Regional home prices have been kept afloat by demand for affordable lifestyle regions and limited supply, as demand remained close to three times pre-COVID levels, shielding prices.
This was according to the PropTrack Regional Australia 2022 Report, an annual report analysing regional property markets around the country.
The report said home prices in regional Australia have dropped 2.2% since their peak in April, following record demand in the regions over the past two years due to pandemic-induced preference shifts. Despite this, regional prices continue to hold up better than capital city prices.
“Housing markets in regional Australia thrived as people sought more space and more affordable homes,” said Eleanor Creagh, PropTrack senior economist and report author. “Remote working opportunities and preference shifts drove strong population growth in regional areas at the expense of the capitals, predominantly Sydney and Melbourne. As public health restrictions have eased and interest rates have quickly risen, the boom has been replaced with slower growth and elevated uncertainty.”
As interest rates rose, demand has fallen 22% from its peak in January, though it remained close to three times pre-pandemic levels and was stronger relative to the capitals.
“While it remains a relative bright spot in the current housing market, regional home prices are falling,” Creagh said. “Regional prices are expected to continue to decline amid monetary tightening and reduced net migration flows to regional areas.
“However, regional markets are likely to continue to exhibit a slower pace of price falls compared to capital cities. They remain buoyed by shifting lifestyle priorities, migration trends, and affordability advantages that are still in play.”
Conditions remain tougher for regional buyers, the PropTrack economist said, with the number of properties listed for sale still well below pre-pandemic levels.
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