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The latest data shows capital city values have dipped into negative territory, falling by 0.7 per cent, while regional values have increased by 1.0 per cent over the rolling quarter.
A deeper analysis reveals that almost three-quarters of regional suburbs (72.6 per cent) saw an increase in dwelling values during the three months to January, up from 66.2 per cent in the September quarter.
In contrast, the proportion of capital city suburbs recording declines has increased, from 31.3 per cent in September to 48.6 per cent in January.
CoreLogic economist Kaytlin Ezzy said these mixed results could be attributed to improved relative affordability across the regions, a rise in listing levels in the capitals, and increased regional internal migration.
“After underperforming the capitals through much of 2023, the regions have regained much of the affordability advantage, with the capital city premium widening by around $50,000 over the past two years to around $240,000 in January,” Ezzy said.
“With demand skewing towards the more affordable end of the market, it’s not surprising to see value growth shift away from the capitals towards the regions, as cash-strapped buyers look further afield for more affordable markets.”
Ezzy noted that the regions have also benefited from both an elevated flow of capital city residents moving to regional areas and a reduction in the number of people leaving the regions for the capitals.
“We’re almost five years on from the onset of COVID, and it appears that remote and hybrid working arrangements are here to stay.
“With more people able to prioritise lifestyle over job location, the flow of internal migrants to regional markets has settled higher than the levels seen pre-COVID, helping to support housing demand.”
Declines in the capitals become broad-based
While declines at the suburb level have become less common across the regions, capital city declines are becoming more widespread.
“Worsening affordability, easing new overseas migration and a steady accumulation of for sale listings has helped swing capital city selling conditions back in favour of buyers, with quarterly value decline becoming more common across the capitals, particularly in Sydney and Melbourne,” Ezzy said.
Almost three in four suburbs in Sydney saw a decline in values over the three months to January, up from just 30 per cent in September, while nine out of 10 suburbs in Melbourne recorded quarterly declines.
“Quarterly declines are also starting to creep into Brisbane, Adelaide and Perth, as momentum leaves the stronger-performing mid-sized capitals.”
Stabilisation of the market
These mixed results have led to some market stabilisation, with regional increases offsetting capital city declines.
“At the national level, values held steady in January, with the 0.2 per cent decline seen in capital city values cancelling out the 0.4 per cent increase in regional values,” Ezzy said.
The trend looks set to continue, with the 28-day change in the CoreLogic daily index holding steady around the 0.0 per cent mark.
[RELATED: Internal migration a boon for regional housing markets]
