Regional House Prices - What Does a Boom Mean For Buyers?
If you have been watching the news as of late, you will have seen the reports about a rise in house prices in regional areas.
COVID19 has shown many jobs can be performed from outside the office.
Encouraged by the prospect of working from home, city dwellers are looking to the regions to purchase homes where it is more affordable. Not to mention the lifestyle change!
Data released by real estate analysts CoreLogic shows that for the first time since 2004, house prices in regional Australia have risen at a higher annual rate than in capital cities.
The data says dwelling values in capital cities rose 2 per cent during 2020 - compared to an almost 7 per cent increase in the regional housing market.
So what does this mean for regional buyers?
Yes, we are taking back the term ‘hot spots’ and making it about real estate prices!
Experts say the hottest markets are those that are easily accessible from capital cities (such as the Gold Coast, Geelong, Wollongong, and Orange.)
In terms of the Central West, Orange is still the most-expensive place to buy in terms of median house price.
But in terms of values increasing, the new Domain House Price Report has revealed Parkes has seen a huge increase.
December quarter figures show the median price of a house in Parkes has reached $335,000, marking an increase of 24.1 percent across the 12 months prior - and almost 10 per cent across the previous quarter alone.
December quarter numbers were strong across the entire region.
Cootamundra-Gundagai, Hilltops and Orange local government areas have made the top 10 for house price growth, while Yass Valley and Forbes are in the top 20.
What’s behind the rise
Strangely enough, it is not uncommon to see a rise in property values during a recession.
This is because the Reserve Bank usually steps in to lower interest rates, in response to increases in unemployment.
Reserve Bank Governor Phillip Lowe has stated the cash rate is unlikely to drop to zero, but that rates are likely to remain low for about three years.
‘People who still have a job and are in a position to buy property find that they have access to more money and debt is cheaper,’ Ms Owen said.
This encourages anyone who is in a strong financial position to take the leap and purchase a property!
Meanwhile the changing modern workplace has contributed to growth specifically in regional areas.
People are working from home, offices are becoming less important - so people don’t feel the need to live in the city!
Impacts on Regional House Prices
Alongside the rise in house prices, we are also seeing rental markets under pressure.
Large numbers of people are attending rental inspections, looking for places to live. In many regional cities, there are just not enough rentals to satisfy the demand.
This leads to huge competition, making it difficult for some people to make the cut.
Meanwhile renters in regional locations who have previously been settled there with cheaper rents compared to big cities may be facing a rise upon renewal of their lease.
Local Government NSW President Linda Scott says regional councils are reporting increased housing stress among their existing residents.
"Mayors and councillors are concerned at growing numbers of people sleeping rough in regional towns and the need to provide these people with housing," she said.
research director Tim Lawless believes the trend will most likely continue this year.
If this is the case, we could see homes in regional cities becoming even more expensive.
This is good news for investors or anyone looking to downsize. But it could make things more difficult for first home buyers.
It is too soon to tell if the momentum will continue in an upward trend, or if we have reached the peak and prices will eventually stagnate.
First home buyers want to avoid buying in at an inflated price.
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