Australia’s COVID-induced boom in regional real estate has dissipated, but sections of the rural market on the outskirts of Canberra – including Queanbeyan-Palerang and the Yass Valley – are holding strong.
CoreLogic’s Regional Market Update, which analyses Australia’s 25 largest non-capital city regions, shows 13 areas recorded an increase in house values in the year to January. The number is down from 21 in the year to October 2022.
The Capital Region of NSW, which envelopes Canberra, saw an increase in house values increased by 0.7%, while unit prices surged by 3.1% in the year to January.
In particular, Yass Valley house values sustained 4.4% growth in the 12 months to January, while sales volumes dropped by 22.1%.
In the Queanbeyan-Palerang region, unit prices showed greater strength than houses with 5.7% growth in the 12-month period, compared to houses which were up by 0.3%. House sales volumes fell by 30.3%, while unit sales were down almost 18%.
The South East region in South Australia, which includes Kangaroo Island, the Fleurieu Peninsula and the Limestone Coast, was the best performing regional housing market, with annual value growth of 15.7%.
MARQ Licensed Agent Sam McGregor said there had been a noticeable easing of the COVID-inspired ‘retreat to the regions’ approach by buyers when it came to purchasing lifestyle properties.
But there was still demand for smaller residential properties in townships, he said, as a growing preference had emerged for established homes over building new.
“The Yass Valley is feeling it and so are the other rural markets around Canberra, but there doesn’t seem to be the same level of impact as some other regional areas in Australia,” Sam said.
“The rural lifestyle properties and small acreage properties have come off the boil from their peak but the interest is definitely still there in the Yass Valley.
“People are seeing a lot of value in the Yass Valley and the regions surrounding Canberra, but they are cautious. They just want to dip their toe into the market and make sure they’re making a really intelligent decision rather than fall in love with the property and throw money at it.”
Sam said while entry level properties had taken a hit on price across the Yass Valley, markets in more expensive brackets were more active.
“The higher end stock is selling really well, so anything from $1.2 million to $1.3 million, there’s still a lot of people looking in that range because for what you can get in Canberra, you get a lot more value down the road,” he said.
“There are also a lot of people looking to buy established properties in the rural lifestyle market, rather than build. So, there’s this big troupe of buyers that I’m meeting at the moment and they’re all telling me they’ve bought blocks but they plan to buy a house because it makes more sense. And that’s lighting a fire under the established market so it’s outperforming the rest of the market generally.”
CoreLogic Head of Research Eliza Owen said the country’s most popular lifestyle markets had been hardest hit by softer market conditions and interest rate increases.
She warned that it was likely housing values would continue to trend lower with the Reserve Bank of Australia’s prediction that further rate rises may be necessary to curb inflation. Regional areas would not be immune from softer conditions, she said.
“This is a trend we can expect to see playing out at least until interest rates top out,” she said.
“With this in mind, sellers will need to be realistic about their pricing expectations, make sure they have a quality marketing campaign behind the property and be ready to expect some negotiation from buyers.
“Considering some of these regional values will have only moved through a peak in the cycle more recently, it’s likely there will be a lag between buyers and sellers, and it may take some time for vendors to adjust their expectations.”