Regional markets are on the move!
Strong property market conditions across key capital city areas during 2013, have been the catalyst to provide a knock-on effect to some of Australia’s regional property markets with an increase in property values across several regions during 2013.
Only 16 council areas recorded a fall in median house values throughout 2013.
News of value growth across most markets over the year will be welcomed by the regional markets where in some cases they’ve been doing it tough - these results suggest that it is not just the capital city housing markets that are benefitting from the low mortgage rate environment, so too are regional areas.
As shown in the adjacent charts, topping the list of best performing regional areas with a 35% increase in values is the agriculturally-rich Riverina council area of Carrathool. Across each state, Western Australia and New South Wales each have 10 of the 25 regions where the greatest value growth was recorded followed by four regions in Victoria and one in South Australia.
In New South Wales, Victoria and South Australia, the regions to record the greatest increases in house values could be best described as ‘small regional markets’ which are generally located in the non-coastal areas of the state.
For Western Australia, the results are somewhat different where a number lifestyle markets around well-known coastal areas that have previously underperformed for many years, are now showing an increase in overall performance. These include: Augusta-Margaret River (19.9%), Capel (16.1%), Denmark (15.9%), Busselton (15.8%) and Murray (13.9%).
Areas to record the greatest falls in values have been the once fast-growing, resource-rich mining area of Isaac in Queensland where the median house value dropped by -12.4% over 2013. Across the states, Queensland, New South Wales and Western Australia each have the greatest number of regions listed (6) followed by: South Australia (4) and Tasmania (3).
Many of the council areas listed are linked to the mining and resources sector where investment peaked during 2013. As the results show, we are now seeing the impact of a lower demand for workers which is in a number of areas resulting in falling house values.
Areas that recorded the strongest increase in values and largest falls are noticeably devoid of the larger regional areas, except for Gladstone. Focussing on the 30 largest regional markets of the country ranked by population, each of these regions, again excluding Gladstone, recorded an increase in median house values throughout 2013.
Again, this re-iterates a climb in house values right across the country and not just within capital city markets.
As 2014 progresses, I would anticipate more of the same where resource areas will lag and other regional markets will gradually record further value rises.
Overall the challenge in the mix will be the rising levels of unemployment which can be more detrimental to less diversified regional economies than to capital city markets. On a positive note, with mortgage rates tipped to remain low and talk that the Australian dollar will continue to fall, the attractiveness of housing, particularly in some of the larger regional markets, is likely to continue to show further growth over 2014.
Cameron Kusher is senior research analyst at RP Data.