Surprise! Where you should have bought a home four years ago

These are the surprise suburbs and locations that have boomed across the country in the last five years.

These are the surprise suburbs and locations that have boomed across the country in the last five years. Image supplied by Ray White.

***This is the latest in a weekly series of columns from John McGrath***

Home values across Australia’s regional markets are still rising but at a slower rate, according to CoreLogic’s latest quarterly report.

Affordability challenges in coastal and country towns where home values have grown significantly in recent years are one factor slowing price growth today.

Another is a better balance between supply and demand.

The number of homes coming onto the market is normalising and demand has eased off a bit as fewer people leave the cities.

The value of regional real estate changed dramatically during the pandemic.

Many Australians, particularly millennial families, chose to reinvent their lives with a move to the coast or country because they gained the freedom to work from home.

The resulting surge in population permanently reset price thresholds for both home values and weekly rents across the regions.

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Prices have boomed in plenty off regional locations over the past five years.

Overall, home values in regional areas are now 52.5 per cent higher than where they were at the onset of the pandemic. This compares to a 33.4 per cent uplift across the capital cities.

Regional rents are up 39.1 per cent compared to 35.4 per cent in the cities.

After that sort of growth, it’s inevitable that affordability constraints will start to cool the market. Higher interest rates are also playing a role because they’re limiting people’s borrowing capacity.

Over the three months ending July 31, regional home values rose by 1.3 per cent. This represents a slowdown following 2.2 per cent growth over the three months ending April 30.

The same trend is occurring across the combined capital cities, where home values grew by 2 per cent in the April quarter and by 1.8 per cent in the July quarter.

If we drill down on the data, 60 per cent of the 50 biggest regional markets recorded a rise in values over the three months. Eleven regions saw values rise by more than 3 per cent, which is very strong.

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Gladstone has been very popular.

Regional Queensland was the best performer of the quarter, pulling ahead of regional Western Australia where incredible price growth has occurred over the past few years.

The strongest regional Queensland market for price growth was Gladstone, where home values rose by 9.2 per cent. Other strong performers were Townsville (7.8 per cent), Rockhampton (4.8 per cent), Kingaroy (4.5 per cent) and Mackay (4.3 per cent). There was also about 3 per cent growth in Toowoomba, Hervey Bay and the Gold Coast.

In regional NSW, the best markets for price growth were Lismore (3.1 per cent), Ulladulla (2.6 per cent), Muswellbrook (1.8 per cent), Singleton (1.7 per cent), and Wollongong (1.4 per cent).

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In Victoria, the top markets were Swan Hill (3.1 per cent), Bairnsdale (2.9 per cent), Sale (1.5 per cent) and Horsham (0.4 per cent). Victoria is a buyer’s market, with more regions experiencing price declines than uplifts over the quarter. The biggest falls were in Ballarat (-3.4 per cent), Wangaratta (-2.7 per cent) and Colac (-2.4 per cent).

In regional Tasmania, home values lifted by 2.9 per cent in Burnie-Somerset and by 2.2 per cent in Devonport.

The busy spring period has now begun. It will be interesting to see how the usual seasonal uplift in listing numbers impacts price growth across both the regional and capital city markets.

* John McGrath is the managing director and chief executive officer of McGrath Estate Agents.

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Originally published as Surprise! Where you should have bought a home four years ago