CoreLogic’s latest regional market update revealed some of Australia’s affluent lifestyle areas during the pandemic are among the hardest hit by the housing downturn.
The upmarket coastal and hinterland Richmond-Tweed region in NSW, which encompasses Byron Bay and surrounds, suffered the sharpest declines in home values, rapidly reversing some of their large gains during the pandemic.
House values sank 18.6% for the year to January 2023, with sales down more than a third.
Properties in the region posted the longest time on the market at 71 days, with vendors offering the largest discounts at -8.3% over the three months to January.
CoreLogic 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 $1.1 million,” Ms Owen said.
“Since then much has changed with borders reopening, outbound travel returning, workers returning to the office not to mention the overlay of nine rate rises.
“It’s been a swift and significant shift.”
Despite this, houses in the region are still up 23.7% on pre-Covid levels.
The Illawarra region south of Sydney recorded the second lowest yearly change, posting a 12.6% drop in the year to January.
Across the 25 largest non-capital city regions, just 13 recorded an increase in property prices in the past 12 months, down from 21 over the year to October.
“This is a trend we can expect to see playing out at least until interest rates top out,” Ms Owen said.
"Sellers will need to be realistic about their pricing expectations, make sure they have a quality marketing campaign behind the property, and be ready to expect some negotiation from buyers.
“Considering some of these regional values will have only moved through a peak in the cycle more recently, it’s likely there will be a lag between buyers and sellers, and it may take some time for vendors to adjust their expectations.”
While some regional markets are experiencing sharp price falls, they still remain more resilient than capital city counterparts.
Since the rate hiking cycle commenced in May, monthly value changes have averaged -0.8% across regional Australia through to January, compared to -1.1% in the capitals.
Not all doom and gloom: regions that are bucking the trend
Some regions have continued to record strong property price growth despite rising rates including South Australia’s south-east - with annual value growth of 15.7%.
This encompasses areas such as Kangaroo Island, the Fleurieu Peninsula, and the Limestone Coast.
The NSW regions of New England and North West and Riverina were not far behind, with values increasing 11.5% and 10.1% respectively.
For units, Queensland’s Cairns and Toowoomba markets recorded the highest annual increase in values over the 12 months to January 2023, up 17.3% and 14.1% respectively.
Ms Owen said the regions still bucking the trend were predominately areas that had emerged from a long period of subdued capital growth performance.
“The COVID-boom unlocked enormous value across more affordable regional tree-change markets such as South Australia’s South East region,” she said.
“The surge in demand for areas such as New England and North West was also likely to have been due to a spill over from nearby markets such as Richmond-Tweed, where the strong migratory sea-change trend and low interest rates priced out many lower income households.”
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