COVID-19 Impacts: Regional areas “streets ahead” of cities

Corelogic’s recent analysis of Australian property has them saying that property dynamics will shift as the real economic impact of COVID-19 is revealed. The analysis highlights the fact that they believe regional locations are “streets ahead” of capital cities for both capital growth and rental return.

Corelogic’s regional market update, which looks at capital growth over the year to April, saw Tasmania’s Launceston and north east region retain the title of top performer across both the house and unit market, also topping the list over the January 2020 quarter. Houses continued to be the better performer, with 21 of the 25 house markets included in the analysis recording a rise in value, while units had fewer regions—16 of 25—where growth was positive over the year to April.

CoreLogic’s head of research, Eliza Owen, noted that regional dynamics would begin to shift amid the COVID-19 downturn: “Launceston and north east Tasmania have unsurprisingly seen an uplift due to a spillover of demand from Hobart, and a bullish sentiment towards Tasmanian property markets. However, this is annual data, and captures much of the demand prior to the onset of COVID-19”.

“Monthly Corelogic data is showing rents and property values have started to slip across Hobart, which may draw local demand away from regional areas and back toward the capital city over 2020.”

While Western Australia’s Bunbury region saw the lowest yearly growth, with house values down -6.4% over the same period, Owen predicts that parts of regional WA may fare better in terms of stability in housing values over 2020, off the back of increasing optimism in mining as China recovers from the pandemic.

“This could represent a reversal of the housing demand dynamics we’ve observed over the past few years,” Owen said.

In terms of sales volumes, NSW’s Southern Highlands and Shoalhaven saw the highest change in sales volumes for houses across the region, up 21.6% over the year to April 2020, followed by Illawarra, where house sales increased by 18.4%. The Launceston and North East region saw a -11.3% decline in house sales over the year. This just goes to show how quickly the market is changing.

In terms of property rankings for capital cities, analysis based on Corelogic’s data puts Brisbane in equal second place behind Canberra, a result that Propertyology’s head of research Simon Pressley says confirms the regions are “streets ahead” for both capital growth and rental return.

“The facts are that Australia’s best-performed property markets over the last five years have not been the biggest cities. Official data confirms that various regional locations, along with Hobart, were streets ahead of all other capital cities for both capital growth and rental return,” Pressley said.

If you’re considering the move to a regional city, check out our article about the best regional cities in Australia. If you’re not quite ready for a regional city, we would definitely recommend looking at the properties available in Brisbane, because the area is set to boom and now is the time to get your foot in the door.

Written: 17 June 2020

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