Lure of Regions Still Compelling for Home Buyers

The Hunter Valley has topped the regions to claim the mantle for highest annual price growth, but the breakneck speed outside of the capital cities is slowing.
 
New South Wales’ Hunter region chalked up a 34.3 per cent price growth in houses and 20 per cent price growth for units, outpacing the other 24 regions in Corelogic’s quarterly regional market update. 
 
Sales volumes were also 16.4 per cent higher than a year ago and more than 25 per cent above the five-year average with the lowest vendor discount rates across the regions at just 1.8 per cent, and a median house price in the Hunter region of $737,568.
 
But Corelogic research director Tim Lawless said across the board things were slowing down from a peak of 6.6 per cent price growth rate in April last year to 4.7 per cent in the first quarter of 2022. 
 
“Although demographic data is significantly lagged, anecdotally we are still seeing strong demand for regional housing supported by high internal migration rates,” Lawless said.
 
“Across the Hunter Valley region the median value of a house is still well below $1 million implying less dampening pressures from worsening affordability.
 
“The high level of demand is supported by estimates of home sales, which were tracking 20.1 per cent above the previous five-year average over the three months ending April 2022.
 
“It seems many employers across the relevant industries have implemented permanent hybrid working arrangements for staff which is likely to be supporting the stronger demand trend across regional Australia.”
 
The New England and North West region of New South Wales recorded a record 42.9 per cent increase in sales volumes in the 12 months to February 2022, the biggest increase in the country, but the region was also the slowest for sales, with houses on the market for an average 46 days. 
 
The number of homes for sale across regional Australia is more than 40 per cent below the five-year average and about 20 per cent lower than 12 months ago as stock on the market diminishes. 
 
But the outlook for regional growth rates is softening to more sustainable levels according to Lawless. 
 
“Arguably some regional markets will be somewhat insulated from a material downturn in housing values due to an ongoing imbalance between supply and demand,” he said.
 
“We are continuing to see advertised stock levels remain extraordinarily low across regional Australia and settled sales activity looks to be holding firmer relative to the capitals. 
 
“A lot will depend on regional migration patterns and we expect the demographic trends to continue favouring regional housing markets, especially those regions with some lifestyle appeal within a few hours’ drive of the major capitals.”