Regional property prices fall: where you can nab a sea-change discount

As the Australian housing market braces for a potential fifth cash rate hike in a row in September, new figures have emerged showcasing the downward impact rising rates have already made on regional property prices.

Figures from CoreLogic’s Regional Market Update shows that regional values overall recorded their first quarterly decrease since August 2020. House and unit values in coveted sea- and tree-change areas have dropped by up to 4.5% in the last three months.

Regional properties had previously been the hot-ticket item for buyers following the emergence of the COVID-19 pandemic, thanks to work-from-home flexibilities and shifting sentiments around living in crowded cities. Recent data from CBA and the RAI’s Regional Movers Index in June showed the number of people that moved to regional areas increased by 16.6% to a five-year high in the March 2022 quarter.

Now, several months on from the first of the Reserve Bank of Australia’s hikes to the cash rate, the cracks are starting to form in regional property values. CoreLogic data found that the greatest decrease was in the Richmond-Tweed region of New South Wales (including Byron Bay). House values decreased by 4.5% and unit values decreased by 3.8%.

The Illawarra region also recorded a house value fall of 3.5%, with house values in both Southern Highlands and Shoalhaven dropping by 3% in this same quarterly period. And for the popular sea-change destination of the Sunshine Coast, values had decreased by 2.5%, while the Gold Coast recorded a decline of 1.2%.

While the pandemic helped shift Australians who were still on the fence about a sea- or -tree-change to make their big move, this also put significant pressure on housing prices in these areas. In many instances, locals reported being “priced out” of their home towns due to rising demand pushing up home values.

ANZ predictions: 18% slump in Australian housing market

However, the tide may be turning in regional areas, with more property value decreases having been forecast by one of Australia’s biggest banks.

The latest property price forecasts from big four bank, ANZ, paint a picture of anguish for property owners and relief for would-be buyers. ANZ economists have predicted that the Australian housing market may drop by 18%, with regional areas joining the capital cities in this decline.

ANZ forecasting suggests that the recent increases to interest rates, which have reduced the borrowing capacity of would-be buyers, will hit the regional housing markets hardest a few months after capital city prices start falling.

Source: ANZ Property Forecast

RateCity research crunched the numbers on these latest predictions from ANZ to find that, on a national level, house prices could plummet by up to $150,000 by 2023.

RateCity research director, Sally Tindall, said: “This is a classic case of what goes up, can come down. However, the drops aren’t likely to come close to the huge property prices gains over the last couple of years.”

“As interest rates rise, people are finding they can borrow less, because they have to pay more of their monthly salary to the bank in interest.”

Falling prices might finally provide some first home buyers with a window in, but it won’t be an easy one to climb through.”

“Would-be buyers now have to pay significantly higher interest rates on prices that are still likely to be well above pre-COVID levels,” said Ms Tindall.

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