Analysis by PropTrack Senior Economist Eleanor Creagh shows that Australia’s regional property markets not only performed better over the pandemic, but they are also experiencing smaller price falls in response to the Reserve Bank of Australia’s (RBA) aggressive rate hikes:
According to PropTrack, regional home prices have increased 6.49% in the past year, compared to a 2.08% decline in the capitals.
Home price falls in regional Australia are also not as widespread as metro areas. Out of the 42 regional areas classified by the Australian Bureau of Statistics as SA4s, 28 have seen prices fall from their peak, while 41 of the 46 metro regions have seen home prices slip from peak levels.
One reason for the better performance of regional markets is that the number of properties listed for sale still well below pre-pandemic levels. This means regional buyers have less choice and less negotiating power, another reason why regional areas are exhibiting a lesser pace of price falls relative to the capital cities.
The exception is more expensive regions – particularly those that were in high demand in the pandemic – have seen home prices falling fastest as higher interest rates are affecting higher-priced regions most.
For example, the Richmond Tweed region has seen prices fall the furthest from peak (-6.3%). Covid favourites including the Sunshine Coast and Geelong have also seen prices falling further from their peak than many other regions.
PropTrack notes that while the regions overall are outperforming capital cities, as interest rates continue to rise and borrowing capacities are reduced prices will continue to fall and may begin to fall in those markets that have held up to date.
However, many regional markets will continue to benefit from pandemic-induced preference shifts, relative affordability advantages and net migration trends. As a result, relatively affordable regions will likely see stronger competition and prices holding up better than the capitals.
Regions where supply remains limited will likely still see stronger competition and exhibit a lesser pace of price falls as a result.
