Regional property continues country mile growth

The city to country COVID migration and its ensuing hike in regional property values is continuing to hold sway in 2022 but take heart!

There’s a good chance this growth may settle soon.

CoreLogic’s quarterly Regional Market Update released on Monday confirmed Australia’s 25 largest non-capital city regions were continuing to enjoy extraordinary growth.

Twenty-four of these regions’ houses can boast an annual double-digit growth while 18 regions have experienced gains of over 20%.

And that’s not all.

Australia’s combined regional areas’ median dwelling values trumped that of its capital cities counterpart, skyrocketing 26.1% in the year to January 2022 compared to the latter’s 21.3% figure.

Why are regional properties still outperforming the city?

CoreLogic’s head of research Eliza Owen admitted last year was a highly unusual one when it came to the standard pattern performance between capital cities and regions.

“It’s common for these two markets to roughly perform in line with each other,” she said.

“But what was unique about the end of last year was that this pattern changed.

“Regional price growth instead accelerated toward the end of the year, while capital city dwelling price growth continued to slow.”

Should I still buy or sell a regional property? 

Both regional and suburban property growth has soared in the past two years with residential property prices overall jumping 21.7% in the 12 months to September 2021, according to the Australian Bureau of Statistics (ABS)’ Residential Property Price Indexes report.

This is the strongest annual growth recorded since this series commenced in 2003.

Escape to the country-ites keen for a budget-priced property should definitely not move to the Southern Highlands and Shoalhaven areas in NSW.

In the country’s highest annual regional house value growth, properties in these regions soared 38.2% in the 12 months to January 2022.

Second in line for extraordinary house value growth is Queensland’s Gold Coast (36.3%) and the Sunshine Coast (35.4%).

However, if you’re thinking of selling up this year, you can count yourself doubly lucky if you’re on the Sunshine Coast, where homes boast the quickest selling time in the country of just 15 days.

Close behind the Sunshine Coast with a median time on the market of only 16 days is Launceston and north-east Tasmania, the Gold Coast and Toowoomba.

What’s next for regional property?

Everything’s not lost with Ms Owen expecting regional growth rates to start slowing early this year.

“The expectation is there will ultimately be few regions that can avoid a downswing over the next few years,” she stated.

“Key drivers for performance in the regions will come down to higher interest rates and affordability constraints, the same headwinds capital city markets are facing.”

However, Ms Owen advised potential country buyers that there could still be some regional property growth this year, particularly if interest rates rise.

She added that the possibility of a return to “normality” could also be a challenge, rather than a great expectation, for the regional property market, as this could result in a refocus on cities.

However, this was unlikely, she said, with Australians now prioritising their current housing needs to align with their desired lifestyle.

What does this mean for my property plans?

Simple: don’t stop believing in them!

This information and statistics are crucial for you to consider but at the same time, don’t give up on your plans to buy, sell or invest in property, regardless of where that property is. Sign up to Listing Loop to get first access to pre-market, off-market and secret property listings.

If you’re concerned about how much you can afford to borrow, check out our mortgage calculator, or if you’re rethinking your loan, you may want to consider refinancing.

We have plenty more great loan advice and tips to give you as well so give us a call today at Lending Loop.

Looking back while looking forward


So, what’s next for you and your (current or potential) home loan?


Well, we know it’s hard to take time out from frenzied Christmas shopping and baking so we’ve made life easier for you with this shortlist of 2021’s top real estate highlights plus a forecast for 2022.


Highlights of 2021

  • Record low interest rates
  • Record price growth
  • Record regional property boom
  • Housing affordability fall
  • Loan numbers decrease, loan sizes increase


As Lending Loop recently recorded, the Reserve Bank of Australia (RBA) again maintained its 0.01% interest rate this month.


This makes 14 consecutive months of this stunningly low rate with no growth expected before 2023, according to RBA governor Dr Philip Lowe.


Meanwhile, in a 17-year high for the country, property prices jumped to astonishing levels this year, particularly in Brisbane and Sydney.


Australia’s five major capital cities together experienced an overall property growth of 21.17% in the 12 months to November, according to CoreLogic’s Home Value Index’s monthly indices.


Brisbane recorded the highest growth of 26.34% with Sydney not far behind at 25.82%.


Escaping to the country has been a highly popular trend in 2021, thanks to metropolitan COVID restrictions, lower property prices and greater working flexibility.


As a result, Australia’s 25 largest non-capital city regions achieved a record increase in house values in the past year, according to CoreLogic’s Regional Market Update last month.

More than 50% of these places recorded an annual rise of 20% or above with an incredible seven towns recording a growth of over 30%.


Of these latter areas, the best performers were in NSW from Southern Highlands and Shoalhaven regions (35.9%) to the Richmond-Tweed area (32.8%) while placing third was Queensland’s Sunshine Coast (32.3%).


However, the flip side to property price growth has been rapidly declining housing affordability with first-home buyers particularly feeling the pinch.


According to the Real Estate Institute of Australia’s (REIA) Housing Affordability Report (HAR), average loan sizes overall jumped 17.4% over the past 12 months while first-home buyers’ average loan size surged by 14% in the past year to $459,256.


As a result, mortgage holders now repaying lenders 36.2% of their total income for the September quarter, which is an escalation of 3.9% compared to the same period in 2020.


And while first-home buyers comprise 35% of owner-occupier property loans, this group has nevertheless decreased by 12.6% in the September quarter.


What’s should I expect in 2022?

  • Record figures and demand to stabilise
  • Interest rate rise
  • Tighter, tougher lending conditions
  • Larger household savings


Mortgage holders both current and potential should expect tighter, tougher lending conditions and interest rate increases, with both already beginning late recently.


In October, the Australian Prudential Regulation Authority (APRA) announced tougher home loan serviceability tests, with lenders now expected to boost their minimum interest rate buffer from 2.5%-3%.


And while the RBA is not expected to raise interest rates until 2023, or until actual inflation sits within 2%-3%, several lenders including the Commonwealth Bank and AMP are predicting a much earlier rise.


CoreLogic’s national head of residential research, Eliza Owen, believes these two “headwinds” alone will slow housing demand.


Ms Owen has also warned that the high value growth and 2021’s above-average rates of housing turnovers are unsustainable in the long term.


“Listings levels are normalising across Sydney and Melbourne, and affordability constraints are worsening across most housing markets,” she said.

“As a result, it is expected that 2022 will see far milder rates of appreciation in Australian dwelling values.”


Industry expert Michael Yardney also believes housing demand will decrease in 2022 particularly on the back of rising property values – in some areas at least and certainly not at the record rate of 2021.


He believes the impetus of low interest rates has worked its way through the system.


“With property values now being 20%-30% higher than at the beginning of this cycle at a time when wages growth has been moderate at best and minimal in real terms for most Australians …. the average home buyer won’t have more money in their pocket to pay more for their home,” Mr Yardney says.


At the same time, mortgage holders can be encouraged that Australia’s average household savings rate has jumped by 23.6% due to COVID lockdowns and travel and retail spending restrictions.


Knight Frank recently reported that one in three Australian clients (33%) surveyed for their Global Buyer Survey said their spending power has soared since the start of the pandemic.


This figure is well above the global average of 24%.


However, real estate supply isn’t keeping pace with these larger spending budgets.

“Buyer angst is likely to linger as the number of new apartments being built in prime regions over the coming years continues to diminish with increasing competition from Australians living at home and abroad,” the report revealed.


Annual national growth for mainstream residential properties is also expected to drop from 18% this year to 8% in 2022.


So, what’s next for me and my loan?

Firstly, remember that no one has a crystal ball to 100% guarantee what the future holds for you and your loan.

But we encourage you to study the above figures and statistics and to give us a call at Lending Loop to discuss any questions you have for your loan in 2022.

The “new normal” for you may mean refinancing with a new lender, finally getting the courage to buy your first home (congratulations!) or simply looking over your expected budget for the new year and discovering new ways to repay your home loan faster – or at least spend your cash more wisely!

Don’t forget the possibilities of investing either.

Whatever you decide to do, we’re always happy to help you so get in touch with us today. Merry Christmas and may your new year be a wonderful one!