House prices in premium areas of NSW, such as the Southern Highlands and Byron Bay, are falling behind as city values pull ahead of the regions, data from CoreLogic shows.
The Southern Highlands, which includes the towns of Bowral, Berrima and Moss Vale, had a 2 per cent drop in property values in the past three months, driving average growth in regional areas down to just 0.1 per cent. That compares with average growth in the cities of 1 per cent over the period, the data shows.
“Prices are likely to fall further across many of these regional areas, although the trend across the weakest regional markets is generally towards a slower pace of decline,” said Tim Lawless, CoreLogic research director.
Bellagio Estate in Bowral. House prices in the Southern Highlands are falling.
Overall, housing values fell in 39 per cent of Australia’s regional areas over the past three months, compared with only 8.3 per cent of capital city districts.
“The normalisation in internal migration towards the regions and the fact that they don’t get the same demand side pressures from net overseas migration partly explains why the regions are not seeing the same level of recovery compared to the capital cities.
“A lot of these regional markets have lost their affordability advantage after huge gains during the pandemic, even with values falling in the past few months.”
During the pandemic, house prices surged by 41.6 per cent across the combined regional housing markets, almost twice the combined capitals’ 22.3 per cent gain.
Since peaking, regional house prices have fallen by 7.7 per cent, which means values are still 33 per cent higher than before the pandemic boom.
Byron Bay prices are falling.
Elsewhere in NSW, prices in the coastal areas of Richmond Valley, which includes Byron Bay, dropped by 4.1 per cent and Lachlan Valley fell by 3.6 per cent.
“The weakness in house prices across Richmond Valley could be due to the flooding last year, but in the case of Byron Bay, it’s likely due to prices overshooting the mark having performed well during the pandemic and that affordability challenge could be impacting the market,” Mr Lawless said.
“The fact that regional markets have climbed so high during the pandemic is also probably another reason why they’re underperforming at the moment,” Mr Lawless said.
Regional Victoria was the weakest regional market, notching up the steepest drop in values of 1.4 per cent in the past three months.
The biggest decline was in the Grampians, which slumped by 4.8 per cent over the three months to August. It was followed by Heathcote-Castlemaine-Kyneton with a 4.6 per cent fall.
Surf Coast, Loddon and Mildura dropped more than 3 per cent each, while Bendigo, Ballarat and Wodonga lost more than 2 per cent each.
“Regional Victoria has seen a more significant readjustment in the demographic trends where we’re not seeing the same number of people moving into the regions anymore, so prices are softer across the board,” Mr Lawless said.
“It’s pretty hard to find a subregion across the regional part of that state where values are trending higher.
By contrast, the Gold Coast and Sunshine Coast continued to attract strong demand, sparked by interstate migration, which had increased by 12.3 per cent and 9.2 per cent respectively over the 12 months to March according to the Regional Movers Index.
Coolangatta home values surged 6.2 per cent over the past three months, followed by the Sunshine Coast Hinterland with 5.8 per cent and Gold Coast North at 5.6 per cent.
Desirable lifestyle markets in South Australia such as Barossa, Eyre Peninsula and Limestone Coast also performed well in the past three months, gaining 5.1 per cent, 4.7 per cent and 3.5 per cent respectively.
Meanwhile, commutable regions such as Newcastle and Lake Macquarie gained about 2 per cent.
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