According to data from CoreLogic, house
prices in regional Australia have risen at a higher annual rate than in capital
cities for the first time in more than 15 years. While Australia has long
experienced a two-speed housing market, the health impacts, lockdown response,
and economic fallout of the global pandemic continues to push regional prices
higher. Annual data from CoreLogic shows capital city prices up by just 2%
during 2020, compared to almost 7% for regional markets.
According to CoreLogic research director
Tim Lawless, "Regional markets haven't outperformed the capital city
markets since 2004... So this is quite a new phenomenon." Despite the
novelty of this trend, it's expected to continue for a while yet, as entire
markets adjust to shifting internal migration patterns. "I think this trend
is quite entrenched now and it will persist into 2021. Perhaps as we go into
mid-2021 we will start to see affordability diminish between capital and
regional markets." said Mr Lawless.
Not all regions are outperforming the
cities, with some locations doing much better than others. According to
CoreLogic data, prices are very high in Victoria's Grampians region, Byron Bay
in New South Wales, and Queensland's Noosa and Noosa Hinterland among other
regions. The Yorke Peninsula in South Australia has also seen strong upwards
movement, with prices rising 14.6% in the past year. Prices are also rising
sharply in some remote locations, with house values in Maranoa in south-west
Queensland jumping by 13% last year.
There are many reasons for this movement,
including a lifestyle exodus away from busy capitals and the availability of
more money due to a lack of overseas travel opportunities. The widespread
acceptance of remote working has also had an influence, with a greater number
of people able to work from home and move away from their CBD offices. COVID-19
has created fear and put things into perspective for many people, as the
pandemic catalyses internal migration shifts and gives people an incentive to
pack their bags.
The movement away from Australia's cities
has put additional pressure on the rental market, with long-term locals in some
regions struggling to find accommodation. Normally heated urban markets
recorded rising rental stock levels in 2020, in sharp contrast to places like
the Surf Coast, Noosa, and Byron Bay. According to SQM Research, the Victorian
capital finished the year with vacancy rates of 4.7% compared to 2.5% the year
before, with Sydney recording a vacancy rate of 3.6%. In one year, Darwin moved
from the second-highest rental vacancy rate in the country at 3.5% to the
second lowest at 0.9%, as people look for a fresh start in the far-flung
corners of Australia.