Regional Australian housing market sees price surge: Tim Lawless
EXPERT INSIGHT
As many parts of rural Australia emerge from long running drought conditions, and the mining sector benefits from higher commodity prices and a lift in investment, many rural areas are recording a surge in housing prices.
Regional housing markets have been at the centre of attention through 2020, due to housing values outpacing their capital city counterparts. Broadly, housing values across regional Australia (+7.9%) increased by more than four times the growth rate recorded across the combined capital city regions (+1.7%) over the twelve months to January 2021.
Most of the reporting on regional areas around the country has focussed on the main population centres outside of the capital cities. These include high profile coastal regions such as Byron and Noosa, or semi-rural markets like the wine regions and hinterland locations close to the major metro regions. This is understandable, given their large populations and popularity. Most of these regions have shown substantial rises in house values over the past year.
However, many of Australia’s in-land rural markets are also showing strong housing market conditions. These areas generally do not provide commuting options back to major working nodes, nor the broad-based lifestyle appeal of coastal markets or hinterland locations. But they do provide a variety of other benefits such as low housing prices, low population densities and a rural lifestyle that may appeal to many. These regions tend to exist within their own economic ecosystem, driven by localised factors including climatic conditions such as drought, as well as local economic drivers like agriculture, mining operations and tourism, infrastructure investment or government services.
The analysis below focuses on the annul change in house values across rural in-land council regions. These areas are all separated from the coastline and are located at least 200km from the GPO of the capital city metro regions. Many of these in- land rural areas of Australia have emerged from long running drought conditions, and others are benefitting from higher commodity prices, which has driven a lift in mining related investment. Some are major service centres that provide essential amenities for surrounding areas.
Council areas with fewer than 20 house sales over the past year have been excluded from the analysis. Many of these markets are moving out of a period of extended decline, mostly due to either drought conditions or the mining downturn.
The rise in values is likely to be a welcome development for long-term home owners in the area. 41 of the 91 council regions analysed recorded house values that remained at least 10% below their historic highs. On the flipside, 32 of the 91 regions had house values tracking at record highs in January 2021.
Council regions where housing values were at record highs were generally skewed towards the largest rural population centres, where economic conditions generally show greater diversity. Seven of the ten largest population centres recorded house values at historical highs. Council regions recording the strongest growth conditions were mixed across Australia’s in-land rural markets, however areas of Central West and North Western Queensland comprised four of the top five regions for the largest rise in house values over the past year.
Winton topped the list where CoreLogic estimates house values surged 40.5% over the twelve months ending January. Only 21 house sales were recorded within the Winton council area over the past year, however that was a 62% lift on sales activity over the prior year, demonstrating a substantial lift in demand, albeit from a small base. Nearby Cloncurry showed a similar result, with values rising 37.1% over the year. This was on the back of sales activity lifting 38.7% to reach 43 house sales last year.
Focussing on the largest in-land rural population centres, the strongest performing market over the past year has been Mount Isa, where house values are up 23.1%. Despite the strong gains, house values remain 39.3% below their 2013 peak at Mount Isa, highlighting the previous weak conditions that have were evident between mid-2013 through to the market finding a floor in August 2019.
Thirteen of the twenty largest rural in-land population centres have values tracking at record highs in January 2021, with most of these areas located in New South Wales or Victoria.
The larger rural population centres arguably show less risk in housing market trends due to their more diversified economies, however this is not always the case. Queensland’s Western Downs council is a case in point: despite having the seventh largest in-land rural population base (34,585 residents), the economy is mainly centred on agriculture, and house values remain 28.3% below their 2013 peak. Values are once again rising though, up 6.2% over the past twelve months, as the region emerges from a long running drought.
Overall, Australia’s in-land rural markets offer up a diverse array of living options, generally with low price tags. The highest median house value was recorded for houses within the Alpine council area at $520,588 which is about $280,000 less than Greater Melbourne’s median house value and almost $500,000 less than Sydney’s. Median house values range down to less than $90,000 in the council areas of Coonamble ($86,139), Bourke ($89,465), Murweh ($89,569) and Blackall-Tambo ($89,687). Such sheer affordability is likely to be an attraction for some buyers, however prospective city folk interested in relocating to the rural areas of Australia might be better off ‘testing the waters’ by renting before buying... just to make sure the rural lifestyle is really their cup of tea.
TIM LAWLESS is the Research Director at CoreLogic
