Midyear state of affairs: A closer look at the country’s markets
With market conditions changing at varying degrees across the country, seven experts from Property Investment Profession...
COVID-19 and advanced technology are expected to trigger a “great regional relocation” ahead as people seek more space and fresh air across regional areas, a new report from McGrath Estate Agents said.
Before the pandemic, Australians were already shifting to regional areas, primarily due to cheaper housing, McGrath found.
The median dwelling value for the combined regional areas was $397,791 in September 2020, 37.4 per cent lower than the combined capital city median of $635,196.
“Internal migration records dating back to FY0713 show an increasing trend in city dwellers relocating to ‘country’ areas. In recent years, there has been record outflows of residents from Sydney, Melbourne and Brisbane to regional areas of NSW, Victoria and Queensland.”
“In FY18, a record 66,193 people left Sydney to resettle in regional areas of NSW, Victoria or Queensland. Another 62,495 left in FY19. This was substantially higher than FY17 and FY16, when about 55,000 people left per year, and FY15 and FY14, when 48,000 left per year.
“There was a similar trend in Melbourne, with a record 55,878 people departing in FY19, 54,055 in FY18 and 44,219 in FY17. In Brisbane, 51,420 left in FY19 – the highest number in a decade; 47,832 left in FY18 and 41,606 left in FY17, according to the Australian Bureau of Statistics,” the report said.
Since the pandemic began, major regional centres have consistently outperformed capital cities, with local home values well insulated due to distance from the afflicted capital cities and rising demand from a growing group of remote workers.
During lockdown in April 2020, 46 per cent of working Australians are officially based at home, McGrath revealed.
“But the biggest realisation is that working from home means we can work from anywhere.”
“COVID-19 proved staff can work autonomously for months at a time. All we need is a fast internet connection, with 7 million homes and businesses already on the NBN and 11.2 million ready to go,” the report highlighted.
The positive trend across regional Australia is expected to continue as regional areas grow and develop, boasting greater lifestyle amenities and employment opportunities than in the previous years.
“Many regions are becoming economic powerhouses. A 2020 report by economics consultancy Polis Partners found many large and small regional cities were outperforming their capital city counterparts on economic growth measures, including population change, business and jobs growth and investment in residential and commercial construction.”
Among the best regional performers of the year included Ballarat, Geelong and Warragul-Drouin in Victoria’s West Gippsland region; Newcastle- , Goulburn and Bowral-Mittagong in NSW; and Gympie and Cairns in Queensland, according to the report.
The associated economic benefits of more city departees moving to these regions had contributed to their economic health.
Significant government investment will also be critical in the development of regional areas, with state governments committing billions of dollars to infrastructure and redevelopment projects.
With this shift in consumer demand amid the COVID-19 era, the report said that regional relocators are likely to seek larger yet more affordable houses, with more rooms to ensure a harmonious 24/7-at-home lifestyle.
In-demand customisations might include separate offices for mum and dad, a study area for the kids and a COVID-free home gym.
“Prior to the unprecedented health event, city escapees typically moved to satellite towns that provided a tolerable daily commute, but today’s workers-from-home have the freedom to go further afield, and getting in and out of the cities has never been easier due to new freeways and expanded air services.”
McGrath Estate Agents listed down emerging hotspots in regional Australia as of October 2020:
1. Byron Shire; Tweed Shire
Dubbed by McGrath as “one of the East Coast’s favourite holiday playgrounds”, Byron Bay has been seeing huge demand from relocators.
House prices in the Byron Shire, which incorporates Byron Bay, Bangalow and Brunswick Heads, rose by 6.6 per cent over the 12 months to 31 August 2020, according to CoreLogic data. The median value is now higher than Sydney at $1,090,605.
Since 2015, Byron Shire has outperformed Sydney with 31.6 per cent growth compared with 9.7 per cent.
More affordability but similarly impressive growth has been observed in the adjoining Tweed Shire, which had 5.7 per cent annual growth to a median price of $665,531 and 27.9 per cent growth over five years.
2. City of Orange; Cabonne Shire
House prices in the City of Orange rose 5.4 per cent to $421,721 in the year to 31 August 2020. Nearby, house prices in the Cabonne Shire increased by 6.4 per cent to a median of just $288,488.
Over the past five years, Orange and Cabonne both experienced about 20 per cent growth.
3. Illawarra region; Eurobodalla Shire
Several regions throughout the Illawarra recorded impressive capital gains in the year to August 31, 2020, including the local council areas of Wollongong (12.7 per cent), Kiama (10.3 per cent) and Shellharbour (7.9 per cent). Growth in these areas over five years was 23.9 per cent, 21.3 per cent and 17.3 per cent, respectively.
4. Mid-north coast; Newcastle
On the mid north coast, house prices rose by 9 per cent in Newcastle, 7.7 per cent in Lake Macquarie and 6.2 per cent in Maitland over the year. Longer-term growth over five years was 24.4 per cent, 29.1 per cent and 28.6 per cent, respectively.
According to QBE, Newcastle’s recent growth is more closely correlated with an improving local economy rather than flow-on effects from Sydney, with good jobs growth since 2015 and major projects such as the light rail and university expansion adding value to the area.
5. Geelong; the Surf Coast; Ballarat
In Victoria, Geelong, the Surf Coast and Ballarat have been on an outstanding growth trajectory since 2015, with median house prices rising 33.6 per cent, 32.6 per cent and 24 per cent, respectively.
Amongst Australia’s largest 25 regional markets, property is selling fastest in Ballarat with an average days on market of just 30 and the lowest vendor discounting at -2.4 per cent.
6. Central Coast
On the Central Coast, good quality homes are selling for 10 per cent more than in 2019 due to a dramatic increase in demand from Sydney over the September 2020 quarter. Acreages and renovated beach homes in Wamberal, Terrigal, and Killcare are especially in demand.
7. South East Queensland
Whilst it is unusual for long-term price growth in regional areas to outpace capital cities, that’s exactly what is happening in some of South East Queensland’s best lifestyle centres, according to McGrath Estate Agents.
Since 2015, Brisbane house values have risen 10.1 per cent compared to 21.8 per cent on the Gold Coast; 28.6 per cent in Noosa Shire; and 19.5 per cent in theCoast council area.
“This is largely due to high interstate migration and particularly the impact of cashed-up retirees and entrepreneurs. These buyers have reaped significant capital gains in Sydney and Melbourne and are competing strongly for the best waterfront homes on the coast.”
McGrath revealed that regions with airports will also be favoured by relocators, including Albury, Orange and Port Macquarie in NSW; Bendigo and Mildura in Victoria; and the Gold Coast, Sunshine Coast, Toowoomba, Rockhampton, Cairns and Townsville in Queensland.
“For many people, living in regional Australia and enjoying its space, tranquility, affordability and lifestyle has long been a fantasy that was impractical and out of reach. But now that we are empowered to work from anywhere, we can finally live this dream,” the report concluded.