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The country’s most popular regional markets have continued to fall off their record highs, with CoreLogic’s Regional Market Update observing softer values, longer days on market, and bigger vendor discounts in the 12 months to April 2023.
The survey, which examines Australia’s 25 largest non-capital city regions, found South Australia’s south-east region remained the best-performing regional house market on an annual basis, with value growth of 10.8 per cent, taking its median house price to $444,798.
The next best performers were NSW’s New England and North West regions (up 4.9 per cent), to a median house value of $418,511, while Western Australia’s Bunbury bumped up 4.8 per cent to $523,479 (median value).
In contrast, house values in NSW lifestyle market Richmond-Tweed have fallen 24.2 per cent, taking its median value to $875,592.
However, this followed a 51 per cent surge in house values Richmond-Tweed experienced during the pandemic.
The region also recorded the biggest fall in annual sales activity down 39.9 per cent and the highest vendor discounting rate down 7.9 per cent.
In addition, the Southern Highlands and Shoalhaven dropped 16 per cent to a median value of $894,505 and the Illawarra fell 13.7 per cent, recording the largest annual declines in house values for the year to April 2023.
However, Illawarra’s median house value remained relatively high, compared to its regional counterparts, at $947,473.
The downturn has continued the falls recorded for the year to January 2023, where “the drastic shift in market conditions” was beginning to show, following the regional boom experienced during the pandemic.
CoreLogic’s economist Kaytlin Ezzy said it was “not surprising” that some of the largest annual declines were recorded across several of the country’s most expensive regional lifestyle markets.
“Over the past year, premium lifestyle markets have been hardest hit by softer market conditions and rate increases,” she said.
“These markets were among the largest beneficiaries of regional migration through the COVID-19-induced upswing and, as a result, became significantly more sensitive to the rising cost of debt and the normalisation in regional migration trends.”
The data also showed houses in Toowoomba in Queensland’s Darling Downs sold fastest during the quarter, with a median time on market of 21 days.
The Southern Highlands and Shoalhaven region, south of Sydney, recorded the longest days on market, with houses taking a median of 79 days to sell.
Rural markets remain resilient
Affordable rural markets have displayed remarkable resilience, according to Ms Ezzy, with these markets having experienced only minor declines, with select regions even recording values at their peak.
Ms Ezzy attributes this resilience to various factors, including relative affordability; low listing levels; increased regional migration inflows; and robust economic activity in mining, agriculture, and tourism sectors.
“Despite two interest rate rises over the first few months of the year, these markets offer relative affordability, have low listing levels, increased regional migration inflows and strong economic activity off the back of mining, agriculture and tourism. This has all helped support mild value growth,” she said.
She emphasises that the influence on values extends beyond interest rates alone, citing stock levels, migration patterns, local economic factors, and an overall improvement in consumer sentiment as key factors contributing to the stabilisation of values across some regional markets.
Moreover, positive developments have been observed in quarterly house figures in desirable commuter markets, such as the Gold Coast in South-East Queensland and the Illawarra and Newcastle in NSW.
She explained these markets typically lead the cycle and, although the growth has been gradual, the positive growth witnessed in the three months leading up to April indicates “a potential end to the decline in property values and signifies the beginning of a recovery phase in regional markets”.
Ms Ezzy said multiple factors such as low stock levels, a perceived end to the rate tightening cycle, and an improvement in consumer sentiment are helping keep a floor under values across some of these markets.
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