the past 12 months, dwelling values across the combined regions climbed 23.9 per cent, outpacing their capital city counterparts, which were 14.6 per cent higher over the same period.
CoreLogic’s Research Director Tim Lawless said low supply and heavy migration fuelled regional price growth.
“Although demographic data is significantly lagged, anecdotally we are still seeing strong demand for regional housing supported by high internal migration rates,” Mr Lawless said.
“The high level of demand is supported by estimates of home sales, which were tracking 20.1 per cent above the previous five-year average over the three months ending April 2022.
“It seems many employers across the relevant industries have implemented permanent hybrid working arrangements for staff which is likely to be supporting the stronger demand trend across regional Australia.”
The report showed the Hunter Valley, excluding Newcastle, was the best performed non-capital house market, with an annual growth rate of 34.3 per cent, overtaking Southern Highlands and Shoalhaven (33.3 per cent).
“We are likely seeing worsening affordability pressures limiting the rate of growth across the Southern Highlands and Shoalhaven, where the quarterly rate of growth has reduced from 9.7 per cent late last year to 5.6 per cent over the most recent three month period,” Mr Lawless said.
“Across the Hunter Valley region the median value of a house is still well below $1 million implying less dampening pressures from worsening affordability.”
The largest change in sales volumes was recorded in Central Queensland, New England and North West regions of NSW, which both recorded a 42.9 per cent increase in house sales over the year to February 2022, followed by Queensland’s Townsville (41.2 per cent), Mackay – Isaac – Whitsunday (40.8 per cent), Wide Bay (36.1 per cent) and Cairns (35.6 per cent) regions.
At the other end of the scale, Victoria’s Latrobe – Gippsland region recorded the lowest change in house sales over the year to February 2022 (2.4 per cent).
Houses in Toowoomba sold fastest in the 12 months to April 2022, where the median time on market was 13 days, followed by Queensland’s Sunshine Coast and Gold Coast, where both regions recorded a median time on market of 16 days.
The slowest selling region for houses was the New England and North West regions in NSW, where the median time on market recorded was 46 days over the same period.
The Hunter Valley, excluding Newcastle in NSW, had the lowest discount to secure a sale (with a median discount rate of -1.8 per cent), while the highest discounts were offered across the Mackay – Isaac – Whitsunday region in Queensland, with vendors offering a median discount rate of -4.2 per cent in order to secure a sale.
Across Australia’s regional unit market, the Launceston and North East region in Tasmania saw a 30.9 per cent increase in values over the 12 months to April 2022, making it the best performing unit market. This was followed closely by Queensland’s Sunshine Coast (29.3 per cent) and Gold Coast (28.4 per cent) regions. At the other end of the scale, Queensland’s Mackay – Isaac – Whitsunday (0.9 per cent) and Townsville (2.2 per cent) regions saw minimal growth over the same period.
Mr Lawless said the number of homes available for sale across regional Australia was more than 40 per cent below the five-year average and 20.5 per cent lower than a year ago, which could help support prices in the event that interest rates continue to rise.
“Clearly we are still seeing a disconnect between available supply and demonstrated demand,” he said.
“These conditions favour vendors over buyers.
“Buyers in tightly supplied housing markets are probably feeling a bit rushed in their decision making process and will generally have little opportunity to negotiate on the advertised price.”
Mr Lawless said he expected growth rates in regional areas to continue to slow down.
“Arguably some regional markets will be somewhat insulated from a material downturn in housing values due to an ongoing imbalance between supply and demand,” he said.
“We are continuing to see advertised stock levels remain extraordinarily low across regional Australia and settled sales activity looks to be holding firmer relative to the capitals.
“A lot will depend on regional migration patterns and we expect the demographic trends to continue favouring regional housing markets, especially those regions with some lifestyle appeal within a few hours’ drive of the major capitals.”