Facebook has banned news from your feed. So get it sent straight to your inbox instead.
A mass exodus of Australians flocking to regional cities has been underway for several months in a property trend that has been described by an expert as the biggest of the “21st century”.
House prices in regional cities have outperformed capital cities for months, with the latest CoreLogic data revealing dwelling values in regional areas are rising at four times the pace of capital city markets in the 12 months to January this year.
The growth in regional areas is leaving Sydney and Melbourne in the dust, said hotspotting.com.au managing director Terry Ryder.
“The fringe areas of major cities, regional cities, hill change towns and sea change enclaves are all beneficiaries of this compelling trend,” he said.
The exodus has been reinforced by the global pivot to remote work after Aussies were forced to work from home during the pandemic, and workers’ ties to CBD offices were loosened.
“It was a rising tide before the pandemic, with increasing numbers of Australians realising the possibilities of working from home.
“The COVID-19 lockdowns have enhanced a trend that was already under way, turning a steady drift into a stampede, by opening the eyes of more Australians to the potential,” said Ryder.
Many property analysts have made similar observations that the trend has been around well before the pandemic hit.
In October 2019, Propertyology managing director Simon Pressley told Yahoo Finance it was one of the biggest real estate myths that capital cities performed better than regional locations.
“Without exception, there have always been (and will continue to be) real estate markets in parts of regional Australia which perform better than capital cities every single year,” Pressley said.
The latest CoreLogic figures show that house prices in combined regional areas were up nearly 8 per cent in the 12 months to January 2021, compared to the modest lift in combined capital cities of 1.7 per cent.
“As more Australian’s look for properties outside of the capital cities, an imbalance between demand and supply is placing upwards pressure on housing prices,” said CoreLogic executive director of research Tim Lawless.
The lift in regional property prices can be pegged to a few factors, he continued, with affordability being one of the crucial drivers.
“Generally, prices are cheaper than their capital city counterparts, housing densities are typically lower which is likely to be appealing amidst a global pandemic,” he said.
Lawless also echoed Ryder’s sentiments about the impact of working from home. “Many workers have a newfound appreciation and ability to work remotely which is supporting additional demand.”
Which regional areas are booming?
Overall, homes in regional Tasmania have posted the greatest price growth of all the capitals, rising 12.1 per cent in the last 12 months to January, CoreLogic figures reveal.
This is followed by regional South Australia at 10.6 per cent, with regional NSW in third place at 9.5 per cent.
Closer analysis of 25 specific regional markets reveal that the Richmond-Tweed region in northern NSW is the best-performing regional house market, posting annual growth figures of 12.6 per cent in January 2021.
Homes in Victoria’s Ballarat sell the fastest; dwellings in this region spend 27 days on average on the market before securing a sale.
Meanwhile, the fastest-growing regional market for units is NSW’s Southern Highlands and Shoalhaven, recording 17.9 per cent yearly growth.
According to Lawless, regions that strike just the right distance between regional living and proximity to CBDs will continue to flourish.
“Areas that offer up the best of both worlds; an ability to commute into the capital city metro areas while living regionally, may be more successful long term.”
Ryder’s latest report names the following 10 regions as winners of the regional property trend:
Mornington Peninsula, Victoria
Rockingham, Western Australia
Hunter Valley, NSW
Latrobe Valley, Victoria
Ryder has previously named certain locations as performing better due to the pandemic, such as NSW’s Terrigal and Queensland’s Emerald.
How long will this trend stick around for?
It’s anyone’s guess, says Lawless – but there’s some momentum behind it for now.
“As the pricing gap narrows between the regions and capital cities, the challenge of affordability will naturally drag on demand,” he said.
And with the coronavirus relatively under control in Australia, employers are starting to ask workers to come back to the office, at least part-time or on a flexible basis, he added.
“However, to some extent we expect the rise in popularity of regional markets will persist into the future.
“Many workers and employers have found the working from home experiment to be successful, with productivity remaining high while workers enjoy additional flexibility in their work life balance.”
But Ryder anticipates the trend will actually drive a “new boom” in real estate.
“The ‘Exodus to Affordable Lifestyle’ has been a key factor in strong price performance in most parts of Australia throughout the pandemic,” he said.
“We expect ongoing growth as Australia heads towards a new real estate boom, led by the locations which lie in the path of the ‘Exodus to Affordable Lifestyle’.”