One of Australia’s most powerful bankers says professionals who have fled the big city for a lifestyle change in the wake of Covid and lockdowns will regret it.
Regional house prices have risen faster than capital cities during the pandemic on the back of unprecedented demand, and values are rising even in flood-stricken cities.
‘Tree-changers’ have caused median home prices in Australia’s regional areas to rise 24.2 percent in the year to April, compared to 16.8 percent for capital markets, CoreLogic data shows.
But dr. Luci Ellis, an assistant governor for economic policy at the Reserve Bank of Australia, predicted that professionals who can work from home may regret their decision to move away from the big smoke.
“The desire for more space further from the office may diminish over time as the memories of the lockdown begin to fade,” she recently told an audience in Sydney.
One of Australia’s most powerful bankers says professionals fleeing the big city for a lifestyle change to avoid lockdowns will regret it (pictured is Surfers Paradise on the Gold Coast, which has seen house prices drop by a third in a year). have risen)
Where regional house prices have risen
CESSNOCK: 41.6 percent up to $671,014
GYMPIE: 36.4 percent up to $612,969
KIAMA: Up 34.3 percent to $1,708,243
LISMORE: 33.3 percent up to $671,352
GOLD COAST: Up 33.1 percent to $1,094,519
COFFS HARBOUR: Up 31.7 percent to $874,663
NOOSA: 30.2 percent up to $1,495,696
SUNSHINE COAST: 30.2 percent up to $1,068,903
PORT MACQUARIE: Up 28.9 percent to $909,632
LAUNCESTON: 28.4 percent up to $595,988
Source: CoreLogic data on median home prices for the year to April 2022 based on municipal areas
‘Not everyone looking for a ‘tree change’ in the regions will find it the right choice in the long run.’
For much of 2021, Sydney and Melbourne were plunged into a prolonged lockdown following an increase in the more contagious Delta strain of Covid.
dr. Ellis argued that many people who have moved to regional areas to escape these lockdowns are becoming bored with the slower pace of life in the country as more cosmopolitan major cities reopen.
“So this wasn’t so much about city folk wanting tree changes, but rather the interruption of the long-standing trend of others going to the big smoke,” she said.
Regional areas within a two-hour drive of a capital have seen some of Australia’s steepest price increases.
Queensland’s Gold Coast saw its annual average house price rise 33.1 percent to $1,095 million.
On the other side of Brisbane, the Sunshine Coast has also been particularly popular, with average home prices rising 30.2 percent in a year to $1,069 million.
Neighboring Noosa, a more exclusive area, saw average home prices rise 30.2 percent to $1.5 million.
Less than an hour from Gympie, which recently flooded, saw a 36.4 percent annual increase in home prices to $612,969.
Another flood-stricken town, Lismore, in northern NSW, saw average home prices rise 33.3 percent in a year to $671,352.
Coffs Harbor on the Mid-North Coast of New South Wales also saw a big increase, with home prices rising 31.7 percent in the middle to $874,663.
Noosa, a more exclusive area, saw the average home price rise 30.2 percent to $1.5 million (pictured is a more expensive home in Noosa Heads)
dr. Luci Ellis, an assistant governor for economic policy at the Reserve Bank of Australia, predicted that professionals who can work from home may regret their decision to move away from the big smoke
The NSW Hunter Valley also saw a surge in demand, with median home prices in Cessnock rising 41.6 percent to $671,041.
Kiama, on the south coast of NSW, saw a 34.3 percent increase, pushing prices to $1,708 million.
Byron Bay’s 21.1 percent increase was more moderate, but it has become the first regional market to have a median home price in the millions of $2,004 million, putting it in the same league as the suburbs on Sydney’s Upper North Shore.
Australia’s most expensive regional market also had the country’s highest Greens vote, with the small party winning 54 percent of the primary vote at the Byron Bay voting booth in Richmond’s Labor seat.
Northern Tasmania also experienced above-average growth, with median home prices in Launceston rising 28.4 percent in a year to $595,988 in the seat of Bass, who remained with the Liberal Party.
Since rental vacancy rates are very low in most regional areas, Dr. Ellis that there would be rent stress, which could have flow-through effects on regional economies.
“Regardless of the cause of the change in population flows, there is no denying that prices and rents have risen significantly in many regional housing markets,” she said.
‘This is at the expense of the budgets of existing residents.
“It’s important to be aware of that.”
Byron Bay’s 21.1 percent increase was more moderate, but it has become the first regional market to have a median home price in the millions of $2.004 million, putting it in the same league as the suburbs on Sydney’s Upper North Shore.
The pace of house price growth is also slowing as economists expect the Reserve Bank to raise interest rates seven more times over the next year, bringing the spot rate to 2.25 percent for the first time in eight years.
Headline inflation in the year to March rose 5.1 percent, a level well above the RBA’s 2 to 3 percent target.
As a result, the RBA raised rates in May for the first time since November 2010, with a quarter of a percentage point increase ending the era of record-low cash interest rates of 0.1 percent.
So far, only Sydney and Melbourne have experienced a quarterly decline in house prices, the worst since 2020 before the RBA cut rates.
Lismore, a flood-stricken town in northern NSW, saw average home prices rise 33.3 percent in a year to $671,352 (pictured is a protest sign targeting Nationals MP Kevin Hogan who was reelected to Page and de Lismore won booths on primary votes)
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