The regional property markets tipped to hit fresh records in the next year

Regional house prices are expected to hit record highs in all but one pocket of the country in the next year thanks to resilient regional economies, a new forecast predicts.

Queensland’s Gold and Sunshine Coasts were tipped to record the strongest growth among regional areas and will become the most expensive regional house prices in Australia, the Domain’s FY25 Price Forecast Report predicts.

The Gold Coast was predicted to grow by 3 per cent to 6 per cent, hitting a median of $1.08 million to $1.11 million. On the Sunshine Coast the median was predicted to grow by 2 per cent to 5 per cent, reaching $1.07 million to $1.1 million.

Regional Queensland was tipped to increase by 2 per cent to 4 per cent growth to reach a median of $536,000 to $546,000. Meanwhile, regional NSW would hold steady at a median of $735,000 with the potential of rising to $757,000 after 3 per cent of growth. Both regional areas would hit record price highs if the forecast rises come to pass, but only at the upper end of the prediction for NSW.

Regional Victoria was predicted to go backwards by as much as 3 per cent or stay stagnant at best. Its median would fall to between $543,000 to $560,000. Forecasts of the other states and territories regional markets were omitted from the Domain report because of their volatility.

Domain chief of research and economics Dr Nicola Powell said regional house prices in NSW and Queensland would improve the most in large regional towns, such as Tamworth, and satellite towns of the major cities, such as Wollongong and Newcastle.

“We’ve seen slightly weaker conditions, but we could see some more [geographic] diversity in terms of price growth,” she said. “It really showcases the structural undersupply we’ve had in housing over a long period of time. We’ve had strong population growth and building hasn’t been able to keep up with that, in the long term as well.

“Governments are definitely focused on supply, and supply takes time to come to market. The undersupply and the need for housing is still placing pressure on prices and pushing them up.”

KPMG urban economist Terry Rawnsley said the modest growth expected in regional NSW and Queensland was likely due to popular regional towns approaching an affordability ceiling.

“[For example,] Wollongong and Newcastle which make up the bulk of regional NSW, and they’re really struggling with affordability,” he said. “The purchasing power of the local communities is a bit stretched.

“In lots of places there have been big price increases. There’s a big ripple effect from the COVID tree changer who paid $500,000 for a house in a country town, who displaced a local who could only pay $450,000.”

Newcastle’s property market was becoming unaffordable to locals. Credit: iStock

PRD Real Estate chief economist Dr Diaswati Mardiasmo said regional centres had proved resilient in the post-COVID economy, which had helped to grow local property markets when combined with low numbers of homes for sale.

“There has been quite a big wage growth when compared to the capital cities,” she said. “Places like Newcastle, Tamworth, Mackay, the Whitsundays, on average, their wage growth is 6 per cent to 7 per cent which is much higher than the national average.

“They don’t have as many people as Sydney and Melbourne, of course, so even though they’re growing in terms of population growth, they don’t have as much human capital there and their wage growth is actually higher.”

Rawnsley agreed. “Part of the gift from COVID was surges of people into these cities,” he said. “There’s enough happening in these centres to keep people coming through … their economies are looking a bit different to what they were pre-COVID so that’s helping support that local housing market.”

Powell said Victoria’s ongoing loss of residents to other states had caused its regional areas to fall behind its peers.

“One of the big things for Victoria that’s been a changed dynamic is the net interstate migration is negative,” she said. “I cannot stress how unusual that is. By now we would have anticipated that it would recover.”

Rawnsley expected price falls in regional Victoria, as the lockdown-era tree- and sea-change trends had caused some regional centres to become overvalued.

“There’s less of that flow of people out into the regional parts of Victoria,” he said. “Then places like the Surf Coast ran a bit too hard in that COVID period so they’re coming back to the fundamentals in those locations.”

Powell said other factors which also had affected Melbourne’s property market would continue to weigh on demand in the state’s regions, too.

“Things like taxation changes, that has impacted sentiment for people looking to invest in Victoria. Investors are looking elsewhere because the capital growth isn’t there,” she said.