Regional areas and high-end Sydney suburbs lead the bounce back

Affordable regional areas and high-end Sydney suburbs dominate the list of locations experiencing a market bounce back, according to new research.

CoreLogic’s Property Pulse found that of the top 25 performing suburbs this quarter, 20 are located in regional Australia, spread across South Australia, Victoria, New South Wales, Western Australia and Queensland.

While the only capital city represented was Sydney, where top-performing suburbs were found across the affluent North Sydney and North Shore suburbs.

According to CoreLogic, Robe in South Australia was the strongest-performing location over the past three months, with prices growing 8.3 per cent.

Other regional locations that topped the list this quarter included Dinner Plain in Victoria (8 per cent), Trangie (7.4 per cent) and Werris Creek (7.1 per cent) in NSW and Kalbarri in WA (6.9 per cent).

CoreLogic’s Head of Research, Eliza Owen said more affordable locations in regional areas have been seeing strong demand.

“It has been common for regional Australia to dominate growth charts through the pandemic period, but as the cycle has matured, it seems to be more rural regional markets with particularly low price points that have seen the strongest rates of growth,” Ms Owen said.

“The average median value of regional top-performing suburbs was $442,468. 

“Dinner Plain in the Victorian Alps, 13km from Mount Hotham, is a striking exception among the top-performing regional suburbs, where values have trended higher following a slight dip through the second half of 2022.”

Across Sydney, East Killara (6.8 per cent), Middle Cove (6.4 per cent) and Warrawee (6.4 per cent) also made it into the top 10.

“These suburbs are largely popular with owner-occupiers, having a higher than average owner-occupier rate of 76 per cent, compared to an average 63 per cent across Greater Sydney suburbs,” Ms Owen said.

Source: CoreLogic

Ms Owen said around the rest of the country there are a diverse range of states with a high portion of suburbs experiencing growth – led by Sydney (43.9 per cent) and Perth (57.3 per cent).

“The number of suburbs seeing growth tells us a bit about where these regions are in the cycle,” she said.

“For example, Hobart had just two suburbs that saw dwelling value increases in the quarter, as the city has moved through a steep peak-to-current decline of 12.9 per cent. 

“Steep price falls in the city follow more than seven years of almost uninterrupted growth, so it is somewhat unsurprising to see such an extended, broad-based decline.”

Ms Owen said there was a relatively high volume of suburbs experiencing growth across Sydney and Perth, however, they have very different growth dynamics. 

“Sydney dwellings are showing signs of a rebound, following a peak-to-trough decline of around 14 per cent over the year to January,” she said.

“Sydney often leads inflections in the housing cycle across capital city markets, and may be seeing a relatively high portion of markets in growth because it is moving through to the next cyclical phase. 

“Strong recovery has been concentrated in the high end of the market, with the top five performing suburbs having median dwelling values of at least $1.5 million.”

Ms Owen said if Sydney is leading capital cities out of a downswing, Perth has yet to go through one. 

“Perth dwelling values have held reasonably steady since rates started to rise, tracking just 0.4 per cent below a recent high in July last year,” she said.

“This mild decline follows an upswing of 25.9 per cent between June 2020 and July 2022. 

“Home values across Perth are highly affordable due to subdued capital growth performance in the longer term, and have likely not been as impacted by recent rate rises as a result. 

“If anything, it has been more affordable suburbs that led growth across Perth in the March quarter, including Forrestdale (up 4.7 per cent), Bouvard (4.6 per cent) and Falcon (3.7 per cent), all located well south of the city.”

Looking ahead, Ms Owen said the proportion of suburbs recording a rise in values could start to trend higher. 

“If this cycle mirrors historic ones, the higher-tier markets of Sydney and Melbourne are likely to show more suburbs in upswing over the coming months. 

“However, the prevalence of highly affordable regional markets in the top performing suburb list is quite different to what we’ve seen in previous inflection points. 

“In late 2019 when the market was showing signs of moving into an upswing, Sydney suburbs were topping capital growth charts.”

Ms Owen said In mid-2012 when the market was moving into an upswing, resourced-based markets across WA and Darwin dominated. 

“The current upswing could reflect a hangover of the pandemic and the interest rate environment, where affordable, regional property remains desirable,” she said.

Source: CoreLogic

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.