House values in regional Australia down in Q3

Oksana Patron

16 November 2022

It looks like the Australia’s regional housing market has burst, with several regional markets which saw the strongest growth now experiencing the fastest declines, and six of the most popular lifestyle markets having recorded falls of -6% or more the last quarter, according to CoreLogic’s Regional Market Update.

Following this, all but two of the 16 regions analysed saw an annual increase in unit values while 14 saw a quarterly fall which meant more than double the number of regions that had declined in values over the three months to July.

The declines were the result of consecutive interest rate rises, persistently high inflation and waning consumer sentiment combined.

As far as the house values were concerned, the most popular regional markets were all down, including 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%).

The report, which examined Australia’s 25 largest non-capital city regions, also found that the exception to falling quarterly house values were Central Queensland (0.1%), SA’s South East (0.0%) and WA’s Bunbury (0.0%).

At the same time, CoreLogic Economist Kaytlin Ezzy said it was important to remember that last year was one of the busiest sales periods on record, and the majority (76%) of regional markets analysed were still recording higher annual sales volumes compared to their previous five-year averages.

“It is unsurprising the Richmond-Tweed region recorded the strongest decline in house values. Throughout the COVID period, values skyrocketed, 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,” she said.

Regional NSW also dominated the worst performing house markets across a range of different metrics, with Southern Highlands and Shoalhaven having recorded the largest decline in sales volumes (-27.5%) and the highest vendor discounting rate (-4.9%), and the New England and North West region having clocked up the longest time on market at 43 days.

As far as units were concerned, Townville recorded both the longest time on market (42 days) and highest vendor discounting rate (-4.4%), while unit sales volumes in Southern Highlands and Shoalhaven plummeted -35.8% year-on-year.

Queensland’s Cairns and Toowoomba regions recorded the highest annual increase in unit values over the 12 months to October 2022, up 18.9% and 17.4% respectively, and were also the only two regions to record an increase in unit values over the quarter.

Ezzy noted that on the supply side, the flow of regional listings had been relatively lacklustre this spring selling season, which kept total listings levels fairly tight, despite a slowdown in sales activity.

“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. 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.”