The value of homes in regional New South Wales has plummeted by almost 10 per cent in the past year, the sharpest decrease since before the pandemic.
Key points:
- Byron Bay’s property values fell by a huge 22 per cent
- Despite the decline, median dwelling values remain higher than pre-pandemic levels
- Rents increased by almost 10 per cent in the past 12 months
CoreLogic data released on Friday showed in the 12 months to May, there had been declines in most regions, with house values across regional NSW dropping by 9.8 per cent.
Housing markets also cooled in capital cities, with Sydney’s falling 8.2 per cent during the same period.
The bulk of the declines were between May 2022 and January 2023 when Australia’s home value index fell 8.4 per cent, the steepest decline in the country’s history.
It comes after a meteoric increase in house prices during the pandemic, reaching a record high on May 7, 2022.
Corelogic’s head of research, Tim Lawless, said regional areas that proved popular during the pandemic, including the Richmond-Tweed and the Southern Highlands, had experienced the steepest declines in property values.
“Markets like Byron Bay, we’ve seen housing values in that market fall by nearly 22 per cent over the past 12 months,” Mr Lawless said.
“The Southern Highlands and Shoalhaven have also recorded a larger drop than most other regions, down 16 per cent over the past 12 months.”
Mr Lawless put the trend down to more people moving from regional areas to Sydney.
“I wouldn’t necessarily say this is a lot of people who have made the regional move and have found it’s not quite their cup-of-tea,” he said.
“It’s probably more people that were already based regionally and had delayed their decision to move during the pandemic.
“So the regional population trend looks fairly similar now as it did pre-COVID, after that significant adjustment during the middle of the pandemic.”
Agricultural markets higher
Mr Lawless said rate rises had also impacted house values, however rural properties in the west and southern parts of the state held their values better than elsewhere in NSW over the past year.
“If you look at somewhere like the far west and Orana or the Riverina, more agricultural markets, values are just a little bit higher than they were 12 months ago,” he said.
“In amongst those regions there’s quite a bit of variability as well, the past three months has really started to see the stronger growth conditions emerging from your more commutable regional markets.
“Areas like the Illawarra has seen a 2.7 per cent rise in the past three months and the Newcastle region has seen housing values rise by 1.8 per cent.”
Despite the overall decline on last year, Mr Lawless said median dwelling values remained higher than pre-COVID levels.
“The market is still remarkably higher, it is still relatively expensive,” he said.
“Even though we have seen a pretty sharp drop in values, I think most home owners who own their property for a period of time, are sitting on a pretty substantial amount of equity.”
Rental market trends in opposite direction
Over the 12-month period rents in Australia have hiked 9.9 per cent, with an increase in Sydney of 13.2 per cent.
Mr Lawless said the rent on inner-city apartments had risen by nearly 20 per cent due mainly to the return of international students.
“It’s a lack of supply against a backdrop of extraordinarily strong rental demand,” he said.
“There’s a lot of temporary or non-permanent migrants, who tend to be students, who are competing now with domestic rental demand for inner-city apartments.”
In regional NSW, rents rose over the past year, but the increase was not as steep as in the capital cities.
“We’re seeing the vacancy rate across regional NSW broadly at 1.7 per cent, a year ago it was at 1.4 per cent,” Mr Lawless said.
“So, there’s been a little bit of a loosening up in rental supply which is great news for renters, but we’re still seeing rents rising across most areas of regional NSW.”
Mr Laweless said while overall house values had recovered over the past three months, potential ongoing rate increases would likely “dampen” the market later in the year.
“The prospect of at least another rate hike in the wings it seems, will probably be enough to dampen some of this newfound exuberance in the marketplace,” he said.
“Maybe not send prices backwards again but probably at the very least, take some heat out of the market.”
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