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Homeowners are continuing to desert city centres, boosting house prices outside of capital cities in 2021. Corelogic’s data for January has highlighted the national uptick of home values, up 0.9 per cent over the past month. But this has been driven by a strong tree change trend.
Housing values have now surpassed pre-Covid levels by 1 per cent, and the index is 0.7 per cent higher than the previous September 2017 peak. Sydney and Melbourne recorded a very moderate rise in property values in January, up 0.4 per cent, while their regional counterparts were up to 1.6 per cent higher.
Corelogic research director Tim Lawless said the divergence between city and country housing demand in New South Wales and Victoria was more significant than other states.
“Internal migration data shows more people are leaving Sydney and Melbourne for regional areas, resulting in a transition of activity from the metro regions to the outer fringe and regional markets. This demographic trend is further compounded by the demand shock of stalled overseas migration. As Melbourne and Sydney historically receive the vast majority of overseas migrants, these metro areas have been the hardest hit by this demand shock.”
Lawless said housing affordability and lifestyle upgrade was drawing homeowners out of the cities, along with the advent of remote working arrangements.
Corelogic house price index: January
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CommSec economist Ryan Felsman said regional home prices climbed by 1.58 per cent in January after December’s 1.63 per cent gain—the biggest lift in 17 years.
Regional home prices surged 7.9 per cent in the year to January—the strongest annual growth rate in 16 years. Corelogic data also shows that in 46 of the 88 larger regional towns, home prices were at record highs to begin 2021.
Corelogic’s Tim Lawless said there had also been a big shift towards houses outperforming units, with national house values increasing 3.5 per cent over the past six months compared to unit prices, which were unchanged.
“Demand for units has diminished through Covid-19 amid record low levels of investor participation and changing living preferences. At the same time supply levels are heightened in some precincts. While demand and supply remain imbalanced we are likely to see units continue to underperform relative to detached housing markets,” Lawless said.
Darwin house prices have bucked the capital city trend charting a course for a 2.3 per cent increase in January.
The moderate increase in house values is set against a backdrop of low listings and rising buyer activity.
The number of listings added to the market nationally over the past month was 3.3 per cent lower than the same period a year ago, and 13.3 per cent below the five-year average.
Low interest rates have been a key factor in supporting the housing market recovery. Mortgage rates are likely to remain at record lows for the foreseeable future, with little chance of a rate rise this year.