After booming throughout the pandemic, regional property prices have continued to outperform the capital cities in 2022, driven by ongoing demand and tight supply, according to a new report.
The PropTrack Regional Australia 2022 Report found values in regional Australia have only fallen 2.2 per cent since their peak in April 2022, after rising at an exceptional pace throughout the pandemic.
While pandemic-induced preference shifts drove record demand in the regions over the past two years, demand has slowed as interest rates have risen.
The Richmond-Tweed area, home to Byron Bay has been the regional market that has seen the biggest declines this year, with home prices down 6.3 per cent from their peak.
It’s closely followed by the Southern Highlands and Shoalhaven, where tree-changers sought space in the likes of Bowral where values in that region have fallen 5.3 per cent from their peak.
Regional NSW is home to the most regions seeing prices fall the furthest, accounting for four out of the top 10 regional markets where prices have slipped the most.
Other markets that thrived during the pandemic have also seen home price growth slowing rapidly, like the Sunshine Coast (-5.1 per cent), Geelong (-4.5 per cent), and Illawarra (-3.9 per cent) regions.
PropTrack Senior Economist and report author, Eleanor Creagh said the boom times in regional Australia have now passed by there is still demand in many regional areas.
“As public health restrictions have eased and interest rates have quickly risen, the boom has been replaced with slower growth and elevated uncertainty,” she said.
“While it remains a relative bright spot in the current housing market, regional home prices are falling.
“Regional prices are expected to continue to decline amid monetary tightening and reduced net migration flows to regional areas.”
According to the report, it’s the higher-priced areas within regional Australia that are seeing the steepest price falls, while values in more affordable regions are holding up well.
Regional Queensland continues to be a hot spot for buyers and is the top searched location for interstate property seekers in regional Australia, with close to a third (31 per cent) of all searches in regional Queensland from interstate property buyers.
According to census data, the Sunshine Coast, Gold Coast and Wide Bay, were the leading locations in the country for internal migration last year, which was one of the key drivers of growth in Queensland property prices.
Notably, demand for homes in regional Queensland, South Australia, and Western Australia continues to exceed that of homes in regional New South Wales and Victoria.
The report found that the number of potential buyers per listing in regional Australia has fallen 22 per cent from the peak recorded in January 2022.
However, it remains close to three times pre-pandemic levels and stronger relative to the capitals.
While the stock of properties for sale in regional markets remains low, down 37 per cent on pre-pandemic levels.
Regionally, the median number of days a property was listed on realestate.com.au before selling hit just over 50 days in October, up from last year’s record low of 29 days.
Ms Creagh said regional markets are likely to continue to exhibit a slower pace of price falls compared to capital cities.
“They remain buoyed by shifting lifestyle priorities, migration trends and affordability advantages that are still in play,” she said.
“In addition, conditions remain tougher for regional buyers, with the number of properties listed for sale still well below pre-pandemic levels, which is also seeing some markets remain more competitive and shielding home values.”