Regional reversal taking place as people move back to the cities

After a record few years for regional property prices, values have started to decline as regional migration begins to stall.

According to the latest CoreLogic Home Value Index, regional home values dropped 1.5 per cent in August, which is catching up with the 1.6 per cent decline the capital cities recorded.

CoreLogic Research Director Tim Lawless said regional home values were also 2.1 per cent down for the quarter, which is a reversal of what happened to property prices during the pandemic.

Between March 2020 and January 2022 regional dwelling values surged more than 40 per cent compared with a 25.5 per cent rise for the combined capitals.

“The largest falls in regional home values are emanating from the commutable lifestyle hubs where housing values had surged prior to the recent rate hikes,” Mr Lawless said.  

“Over the past three months, values are down 8 per cent across the Richmond-Tweed area, 4.8 per cent down across the Southern Highlands-Shoalhaven market and 4.5 per cent down across Queensland’s Sunshine Coast.“

The latest data from PropTrack tells a similar story, with regional property prices falling 0.34 per cent in August to be down 1.2 per cent over the quarter.

PropTrack Senior Economist Paul Ryan said it was the fastest fall in regional home prices since 2011.

“Regional South Australia is the only market continuing to see significant growth, hitting a new price peak,” Mr Ryan said.

“We expect home prices to continue to fall across the country in 2022 and into 2023. Regional areas are now falling persistently but continue to be buffered by the affordability and lifestyle appeal that has led these markets to outperform over the past two years. 

“In the short-term, spring will see market activity pick up, despite price falls as buyers and sellers adjust to higher interest rates.”

Despite recent falls, prices are still significantly above their pre-pandemic levels, with regional areas up almost 50 per cent since March 2020. 

One of the big drivers of the surge in regional property prices has been buyers’ migration away from large capital cities towards the country to cope with Covid-related lockdowns.

Data from the latest quarterly Regional Movers Index showed that regional residents were returning to capital cities, with net migration to regional areas of Australia dropping 35 per cent since the March quarter. 

The number of Millennials relocating from metropolitan areas has fallen 16.5 per cent in the same time period.

Commonwealth Bank Regional and Agribusiness Executive General Manager Paul Fowler said despite the latest falls, the level of net migration was still 30.2 per cent up on the two years before the pandemic.

“Regional economies are booming, many businesses are investing and innovating to strengthen their capabilities and grow, and this is creating new employment options for jobseekers in many regional towns and cities across the country,” Mr Fowler said.

“This is particularly in key sectors such as agriculture and manufacturing where there continues to be strong production and revenue growth.”

Regional Australia Institute Chief Executive Officer Liz Ritchie said people were still moving to regional Australia, but the recent slowdown in numbers should take the pressure off housing demand and provide breathing space for regions to plan for the future.

“We know people are happier when they choose a life in the regions, but investment in creating a sustainable model for Regional Australia to accommodate the changing nature of our populations trends is needed,” Ms Ritchie said.

“Now is the time for a new National Population Plan at the federal level, that considers future settlement patterns to ensure regional communities have the services and infrastructure they need to help them grow.”

The major coastal cities close to the east coast capitals are the main destinations for city-dwellers making a regional move – Gold Coast welcomed 11 per cent of all capital-city movers , Sunshine Coast 6 per cent, Greater Geelong 4 per cent, Wollongong 2 per cent, and Lake Macquarie 2 per cent.

Three of the Top 5 highest-growth local government areas in the 12 months to June 2022 were in South Australia, with young people making up the largest proportion of movers from cities.

Mount Gambier experienced a 90 per cent increase in regional movement over the year, while capital-city people moving to Port Augusta rose 63 per cent and the Yorke Peninsula 50 per cent. 

Other LGAs such as Moorabool in Victoria grew significantly, while Bathurst in NSW also featured in the Top 5 highest growth LGAs for the first time.

Mr Fowler said Bathurst saw a 39 per cent increase in annual growth and is a rapidly growing inland centre with a diverse range of thriving industries, including agriculture, education, healthcare, manufacturing, and construction.

“Bathurst is a renowned for its innovation. There are a growing number of businesses in the region and many exciting projects that are driving employment and growth, benefiting the entire region over the longer term,” Mr Fowler said.

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Rowan Crosby

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