Regional property outpaces capitals despite ‘normalisation’ in local migration

The lack of affordable housing is causing serious social and economic problems.

The lack of affordable housing is causing serious social and economic problems. Photo: Getty

Regional property values are outperforming the major capitals, with a new report showing how key markets in Queensland and Western Australia are seeing huge price jumps in early 2024.

Figures published on Monday by CoreLogic revealed dwelling values across the 50 largest non-capital areas in the country was 1.2 per cent in the three months to January, compared to 1 per cent for the big cities.

CoreLogic research director Tim Lawless said the higher regional increases are a “fairly new” phenomenon since the pandemic, and come as price growth eases in major cities like Sydney.

“The more recent trend where growth in regional housing values has outpaced the capital cities is attributable to a slowdown in capital city growth rates rather than an acceleration in regional growth,” he said.

In other words, the performance of regional markets lately doesn’t reflect a rush of buyers trying to escape high city prices.

Instead, it’s being driven by a moderation in price growth in major cities themselves, while the COVID tree-change trend continues to ‘normalise’.

Specific coastal towns in WA are still booming, however, with value growth of 7.7 per cent in Albany and 6.2 per cent in Bunbury – the highest increases anywhere across the nation.

Queensland’s north is also performing well, with values in Townsville up a strong 4.7 per cent.

“These areas have a diverse economic base and are generally supported by a mixture of agriculture, tourism, ports and mining,” Lawless said.

“They’re the only states with a positive rate of interstate migration that helps support housing demand and they’re relatively affordable markets.”

Source: CoreLogic (click to enlarge).

Regional rents rising fast

Rents are also rising sharply in many regional markets, rising 2.3 per cent nationwide over the January quarter, compared to 2.1 per cent in major capitals.

Increases of more than 3 per cent were recorded in 13 particularly hot regions, including Albany (6.3 per cent) and Bunbury (4.6 per cent).

Gladstone (11.6 per cent) and Mackay (10.4 per cent) in Queensland are also running hot, recording double-digit rent growth over the past year.

Batemans Bay in New South Wales was the weakest market, with rents falling 1.8 per cent over the January quarter and 10.2 per cent in annual terms.

COVID migration ‘normalises’

Only 11 regional markets have seen property prices fall over the past year, located mainly in Victoria, Tasmania and NSW, where again, Batemans Bay saw prices sink 5.8 per cent.

Lawless said a “normalisation” in the internal migration trends seen during the pandemic – when many people moved out of the city – has affected the performance of some regional markets.

But with many regional markets still offering better affordability than capital cities, it’s likely that demand for housing will still remain higher than before the pandemic.

Lawless said the best-performing areas will be those with commute options to a nearby capital, a “lifestyle dividend” and more affordable housing than the major capitals.

“In contrast, the performance of more remote regional markets will hinge on local economic factors, with infrastructure projects impacting housing demand, and climate, weather, currency flows, and policies affecting farming or coastal areas,” he said.

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