Housing prices in regions to trend lower

Oksana Patron

15 February 2023

Australia’s regional cities have started to see declining housing values as vendor discounts climbed, with only 13 areas of examined 25 largest non-capital city regions having registered an increase in house values.

According to CoreLogic’s Regional Market Update, the South East region in South Australia, which included areas such as Kangaroo Island, the Fleurieu Peninsula and the Limestone Coast, was the best performing regional house market, with annual value growth of 15.7%.

On the other hand, the upmarket coastal and hinterland Richmond-Tweed region in NSW recorded the weakest performance across all metrics registering the lowest annual growth rate, largest drop in sales volumes, longest days on market and highest vendor discounts.

However, although regional markets were experiencing sharp price falls, regional market performance overall remained more resilient than capital city dwelling markets.

The COVID-boom unlocked enormous value across more affordable regional  markets such as South Australia’s South East region and the surge in demand for areas such as New England and North West was also likely to have been due to a spill over from nearby markets such as Richmond-Tweed, where the strong migratory sea-change trend and low interest rates priced out many lower income households.

“Considering some of these regional values will have only moved through a peak in the cycle more recently, it’s likely there will be a lag between buyers and sellers, and it may take some time for vendors to adjust their expectations,” CoreLogic Head of Research Eliza Owen said.

Owen also said there was a good chance housing values will continue to trend lower, and regional areas would not be immune from softer conditions.

“This is a trend we can expect to see playing out at least until interest rates top out,” she said.

“With this in mind, sellers will need to be realistic about their pricing expectations, make sure they have a quality marketing campaign behind the property and be ready to expect some negotiation from buyers.

“It is unsurprising the Richmond-Tweed region recorded the strongest decline in house values and a sharp increase in other important metrics.

“This was the region where values skyrocketed, with houses increasing more than 50% during COVID, taking the median house value to more than $1.1 million. Since then much has changed with borders reopening, outbound travel returning, workers returning to the office not to mention the overlay of nine rate rises. It’s been a swift and significant shift.”