Property prices are dropping from Byron Bay to Geelong as rising interest rates and the end of Covid curbs sap the urge of city folk to shift to the beach or the bush.
Of 25 regional markets around the country, 13 were still on the rise in terms of house prices last month, down from 21 advancing in the 12 months to October, according to CoreLogic, a property data firm.
New South Wales’ Richmond-Tweed, which takes in Byron Bay, was the worst performing. House values sank 18.6% for the year to January, with sales down more than a third. Properties in the region also posted the longest time on the market, at 71 days and the largest vendor discounts at 8.3%, over the three months to January.
The Illawarra region south of Sydney was the next worst, posting a 12.6% drop in the year to January.
The current retreat follows a 51% jump in Richmond-Tweed and 44% in Illawarra in the run-up to their latest peaks.
And while regional markets were starting to decline, the pace was less than in capital cities and the recent peaks were typically higher too. For instance, regional property prices rose 41.6% during the latest cycle, and were retreating at the rate of 0.8% a month – the drop compared with capital cities reporting an average 1.1% monthly drop from a 25.5% peak.
CoreLogic’s head of research, Eliza Owen, said it was no surprise the Richmond-Tweed region recorded the biggest retreat.
“This was the region where values skyrocketed, with houses increasing more than 50% during Covid, taking the median house value to more than $1.1m,” she said.
“Since then much has changed with borders reopening, outbound travel returning, workers returning to the office – not to mention the overlay of nine [Reserve Bank] rate rises. It’s been a swift and significant shift.”
With the central bank last week indicating it “expects to increase interest rates further over the period ahead”, Owen said it was likely housing values would “continue to trend lower”.
“This is a trend we can expect to see playing out at least until interest rates top out,” she said, adding sellers would need to adjust their price expectations.
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Bucking the trend so far included South Australia’s south-east, taking in Kangaroo Island, the Fleurieu Peninsula and the Limestone Coast. House prices there notched a 15.7% increase in the year to January.
NSW’s New England and north west and the Riverina reported gains of 11.5% and 10.1%, respectively.
For units, the areas around Queensland’s Cairns and Toowoomba had the largest rise in prices over the year to January, advancing 17.3% and 14.1%, respectively.
Units in Richmond-Tweed posted a 10% drop in prices, the largest covered by CoreLogic, edging the 9.4% slide for prices in Victoria’s Geelong.
By volume terms, units sales only picked up in two regions – Mackay and Townsville – in the 12 months to November, rising 19.2% and 10.6%, respectively.
Unit sales in the southern highlands/Shoalhaven region of NSW slumped almost half, while those in Newcastle and Lake Macquarie, and the Illawarra, also sagged by more than one-third, CoreLogic said.
