- Factors like travelling time, distance and net migration affect house price movement.
- Cities in the Illawarra region have a strong correlation to Greater Sydney house prices
- Regions that improve their connectivity to CBDs can expect an increase in the value
A new study has shed light on the complex relationship between Sydney’s property market and the housing markets in coastal regions of New South Wales.
Housing economist at the School of Built Environment at UNSW and co-author, Associate Professor Chyi Lin Lee, said that travel time, distance and net migration determined whether a regional area’s house prices moved in similar ways to Sydney’s.
She said regions with improved transport connections to CBDs are more likely to be linked to Sydney’s housing market, while those without good connectivity are more likely to be affected by economic factors outside of Sydney.
Associate Professor Lee said, “Our analysis is the first to explain house price movements in the regions surrounding Sydney using in-depth data.
“Our findings show that a few factors like travelling time, distance and net migration determined whether a regional area’s house prices moved in similar ways to Sydney’s.
One of the key findings was that commuter connectivity, including access to easy transport, played a vital role in whether a region’s housing market became pinned to Sydney’s housing market.”
Connectivity matters
According to Associate Professor Lee, larger regional cities in the Illawarra region like Wollongong, Shellharbour and Kiama have a strong correlation to Greater Sydney house prices, while regions that do not have good connectivity with Sydney CBD are more likely to be affected by economic factors outside of Sydney.
Professor Lee said “An implication of our analysis is that regions that improve their connectivity to CBDs can expect an increase in the value of properties and land.
“Our findings could also inform housing policymakers that seek to create regionally balanced cities across a state,” she said.
Associate Professor Lee said she hopes the new insights will help provide a framework for property investors and policymakers.
She said “With a deep range of data dating back to 1991, our findings validate what is observed anecdotally with hard data explanations.
“Besides market fundamentals, we confirmed that connectivity plays a vital role in whether a region’s housing market becomes pinned to Sydney’s housing market,” she said.
According to Associate Professor Lee, the recent decline in house prices in Sydney could be a leading indicator of what’s to come in regional areas.
“Given the recent market corrections taking place in Sydney, the findings can give people in the surrounding regions some idea of what to expect,” she said.
