October 27, 2023 G News by ash

The regional housing markets where prices are set to surge

Rising capital city home values could price out a growing number of buyers in coming months, experts say in affordable regional housing markets near CBDs, such as Newcastle and Wollongong.

Despite stabilizing house prices in the past three months, the outlook for more premium regional areas, such as Byron Bay, remains uncertain amid weak consumer sentiment.

NAB head of valuations and property advisory Mark Browning said that regional markets that are still relatively affordable and located within good proximity to capital cities are seeing a resurgence, as they are becoming an attractive option for home buyers unable to afford capital cities.

The appeal of a good climate and a desirable lifestyle will still attract people seeking sea and tree-change experiences, affecting property prices in these areas even with less regional migration and higher interest rates.”

According to CoreLogic, Sunshine Coast suburbs Mooloolah Valley and Glenview have risen 9.4 percent each over the past three months, while Greenock and Penola in South Australia have gained more than 9 percent.

Newcastle house prices rose 3.6%, but this was much higher than the 0.2% gain experienced in the previous three months. Likewise, Wollongong grew 3.8%, which is more than double the 1.7% tallied in the previous quarter.

There was a 3.0% increase in Lake Macquarie, a 2.7% increase in Shellharbour, and a 2.6% increase in Toowoomba.

As affordability worsens in capital cities, CoreLogic’s head of research Eliza Owen predicts a growth in commutable regional markets.

Regional centres may benefit from the fact that expensive markets like Sydney are on the rise again. According to her, first-time home buyers and young families may turn to nearby regional centres like Wollongong and Newcastle for housing.

Wollongong, Newcastle, and Geelong could see strong growth in the year ahead, just based on the idea that we are returning to pre-COVID rent trends.

As people are priced out of capital cities once again, the more affordable commutable areas have a stronger case for purchasers.

CoreLogic says Newcastle’s median house price is $893,826, which is $440,159 cheaper than Sydney’s and comparable to an average two-bedroom unit’s $817,059 price.

There are currently $981,136 houses for sale in Wollongong, which is $352,849 cheaper than Sydney.

Ms Owen says high-priced regional markets, like Byron Bay, with its $1.44 million median house price, remain uncertain amid weak consumer sentiment and higher interest rates.

“At a macro level, the upswing appears uncertain, reflecting some uncertainty households still have regarding interest rates. This will continue until households are more confident that interest rates have peaked,” she said.

The house prices in Byron Bay rose 0.3 percent in the past three months, after falling 1.5 percent in April. There has been a 25.5 percent drop in house prices compared with a year ago.

Castlemaine, Kyneton, and Heathcote, smaller Victorian towns popular with tree-changers but within commuting distance of Melbourne, also went backwards.

In the three months to July, house prices increased by 1.2 percent across the combined regional markets, compared with 3.5 percent across the combined capital cities.

According to Ms Owen, the market also lost a bit of momentum in July, with growth slowing down from 0.5 percent to 0.2 percent.

As long as we don’t know where monetary policy and employment are heading, the upswing might appear soft at the aggregate level, reflecting households’ current borrowing constraints.”