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Highlights
- The rapid shift of workers from cities has resulted in a property demand surge in regional areas.
- Speculations are rife that such immense rises in prices might not arise in 2022 when lending conditions remain stringent and affordability improves.
- The prevalence of work-from-home arrangements has led to individuals shifting to the regional areas in search of better affordability.
Australia’s housing price boom has quickly outpaced price rise in any other sector within the country. While it became increasingly difficult to find a house in capital cities like Sydney and Melbourne amid sky-high prices, prices were also seen to be spiralling out of control in the regional areas. The rapid shift of workers from cities to regional areas has led to a demand surge in areas such as the Illawarra region, Kiama Heights and Shoalhaven Heads.
The amalgamation of varying factors that developed during the pandemic has led to an excessively unaffordable housing market in Australia. While some correction is slowly seeping into the economy, it might take long before prices simmer down to levels that are palatable for homebuyers.
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What does the regional property look like?
Apart from regions surrounding main cities, prices have also risen in distant and calm towns across the country. In fact, the pressure was so immense that some of these regional areas recorded the highest growth in value overall.
CoreLogic’s latest report titled “Best of the Best” gave some interesting insights into the regional housing boom. As per CoreLogic data, prices of Ocean Groves units in Geelong rose by 41.7% over the year to November 2021, while Fraser Island units in Wide Bay saw the price rise of 48.2%.
Moving closer to main cities, the coastal suburb of Yamba in the Coffs Harbour region of NSW also saw prices heating up by 56.6%. Meanwhile, the Gerringong region in Illawarra saw property prices soaring by 56.4% through the previous year.
Speculations are rife that such immense rises in prices might not arise in 2022 when lending conditions are stricter, and affordability becomes a less pressing concern. On the flip side, prices might get adversely hit if the economy is forced to shut down and property listings fall. Of late, the removal of lockdown restrictions has led to a large uptick in the number of auctions. Thus, it is crucial that the virus remains in check and precautions are followed.
Work-from-home arrangements pushing regional demand
The pandemic brought unique working arrangements along with it, in the form of remote working. Recent data from the Australian Bureau of Statistics (ABS) reveals that the work-from-home population increased by over 40% during the first half of August 2021.
RELATED READ: How COVID-19 pandemic impacted working arrangements in labour market
With the remote working facility prevalent in different parts of the country, individuals have shifted to regional areas searching for better affordability. The skyrocketing property prices in the main cities have pushed out many first-time homebuyers from the market. Thus, many are now flocking to regional areas, leading to soaring demand in the regions, and subsequently, upward pressure is developing on prices.
Also, many Australians have sought habitation near the coastal regions to live their dream of owning a luxurious house next to the beach. However, it is worth noting that once offices reopen completely, another shock might arise in the housing sector in the form of reduced demand in regional areas. In the meantime, experts speculate that such a day might be a distant reality, owing to the Omicron and Delta variant scares.
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