Homebuyer desire for sea and tree change weakens, renewed focus on suburbs after lockdowns end

A major change is happening in the real estate market, with a pandemic-inspired trend now reversing, a top four bank’s survey suggests.

A major change is underway in the real estate market, with the desire to move regionally weakening as buyers once again look to the suburbs after emerging from lockdowns, according to a National Australia Bank survey.

The bank surveyed 370 property professionals including investors, real estate agents and developers.

Last year, Covid-related work flexibility initially led to a big change in perceptions around buying in regional areas.

But 12 months on, buying in a metropolitan area is considered somewhat more important than buying in a regional area, at 26 per cent versus 21 per cent respectively, NAB says.

The bank’s executive of home ownership Andy Kerr said sentiment had dramatically shifted as the pandemic entered a new phase, with dynamics relatively “more normalised”.

The sea and tree change lure had waned along with the quest for more space as more workers returned to the office for at least a few days a week, he said.

Regional markets outperformed capital cities over the past 12 months, with prices respectively rising 26.1 per cent and 21.3 per cent, CoreLogic data shows. But that may change.

“We know that lockdowns have reshaped how we live, with many at home for longer periods,” Mr Kerr said.

“The trade-off between affordability and lifestyle has changed markedly throughout the pandemic, with choices around CBD proximity, additional space and price fluctuating over the last two years.

“What we are now seeing is little green shoots of people returning to inner-city suburbs, looking for the balance of lifestyle and value as cities like Melbourne and Sydney have opened up.

“This has been aided by more subdued price growth in these areas.”

The gradually growing lure of inner suburbs in these cities was slowly bringing them back to life, Mr Kerr said, driven by young first home buyers seeking nightlife.

But outer suburbs were still holding reasonable appeal in NSW, where “there’s still that kind of view that we’re going to be locked down for a bit longer”.

Having endured the longest periods of stay-at-home restrictions, having a study or work area was most important in Victoria and NSW.

The size of a house/apartment was most important to South Australians surveyed.

Mr Kerr said Victorians still clearly valued good public transport more than other states, a result of the move to the outer suburbs or regions during the past 18 months.

“In each state, there are different factors that impact what is most important when buying a home,” he said.

“Outer suburbs with good public transport have unsurprisingly been really strong throughout ... (and offer) generally better value.

“They give that right balance of a bit more space but easy access to the CBD.”

The research also found the amount homebuyers were prepared to borrow was the key consideration in all states – with buyers in South Australia most concerned about this by far.

The size of a house/apartment was also most important in South Australia, where those preferring an apartment over a house was higher than any other state.

“South Australia in recent times in particular has seen some significant house price growth,” Mr Kerr said.

First home buyers are starting to bring some life back to inner suburbs, particularly in Melbourne and Sydney.

“What we’ve typically seen over the past 12 months is prices of apartments has grown at a much, much slower rate than houses.

“So what we’re seeing come through in South Australia is the hunt for value driving them to consider apartments.”

The relative importance of a house instead of an apartment was a big consideration in Western Australia, while for Queenslanders, the size of the land was critical.

Good local shopping also rated highly in all states.

Having a study or work area was most important in Victoria and NSW.

Mr Kerr also said fierce competition for listings and the speed at which properties were changing hands had driven a need for banks to process loan applications more swiftly, with NAB taking five days on average about 12 months ago, but now 80 per cent get a decision that same day.

It had taken a lot of the emotion and heartache out of the home buying process, he said.

The bank had been progressively improving its technology to enable faster decisions, Mr Kerr said, with 40 per cent of home loan appointments now taking place via videolink.