CoreLogic’s Regional Market Update, which examines Australia’s 25 largest non-capital city regions, revealed six regional housing markets that have posted declines of 6% or more last quarter.

Despite recording the strongest value growth through the pandemic upswing, these regional markets are now among the fastest declining regions.

They include Richmond-Tweed, -11.7%; Southern Highlands and Shoalhaven, -7.1%; Sunshine Coast, -7.1%; Gold Coast, -6.4%; Illawarra, -6.1%; and Newcastle and Lake Macquarie, -6.0%.

While all markets anaylsed recorded a quarterly decline in house values, Central Queensland (+0.1%), SA’s South East (0.0%), and WA’s Bunbury (0.0%) were the exceptions. 

In terms of annual value growth, the South East region in South Australia was the best performing regional house market increasing by 21.7%, followed by Riverina and New England and North West with 20.5% and 19.8% respectively.

CoreLogic Economist Kaytlin Ezzy said constraints to buyers’ hip pockets have contributed to declining house values.

“Consecutive interest rate rises, persistently high inflation, and waning consumer sentiment saw the pace of value declines accelerate across regional Australian property markets,” Ms Ezzy said.

“Throughout the Covid period, values skyrocketed in the Richmond-Tweed region, rising more than 50% and taking the median house value to more than $1.1 million.

“However, the impact of this year’s floods coupled with seven consecutive rate rises has seen house values fall in the region by nearly -16% since April.”

PropTrack Senior Economist Eleanor Creagh said regions that were in high demand during the pandemic have seen home prices falling the fastest.

“It’s often the case that the upper end of the market experiences larger price declines, and at the moment it's the regions and suburbs that are home to more expensive properties that are seeing bigger price falls,” Ms Creagh explained.

“Covid favourites including the Sunshine Coast and Geelong have also seen prices falling further from their peak than many other regions.”

Are units following the same trend?

Out of the 16 regions analysed, 14 saw a quarterly fall, more than double the number of regions that declined in values over the three months to July.

The Southern Highlands and Shoalhaven and the Sunshine Coast recorded the largest quarterly falls in unit values with -7.7% and -6.0% respectively. 

When comparing annual unit values, Cairns and Toowoomba posted the highest annual increase in unit values up 18.9% and 17.4%.

“While unit values have not been immune to the downturn, units have largely been more resilient than houses through the downswing to date,” Ms Ezzy said.

“If this trend of house values falling at a faster pace than unit values persists, we could see some demand shift towards the detached segment as the value premium for houses shrinks.”

What does the future hold for the regional property market?

Ms Ezzy said the outlook for regional markets remains skewed negatively, with values expected to continue declining.

“The lack of a typical spring listings surge is positive, in that we are yet to see material signs of a rise in distressed listings,” she said.

“However, as the cumulative rise in the cash rate approaches the serviceability buffer of 3% which most borrowers were assessed under, we could see an increasing number of regional home owners come up against affordability pressures in terms of mortgage serviceability.”

See Also: When will the house price plunge hit?


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