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29 Jul, 2022
Market Update on Regional Australian Property
The regional areas outside of the capital cities have recently received increasing attention. Although the growth in the unit values remained positive, it seems that Regional Australia is now showing signs of a slowdown.
A recent regional market update by CoreLogic found that overall housing sales have gone down 4.7% since January from a previous high of 6.6% in April 2021.
So is this a sign to worry about?
Increasing value in Regional Australia
Although the Regional Australia market is showing signs of slowing down, this is not necessarily negative. Property value in regional Australia is still outpacing all other major cities due to a low number of listings and a constant demand from buyers.
Over 12 months to April, there was a 23.9% increase in value for regional homes compared to only 14.6% increase for homes within capital cities.
Demand is exceeding supply. And this has occurred as more and more people are looking to move into these areas, but there is not enough development in new housing. As a result, many buyers are rushing into the market.
“Although demographic data is significantly lagged, anecdotally, we are still seeing strong demand for regional housing supported by high internal migration rates,” Mr Lawless from CoreLogic says.
In addition, CoreLogic’s monthly Unit Market Update shows that house values experienced a larger monthly decline compared to units. While house values are falling by 0.15% over May, the combined capital unit market stayed resilient, with regional unit values showing a 0.8% increase over the month.
In terms of rental growth, national units are now recording the strongest annual rental growth since July 2007, according to CoreLogic. This saw the annual trend in unit rents (9.5%) outpace growth in house rents (9.2%) for the first time in 4 years.
CoreLogic research analyst Kaytlin Ezzy noted that rental demand across the unit segment fell dramatically at the beginning of the pandemic, but is returning strongly over the recent months.
“Another factor aiding rental growth is the recent shortage of rental supply,” Ms Ezzy said.
“Nationally, the count of unit rental listing over the four weeks to May 29 was -30.2% below the previous five-year average… This saw national vacancy rates tighten from 1.52% in April to 1.47% in May.”
Illawarra rising in demand
Increasing number of properties sold
A short 30 – 90 minutes drive South of Sydney is the coastal region of the Illawarra. It is one of the most popular regional areas in NSW and has grabbed the attention of many home buyers and investors. As of February 2022, Illawarra has seen 6,506 properties sold, according to CoreLogic’s latest report.
Compared to their usual numbers, this is a considerable increase compared to last year. On a five-year average, the region also experienced a significant 15.8% increase in dwelling sales annually. Demand and interest are rising in Illawarra, and the numbers speak for themselves.
Increase in property value
Through Illawarra’s Home Index Value April 2022, we can take a closer look at the increase in the value of houses and apartments. The value of housing in Illawarra was found to have increased by 24.3%, with the current median value rising to $1,085,519.
On the same page, apartments also saw an increase of 16.8% in value, with the median value rising to $716,949. The property market in Illawarra has seen fantastic growth in value over this year alone.
Decreased time on the market
Along with the increasing value seen for properties within the Illawarra region, there has been a decrease in the time they spend on the market.
Previously houses stayed on the market for 27 days, but have now decreased to 21 days. Similarly, apartments have significantly decreased from 32 days available to 21 days on the market.
Kiama property market is set to grow
One of the main attractions that Illawarra holds is Kiama, with median house prices soaring over the past 5 years. It is a popular destination for not only tourists but also those wanting a seachange due to its unspoilt beaches, stunning views and famous blowholes.
According to recent Domain data, in the past year alone, house prices in Kiama have jumped over 26%, reaching a median of $1.6 million and continuing to grow strongly as 2022 progresses.
Being close enough to have convenient access to Wollongong and Sydney, yet far enough to feel like their own small town, Kiama is in a prime location. Located right by the ocean, residents have easy access to the beach and can reap the benefit of having amazing views daily.
Demand for high-end properties in Kiama hasn’t ceased. And while market trends could come and go, Kiama was definitely a long-lasting favourite among buyers!
Should you buy now?
Demand for property in regional Australia is rising, especially for apartments.
The relative affordability across the unit sector, in both property values and rents, will likely be increasingly more desirable. This is due to interest rate increases and inflation affecting day to day living. Additionally, surging unit rents should help to support investor demand, as gross rental yields rise.
So if you are looking to buy or invest in the property market, now is the best time! And the regional areas, the Illawarra region and the beautiful coastal town of Kiama are places to consider.
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