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Regional centres will continue to outperform metropolitan areas in 2021, with towns closest to the three main capital cities touted to be most attractive.
Less densely populated and cheaper regions will become even more popular in 2021, as Aussies continue their search for “more liveable” locations, Deakin University property experts have said.
They hinted that affordability and proximity to the major cities will continue to draw buyers to gateway cities such as Victoria’s Geelong, Bendigo and Ballarat, NSW’s Wollongong and Queensland’s Coast.
“We should continue to see a recovery trajectory for the economy in general, which will flow on to the property market,” said Dr Adrian Lee, an associate professor in property and real estate with the Deakin Business School.
“If this doesn’t result in people moving back to metropolitan areas for work, then the less densely populated and cheaper regions seen to be more liveable are going to become even more popular and we will keep seeing the regions outperform capital cities,” Dr Lee predicted.
According to Deakin’s modelling, during the first pandemic wave from March to June 2020, house sales in Victoria’s regional areas outperformed CBD areas by around 10 per cent, metropolitan areas by around 4.9 per cent, and outer metropolitan by 1 per cent, with similar results for units.
“The trend will continue upward unless another wave of COVID pandemic happens in Australia or there is some other black swan event,” said Dr Jerry Liang, a Deakin Business School property and real estate lecturer.
Dr Liang tipped that suburbs such as Frankston and in Victoria will likely be in highest demand. , too, is expected to have “very good performance” because of the growth of mining industry as the consequence of economic stimulus policy in most of the countries.
But while this is good news for regional local economies, Dr Lee warned of the downside.
“There is a risk that local residents will be priced out of their home market,” he said.
“Property prices in regional centres are increasing as they are seen to be more affordable, particularly with buyers from metropolitan areas.
“However, at some point these properties will no longer be as affordable,” Dr Lee cautioned.
He noted that the issues of affordability are something that local government will need to address.
Property/land owners among the winners
According to Dr Lee, property/land owners will be among the winners in 2021.
“Property/land owners, especially the ones who invested in the property in the last year will be the winners, considering the historically low level of mortgage interest rate and growing house prices,” he said.
“While the growth of building costs this year may erode the profit of the developer this year, even with the low interest rates.”
But while he is bullish about regional performance in 2021, Dr Lee is confident the CBD “will not die”.
“It will always be the centre but has to focus on different offerings, other than commercial, such as retail, entertainment and dining experiences not available in the regions,” he said.
“Commercial owners will need to adapt their offerings to become more about services, temporary office space or to cater for retail, entertainment and dining.”