- Dwelling values in regional areas double that of the capital cities
- Rent values rise by 9.6% in regional areas - capital cities recorded a 3.3% increase
- Eliza Owen suggests several reasons causing this level of growth
Demand for regional Australian property continues to grow rapidly. CoreLogic’s Quarterly Regional Report reveals levels of growth for both dwelling and rental values outpaces that of the capital cities.
The annual growth rate of combined regional dwellings value in the year to April was 13% – more than twice the 6.4% rate recorded in the capital cities.
Even more remarkable is the fact rent values have increased by even more – 9.6% for regional areas and 3.3% for the capital cities, almost a tripling.
Rental market continues to tighten
The report has also revealed an extraordinary tightening of the regional rental market with the 25 regional areas averaging a halving of total available rental listings.
These regions have seen rent values increase by 9.4% on average, ranging from a 17.6% increase across Richmond-Tweed, NSW area to a 2.3% across the Capital Region also in NSW.
The average time a rental property spends on the market has also declined from 25 days during the April 2020 quarter to 17 days for April 2021.
Eliza Owen, CoreLogic’s Head of Australian Research, suggests tenants are having to compete harder both in terms of budget and the decision making pace. She is concerned further rental tightening could lead to greater housing stress and homelessness.
She has cited three general reasons for rapid tightening – low migration away from regional Australia, an increase in migration to regions during the September and December quarters and eased restrictions boosting domestic tourism.
“ABS data shows that in the 2020 calendar year, migration away from regional Australia to capital cities fell to 190,151. This is around -4% below the series average, and may have contributed to less rental stock being freed up over the year.”
Eliza Owen, CoreLogic Head of Australian Research
Ms Owen also highlighted that while the whole calendar year saw less migration to regional Australia from cities, it was higher in the December and September quarters. This in conjunction with fewer people moving away from the regions, motivated by the pandemic induced disruptions to work or study plans in the cities.
She also mentioned that much of the regional relocation was skewed towards white-collared workers.
“Regional relocation from cities to regions may also be increasingly skewed to higher-income workers, which would put further upward pressure on purchase and rent prices. This is because remote work tends to be concentrated in the ‘knowledge economy’, such as for professionals, as well as clerical and administrative workers,” she added.
Lastly, Ms Owen believes that the easing of restrictions – along with closed international borders – has boosted domestic tourism, impacting the rental market. When the pandemic began, many owners of short term rental accommodation converted theirs to long term, although some have since re-converted.
“While this trend is not apparent across every region, data from AIRDNA show Geelong, Shellharbour, and parts of the Mid-North Coast did see a dip in the number of short term rentals from the March to September 2020 quarter. In these same areas, rental volumes trended closer to pre-COVID levels in the March 2021 quarter.”