Tree-change towns where house prices jumped
“We’re really seeing a slowdown in momentum, but prices are really holding firm. That affordability will look different to a local, but there is still that draw from a Sydneysider because it’s [medians] half the price,” Powell said.
The ability to work from home has allowed Sydneysiders to continue to seek regional housing, changing the demographic and outlook of house prices in these areas, she said.
Most regional markets have hit their peak and will see a substantial slowdown in the annual change, Powell said, but it would stop short of falling below pre-COVID levels.
“It’s very unlikely we’ll see these markets revert back to where they were. We’ve seen a shift and that shift is here to stay.”
She said popular councils like Byron, Bellingen and Kiama were leading the downturn just as they did during the upswing.
“These markets peaked first, and saw stronger rates of growth. Byron was the heart beat of regional growth.”
KPMG regional economist Terry Rawnsley said most regional areas continued to record annual house price growth because there was ongoing demand.
“More population growth is coming through. The economy is still more stimulated. The underlying fundamentals are still driving the housing market,” Rawnsley said.
With many of these areas still relatively more affordable than their city counterparts, it was unlikely for house prices to fall back to pre-COVID levels now despite the broad housing downturn, Rawnsley said.
“What the pandemic has done is a big re-pricing of housing in regional areas. Housing has become more expensive across the board,” he said.
Most of those regions are unlikely to head backwards to pre-COVID prices because of ongoing demand and tight rental vacancy rates, he said.
“The increase in population, the change of demographic, it’s going to hold up more of their post-COVID levels rather than swinging back to their pre-COVID levels.”
Rawnsley said regional housing markets ultimately move slower, for reasons such as longer settlements, and would see a delayed impact from interest rates in coming quarters.
But for some regional councils, like Byron Bay, the heat has come out of the market, Rawnsley said, as buyers were priced out and looked elsewhere.
“They had that really strong 2021 as people shifted out of the cities. Last year some of that heat came out of the market,” he said.
Ray White Byron Bay director of sales Damien Smith said the combination of a steep run up in prices coupled with floods and eight months of rate rises contributed to median house prices falling in the 12 months to December.
“That’s absolutely going to contribute to Byron LGA [house prices] coming off. House prices have come back by 20 to 25 per cent in parts of the shire. Mullumbimby has been hit hard,” Smith said.
He said half of Byron’s buyers still come from Sydney, but they have more negotiating power: “You’ll see sellers will take a little bit less to get onto the next place.”
Elsewhere, Professionals Armidale’s Kyle Garrahy said while the local property market has settled down since the height of the pandemic, there are still more buyers than there are properties.
“We were selling houses 30 per cent quicker than we were listing them. That goes for every agency in town. We were selling more than we were adding to the market,” Garrahy said.
Tight vacancy rates below pre-COVID levels have drawn out investors too, adding to demand, he said.