Regional areas continue to outperform capital cities throughout the pandemic as interstate buyer interest drives demand for lifestyle properties.
According to the latest CoreLogic Hedonic Home Value Index, in the seven months since March, regional dwelling values are up +1.7 per cent, while values across the combined capitals index have fallen by -2.3 per cent.
We take a look at the best performing markets around the country.
Regional markets going from strength-to-strength
CoreLogic recently analysed Australia’s largest regional areas, reporting the performance of both house and unit markets over the 12 months to October.
Of the 50 house and unit markets analysed, only six markets continued to show declines over the year including Riverina houses, Cairns units and units in Central Queensland.
Across all markets, houses continued to be the better performer with 23 of the 25 markets recording value rises, compared to 18 regions with positive growth for units.
According to CoreLogic’s Head of Australian Research, Eliza Owen, the results of this report support the increasing levels of demand outside capital cities throughout the pandemic.
Best performing markets for houses - October 2020
Highest yearly growth: Launceston and North East, TAS: +10.5%
Highest change in sales volume: Bunbury, WA: +24.6%
Shortest days on market: Ballarat, VIC: 29 days
Lowest vendor discount: Newcastle and Lake Macquarie, NSW: -2.4%
When it comes to annual price growth, the riverside city of Launceston and Tasmania’s North East is the country’s top performing region, recording an increase of +10.5 per cent. This region remains the top performer for houses for the third consecutive quarter.
Over on the west coast of the country, the city of Bunbury in Western Australia saw the highest change in sales volume for houses over the year to October 2020, up +24.6 per cent.
The riverside city of Launceston and Tasmania’s North East is the country’s top performing region for price growth, up +10.5 per cent.
Buyers were at the ready in Ballarat in Victoria, with houses in the region selling quicker than any other in the country with days on market sitting at 29 days.
The mildest price reductions were seen for sellers in Newcastle and Lake Macquarie in NSW, with the region reporting the lowest vendor discounts at -2.4 per cent.
Ms Owen told the Australian Financial Review that the growth in Launceston has benefitted from initial growth in Hobart.
“It’s not really a surprise that regional Tassie has performed so well, it’s a relatively small state, and so for the Launceston and north west region, it makes sense you get a spillover of growth that’s been so strong across Hobart, into the next biggest, next most vibrant area,” she said.
Real estate agent Jeremy Wilkinson from Harcourts Launceston agrees, saying there has definitely been a rollover effect from the capital.
“Because Hobart is the capital and to some, it’s as expensive as any other capital city in Australia in certain places - people have rolled to the north.
“The north is convenient. It’s easy to get to from Sydney and Melbourne. It’s beautiful, safe with a lot of greenery, it’s not too hot and more affordable,” he said
Mr Wilkinson says there is a mixture of first home buyers, upsizers and local investors currently in the market, seizing the opportunity.
“There are people moving out of Hobart coming this way; there’s even younger ones buying properties up here in the north as an investment just to get into the market in a good spot.
“I think investors are now going, ‘look we can see it moving, finally there is a bit of capital growth,’ and they’re saying, ‘let’s get on it, because in two years time, we’ll kick ourselves because we won’t be able to afford it,’” he said.
Mr Wilkinson believes that rural towns in Australia will continue to benefit off the back of changing preferences as a result of Covid.
“People will start relocating because they realise they can work remotely.
“I think for the first time ever we’ve had positive population growth. In the past 12 months it's been around 1000 or 2000 people, when normally it’s negative 500 every year,” he said.
Launceston is not the only region recording positive population growth with migration numbers from the ABS showing net internal migration to the regions rose to a record high in the June quarter.
Ms Owens explains these figures, stating that “This is because movements to regional Australia increased, while departures from the regions slowed. As a result, demand for dwellings in regional Australia will have risen at a time when the stock available for sale is relatively low.”
Best performing markets for units - October 2020
Highest yearly growth: Southern Highlands and Shoalhaven, NSW: +8.6%
Highest change in sales volume: Bunbury, WA: +38.7%
Shortest days on market: Launceston and North East, TAS: 26 days
Lowest vendor discounts: Ballarat, VIC: -1.9%
In the regional unit market, the Southern Highlands and Shoalhaven in NSW recorded the highest yearly growth of +8.4 per cent. Looking at sales volumes, the coastal city of Bunbury in Western Australia posts impressive figures, up +38.7 per cent.
Units in Tasmania’s North East and Launceston are selling more quickly than any other region in Australia with days on market sitting at 26 days. Ballarat in Victoria has recorded the lowest vendor discount at -1.9 per cent.
Terry Digger, Principal and Partner of First National - Coast and Country who services properties on the south coast including the Shoalhaven, says that in the 30 years of working in the region, he has never seen so much demand for property.
“I have never experienced a market as buoyant as this to be honest, the last two months have seen a surge in buyer activity, and obviously coming into spring and summer, which is a more active time for selling, the turnover has increased substantially.
"I have never experienced a market as buoyant as this to be honest, the last two months have seen a surge in buyer activity"
“Because we’re a small coastal region with a limited number of sales per year, we don't need a large increase in buyers from Sydney to push the market, so a small increase in buyer activity can influence the market quite a lot, and that’s what we’re seeing,” he said.
According to Mr Digger, demand has shifted slightly due to the pandemic.
“There’s always a strong demand from retirees, but we’re certainly seeing families and young couples moving from Sydney because of the ‘working-from-home scenario,’ so that has affected the market as well,” he said.
Other notable regions
Using a combination of CoreLogic data and our internal data, we’ve rounded up some other lifestyle areas around Australia that have been performing strongly year-on-year.
According to Ms Owen, commutable regional areas within a reasonable travel distance to the major metro centres have seen a particularly extraordinary increase in demand.
“House sales volumes increased by double digits across the mid north coast, Illawarra and the Hunter Valley,” she said.
In the Illawarra region, agents are reporting fierce competition for properties as buyer demand increases.
Daniel Ellem, Director and Sales Consultant from Illawarra Estate Agents says that before November, the team had experienced some of the busiest months they’ve ever had with most properties selling extremely quickly.
“In the Shellharbour and Albion Park region, and especially in Albion Park’s new Bella Vista estate, we’re selling properties faster than they’re being built,” he said.
While Government incentives, affordability and lifestyle factors are driving buyers to these regions, listings have not kept up, with most areas reporting a shortage of stock. This shortage of listings, coupled with strong buyer demand has resulted in prices either holding or soaring, which no doubt, is great news for home owners and sellers.