Home values in regional areas of Australia have grown twice as much as the big cities and weekly rents have risen at triple the pace over the past year, according to new research from CoreLogic. 

Dwelling values (a measure of all homes) in regional areas rose by 13% compared to 6.4% for the combined capitals over the 12 months to April 2021.  Interestingly, while regional houses had the highest level of growth, the gap between regional and city growth was widest with apartments. 

House prices in the regions grew by 13.5% compared to 8% for the capital cities. Apartments rose by 10.6% in regional areas compared to 1.8% in the cities, which largely reflects the absence of migrants and international students in our cities during the first year of the pandemic. 

In recent months, the growth gap between the regions and cities has narrowed due to a little less buyer exuberance in both markets. This follows the first dip in new mortgage commitments in February following almost a year of month-on-month growth and record levels of borrowing.

Here are the top regions for house price growth in the year to April 2021   

1. Richmond-Tweed, NSW 21.9% 
2. Southern Highlands & Shoalhaven, NSW 19.5% 
3. Launceston & North East, TAS 18% 
4. Capital Region, NSW 17.5% 
5. Newcastle & Lake Macquarie, NSW 17.5% 
6. Sunshine Coast, QLD 17.5% 
7. Gold Coast, QLD 16.6% 
8. Mid North Coast, NSW 14.9% 
9. Illawarra, NSW 14.8% 
10. Wide Bay, QLD 14.6% 

Source: CoreLogic Regional Market Update released May 2021, SA4 regions 

In the rental market, regional dwelling rents rose by almost triple the rate of the capital cities over the year to April at 9.6% compared to 3.3% in the capital cities. 

Once again at the top of the tree was the Richmond-Tweed region, which includes Byron Bay, Suffolk Park and Bangalow, with 17.6% growth in local rental values to a median $590 per week. 

A big reason for soaring regional rents was an astounding halving of available rental stock across Australia’s 25 largest regional areas last year. This was caused by eviction moratoriums and a -4% decline in internal migration of regional residents (mainly students) to capital cities in CY20. 

At the same time, demand spiked as a flood of city dwellers moved temporarily or permanently to the regions, mainly during the second half of 2020. The net population gain from internal migration from the cities to the regions over CY20 was 43,000 people compared to just under 20,000 in CY19.

Many of them were higher income workers in knowledge industries, who had more opportunity to work from home and more capacity to pay rising rents. In some regions, local Airbnb landlords converted their properties to long term rentals to take advantage of the dramatic increase in yields. 

Here are the top regions for growth in dwelling rents in the year to April 2021   

1. Richmond-Tweed 17.6% (now $590 pw) 
2. Central Queensland 15.3% ($340 pw) 
3. Sunshine Coast 15% ($550 pw) 
4. Southern Highlands & Shoalhaven 13.2% ($620 pw) 
5. Bunbury, WA 13.1% ($390 pw) 
6. Mid North Coast, NSW 12.7% ($430 pw) 
7. South East, TAS 11.9% ($400 pw)
8. Launceston & North East, TAS 11% ($400 pw) 
9. Gold Coast, QLD 10.9% ($530 pw) 
10. Central West, NSW 10% ($390 pw) 

Source: Growth in regional rents is almost 3 times that of capital cities, CoreLogic, published May 24, 2021

Despite increasing home values, affordability in the regions remains outstanding compared to capital cities, with a $250,000 difference in median prices. There are some exceptions, including Byron Bay LGA where the median house price is now $1,444,000 – that’s almost $300,000 higher than Sydney!   

CoreLogic reports that it takes an average 7.4 years across the combined regional markets to save a 20% deposit compared to 9.1 years in the capital cities. It also takes 27.1% of household income to service a regional mortgage compared to 33.4% for a city mortgage.  

One of the greatest things about Australia is that it offers the very best in city and regional living. 

You can choose between smaller capital cities with character, like Adelaide and Hobart; or the excitement of big city living in internationally renowned centres like Sydney and Melbourne. 

Then we have a huge variety of regional areas, with varying climates, including coastal beach towns, riverside communities, the snowfields, wine country, mountain regions and farming centres.  

One of the enduring legacies of COVID will be that it opened so many Australians’ eyes to the amazing lifestyle options available right here at home.

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters. 

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