John McGrath – The shift from the beach to the bush
Amongst all the gloomy headlines about rising interest rates and the property market cooling, it would be easy to assume that home values in every part of the country are falling today.
That’s actually not the case. Regional markets across Australia, as a group, are still growing in value. They’re up 3.5% in 2022 so far, according to the latest CoreLogic data.
There's no doubt that the pace of capital growth in the regions is slowing, and that’s likely due to a combination of rising interest rates and possibly a reduced number of people leaving the cities for coastal and country areas at the moment.
The important part is that there is still enough demand to keep home values in the green.
There is one place we Australians have traditionally loved to live and that’s by the coast. And it’s easy to see why. Our beaches are amongst the best in the world and our climate means we can enjoy them almost all year round.
When the pandemic came along it created an opportunity where we didn’t need to be tied to big cities for work, so we went looking for our perfect patch of sand. The only trouble is that laidback life by the seaside is getting harder to find — and afford.
As discussed in our recently released McGrath Report 2023, house prices in towns all along the coastal fringes have skyrocketed in the past two years, in some cases to be on par with our big cities.
These affordability constraints have forced many capital city escapees to look elsewhere, and many are choosing the bush over the beach. They’re heading inland for larger blocks, fresh air and views of rolling paddocks.
Three of the top five local government areas by growth in migration in 2021 were inland regions: Western Downs, Queensland, 48%; Mount Gambier, South Australia, 44%; and Banana, Queensland, 40%.
Experts say people form attachments through “physical, social or economic interactions and connections within the neighbourhood” and these things can influence the desire to move. Country towns have this in spades.
Employment opportunities are a key driver for those planning on a career change or a new workplace to accompany a move to the bush. Data shows there were 84,600 job vacancies in regional Australia in April 2022 — 24.8% more than a year earlier.
Affordability plays a large part in people’s decisions on where to live, and in the regions there’s affordability in abundance.
In July 2022, CoreLogic recorded the regional median house price in NSW at $775,792 — almost half the median house price in Sydney at $1,346,193.
In regional Victoria, the median house price was $627,942 compared with Melbourne at $964,950.
In regional Queensland, the median house price was $569,062 compared to Brisbane at $884,336.
Of course, during the pandemic, the most desirable regional areas were targeted first by those leaving the cities, and as a result, local home values have risen substantially.
The Hunter Valley in NSW, an area synonymous with acclaimed wineries and restaurants, has attracted many buyers keen to trade in the hustle and bustle of the rat race for a slower, calmer pace of life.
The area recorded an annual growth rate for houses of 34.3% to April 2022, which made it the best performing non-capital city housing market in the country, and outstripping popular coastal regions such as the Shoalhaven on the state’s south coast.
Central Queensland, where many city dwellers from the southern states have also moved, recorded the largest uptick in sales volumes for houses of 42.9% in the year to February 2022.
It shares this record with the New England and North West region of NSW, which offers large blocks in rural settings.
Both of these treechange areas pipped coastal areas in Queensland, including Townsville (41.2%), the Greater Whitsunday (40.8%) and Cairns (35.6%) regions.
As values continue to rise in the most well-known prime regional centres, we will likely see a ripple effect to surrounding areas.
We’re seeing that already on the Gold Coast. People typically move there for the great weather, beaches and lifestyle. But rising values in the most desirable suburbs of the Gold Coast have meant many have been lured to the hinterland for better affordability, while still being able to enjoy relative proximity to the beaches and nightlife.
So, I think there are more regional areas yet to feel the full benefit of the great regional relocation brought about by the pandemic. Working from home is here to stay and as long as workers have that option, they will continue to leave the cities for the regions over time.