Real estate king John McGrath anoints next boom suburbs

Interest rates pressures, cost of living demands and lifestyle choices are shifting buyer demand and home prices into unexpected places, says John McGrath.

OPINION

Price growth is currently strongest in rural treechange areas across regional Australian markets.

This is quite significant because historically, beachside areas have commanded the most demand and best capital growth.

But the pandemic saw median home prices soar across many coastal markets, as city dwellers who could now work from home relocated there for cheaper housing and a more relaxed lifestyle.

The first wave of regional relocation demand was seen in traditional sea-change markets along the coast and in major commuter hubs close to the capital cities.

Home values went up, and as they did, a ripple effect began pushing some buyers a little further afield to areas within a 15 or 30-minute drive to the beach.

McGrath Estate Agents founder John McGrath at a recent Lilyfield auction.

The second wave is occurring in rural areas, as more people embrace other regional lifestyle options such as wine country, snowfields, and rural towns. They’re choosing views of rolling green paddocks and great peace and quiet over bustling seaside tourism hot spots.

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We identified the ‘bush over beach’ trend in the McGrath Report 2023, and according to the latest CoreLogic data, rural areas are now seeing the strongest price growth of all the regional markets.

Regions with the best growth over the past 12 months In CoreLogic’s latest report, a number of regions were highlighted for particularly strong growth.

Among the big east coast states, most of the top-performing regional markets were in rural settings:

 In NSW, the top 3 regional growth markets are Griffith-Murrumbidgee in the Riverina (9.5 per cent), Tamworth-Gunnedah in the New England area (9 per cent), and the Upper Hunter (7.4 per cent).

 In Victoria, the top three regional growth markets are Wangaratta-Benalla in Hume (2 per cent), Moira in Shepparton (1.4 per cent) and Glenelg-Southern Grampians in the Warrnambool region (1 per cent).

 In Queensland, the top three regional growth markets are Port Douglas-Daintree in Cairns

(12.4 per cent), Granite Belt in Darling Downs (10.1 per cent) and Burnett in the Wide Bay region (7.6 per cent).

While rural areas are seeing the best price growth, buyer demand is now coming back into the

commuter hubs close to the major capitals.

These areas boomed during the pandemic, with prices coming back a bit last year, thereby opening up new value and opportunity today.

I think the trend of leaving the big cities will continue as more people become able to work from home. This is one reason why regional home values did not decline as much as the capital cities during the recent correction.

Many families left cities and moved to rural areas during the height of the pandemic. Picture: Destination NSW

CoreLogic data shows home values across Australia’s regional areas remain 30 per cent higher than pre-pandemic, compared to 10 per cent higher across the combined capital cities.

CoreLogic data for March provided further evidence of price stabilisation in the capital cities.

In fact, four recorded a rise in dwelling values over the month – Sydney up 1.4 per cent, Melbourne up 0.6 per cent, Perth up 0.5 per cent, and Brisbane up 0.1 per cent.

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Factors behind the rising demand today include a low volume of homes for sale, the return of

migrants, and tight rental markets encouraging some people to buy instead.

Prices have also softened across many areas over the past 12-18 months, so a lot of people are now coming back into the market looking to take advantage of the new value.

As I’ve said previously, I believe 2023 is definitely the year to buy if you want to position yourself for the next wave of long-term growth in Australian property.

Originally published as Real estate king John McGrath anoints next boom suburbs