Higher interest rates, lower affordability and falling rents a drag on the residential property market
Regional property markets are witnessing a slowdown in value growth due to ongoing affordability issues, increasing listing levels, and high interest rates, as highlighted in CoreLogic’s Regional Market Update.
Regional property markets are witnessing a slowdown in value growth due to ongoing affordability issues, increasing listing levels, and high interest rates, as highlighted in CoreLogic’s Regional Market Update.
Current Growth Trends
Over the three months to July, regional dwelling values increased by 1.3%, down from 2.2% in April. In contrast, capital cities experienced a smaller deceleration, with growth falling from 2.0% to 1.8%.
The cooling growth in regional markets is attributed to stabilizing internal migration patterns which have lessened the demand for regional housing. Says CoreLogic Australia Economist Kaytlin Ezzy, “The quarterly growth rate in regional dwelling values has slowed from a recent high of 2.2% in April to just 1.3% in July. The capital cities have also seen a moderation in growth, albeit milder, from 2.0% to 1.8% over the same period,”
Regional Variations
Growth trends among Australia’s 50 largest non-capital city Significant Urban Areas (SUAs) have become more varied. While 40% of these regions saw declines in values, 11 areas experienced increases of over 3%. In the three months to July, the number of SUAs reporting declines has more than doubled, from eight to 20.
Queensland Leads, NSW and Victoria Lag
Queensland has outpaced Western Australia, with Gladstone seeing a 9.2% rise in values, and Townsville experiencing a 7.8% increase. Other high performers include Busselton (7.2%), Bunbury (6.7%), and Geraldton (6.2%) in Western Australia, with annual growth exceeding 20% in these regions. Conversely, regional markets in New South Wales (NSW) and Victoria have seen declines, including Coffs Harbour (-3.8%), Ballarat (-3.4%), and Orange (-3.1%). Some markets that had recently recovered are now below their previous peaks.
Rental Market Trends
Rental growth has also slowed. The CoreLogic regional rental index showed a 1.3% increase over the three months to July, down from 2.8% in March. Capital city rents rose by 1.1% in July, a decrease from 2.9% in April.
Among the 50 largest non-capital city markets, six experienced a decline in rental values, but all saw year-on-year increases.
Notable Rental Changes
Geraldton in WA saw the highest quarterly rent increase at 5.1%, followed by Traralgon – Morwell in Victoria (3.8%) and Victor Harbor – Goolwa in South Australia (3.6%).
Some areas, such as Kalgoorlie – Boulder in WA, Forster–Tuncurry and Batemans Bay in NSW, and Launceston in Tasmania, saw slight declines in rents.
Affordability Challenges:
Looking ahead, Ms. Ezzy emphasized that affordability will remain a critical concern. “While growth in both values and rents is slowing, affordability continues to be a major issue. Since the pandemic began, dwelling values have risen by 52.5%, and rents have increased by 39.1%, compared to 33.4% and 35.4% rises in capital cities, respectively.”
CoreLogic Regional Market Update August 2024
