Regional areas gained significant popularity during Covid as Aussies packed up and shifted away from the cities, but there are signs the trend is slowing.
However, as a Covid-normal way of living resumes, the regional market is now showing signs of slowing.
The latest PropTrack Regional Australia Report 2022 shows Covid-normal life is seeing demand for homes outside the city decline, with the number of potential buyers per listing down 22% from a peak recorded in January.
Prices have also been impacted by this slump in buyer interest, declining by 2.2% from an April peak.
Several factors impact the slowing market
Eleanor Creagh, PropTrack senior economist and the report’s author, said there are several reasons why this is happening, including low levels of stock of property for sale, which is down 37% on pre-pandemic levels.
“The past two years were an exceptionally unique period for housing markets in regional Australia as pandemic-induced preference shifts collided with record low interest rates,” she said.
“However, after a strong rebound out of Covid, Australia’s economy is now challenged by high inflation and rapid rate rises that are straining household budgets.
“When public health restrictions eased and interest rates began to quickly rise, the boom was replaced with slower growth and elevated uncertainty. Home price growth has slowed Australia-wide, and many markets are now seeing prices falls.”
Regional Australia remains “a relatively bright spot” in the current housing market, but growth is now slowing, Ms Creagh said.
“Regional prices are expected to continue to slow amid headwinds from monetary tightening and reduced net migration flows to regional areas,” she said.
Despite this, the report shows that prices in regional areas are falling at a slower pace than in the capital cities, rising 0.06% in October compared to a 0.11% decline across the capitals.
“Although affordability has sharply eroded after recent price growth, regional areas still present a comparative advantage, despite increases in mortgage servicing costs and a dip in borrowing capacities relative to the same period last year.”
She added that prices are expected to continue to slow amid cost of living pressures and reduced net migration flows to regional areas.
Regional Queensland still the go-to destination
Census 2021 data shows regional Australia recorded a net gain of 184,000 people over five years, which is more than double the corresponding period before the 2016 Census.
Both metropolitan and regional Queensland remained the most popular destination, with more people moving to the state than anywhere else in the country.
Regional Queensland is the top searched location for interstate property seekers in regional Australia. In fact, 31% of all searches in regional Queensland are from interstate property seekers.
Net internal migration from one year prior to the 2021 Census shows the Gold Coast gained 9024 people, which is 1.39% of the population. The Sunshine Coast had the second-highest net migration with 6967 people, which is 1.77% of the population.
“Though there are many life events that may prompt relocation, relatively affordable home prices are likely to be an influence,” Ms Creagh said.
“And as the pandemic struck, many escaped Covid lockdowns in southern states in search of scenic coastlines and more space.”
Elliott Wicks, director of Castle Property Agents said the popularity of regional Queensland was felt most during Covid, particularly on the Gold Coast.
“The Gold Coast has been praised for the way it handled the Covid outbreak and I think those from out of town noticed this sense of community and longed to be a part of it,” Mr Wicks said.
“I am finding those from larger cities such are looking for a location that offers a sense of security, while also being able to provide the standard of living that they are used to.
“While the population has almost doubled, town planners are preparing for this increase and have plans to upgrade train lines, extend the light rail and amend roads to both the M1 and M2.”
The Gold Coast attraction shows no signs of slowing according to Mr Wicks who said he expects the high demand of property to continue well into 2024.
“Although many businesses are looking to wind down towards the holiday period, my sales and rental team have their hands full trying to service the new arrivals that have turned up on our front doorstep,” he said.
Mr Wicks added that buyers have been proactive and acting fast when an opportunity to buy comes their way.
“The industry is moving so quickly, I think most may have a fear of missing out and I don’t blame them.”
Article source: Queensland Property Investor