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Regional markets lag capitals' rent and value growth

Posted on 4 December 2023

Source: CoreLogic

After recording stronger growth and milder declines through the recent cycles, a new analysis of Australia's regional housing markets shows many areas have lagged their capital city counterparts over the past year.

Since bottoming out in January, values across the combined capitals have risen to new record highs, while the combined regional market remains -2.5% below the peak recorded in May 2022.

However, CoreLogic Economist and report author Kaytlin Ezzy said results across Australia's largest 50 non-capital SUAs vary, with 12 (8 in QLD, 2 in NSW and 2 in WA) recording new peaks in October, and an additional four sitting within 1% of their previous record highs.

"Despite not taking out the top spot, NSW and Queensland were undeniably the best-performing states, each making up four of the top 10 positions in terms of quarterly value growth. Queensland also made up half of the top 10 for annual value growth, with Bundaberg and SA's Mount Gambier both recording annual growth above 10%.

The flood-ravaged town of Lismore (NSW) saw the number of home sales rise from a flood affected low base, lifting 16.5% over the year to August.

The smallest decline in sales volume was recorded across Gladstone (QLD), falling just -1.2% from the strong volumes recorded the year prior.

"Fuelled by strong net overseas migration, smaller household sizes and limited stock, the combined capitals have seen rents rise 1.8% over the past three months. In contrast, normalising migration patterns have seen regional rents record a milder 0.8% rise."

Across the largest 50 non-capital SUAs, 38 saw rents rise over the three months to October, with eight recording a rise of 3.0% or more, and Queensland's Bundaberg (3.5%) and Maryborough (3.5%).

"We're already seeing an easing in the pace of monthly growth across our largest cities, and this is a trend we can expect to see playing out more broadly at least until interest rates top out,” she said.

"Higher interest rates, higher housing prices, higher rents and high cost of living pressures are likely to weigh on buyer sentiment leading into 2024."


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