Regional property prices are falling – but at less than half the rate of capital city prices
Regional property prices have finally started to fall – but they may be safer from the downturn than property in the larger cities.
House prices in regional areas have risen at twice the pace of big-city prices since 2020, according to a report by The Australian. But that doesn’t mean they’ll take as big a tumble during a downturn.
“Normally we would say price patterns in regional Australia are predictable – this time, it’s different,” PropTrack economist Paul Ryan told The Australian. “We have never had to include key factors such as the ability to work from home.”
Thanks to COVID-19 and the resulting remote-work explosion, prices in the regions have skyrocketed 47% since the pandemic, compared to a rise of 26% for larger cities.
However, in the three months to Aug. 31, prices in the regions fell 1.2%, the biggest quarterly drop in more than a decade.
Adelaide prices fell 0.12%, compared to a nationwide decline of 0.39%, according to The Australian. Likewise, popular work-from-home areas such as Wollongong in NSW, Mornington in Victoria and the Sunshine Coast in Queensland have all seen price drops since March.
However, property prices in the regions are being sustained by a lack of supply, lower rental vacancy rates than in metropolitan centres, and affordability.
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Overall, prices in regional Australia are falling at less than half the rate of metro prices. Currently, the price drop from the peak among capital cities is 3.4%. In the regions, it’s 1.4%.
“Regional areas are still the most affordable, and that gives many areas in regional Australia a new profile,” Ryan told The Australian.
Average home prices in regional areas are around $640,000. Affordability is far worse in the capital cities, with an average price of $763,000. Sydney has an average price of $991,000.
Many analysts are forecasting overall price declines of 15% to 20% during the downturn, The Australian reported.
However, PropTrack doesn’t expect the regions to see as big a hit.
“We would suggest that regional Australian property prices will not see the 15% falls the market expects for the capital cities,” he said. “Regional areas are now falling persistently, but they are being buffered by the affordability and lifestyle appeal.”
