Move to regions: what price a place in the country?
The move to the regions is pushing property prices there higher – but will it last?
One of the interesting trends from Covid has been regional property prices growing at a faster rate than capital city prices, and the trend shows no signs of slowing down.
A key factor driving this trend is the rise of the so-called “digital nomad”.
Quirin Schwaighofer, co-founder of rental services firm MadeComfy, says: “Although state-based lockdowns do not allow people to freely move out of capital cities, what we saw pre-lockdown and what we expect post-lockdown is stronger demand from digital nomads demanding short-term rentals within two hours from capital cities.”
A digital nomad is a person who, simply put, does not need to work from an office. Covid has accelerated the acceptance of not coming to a cubicle Monday to Friday. Instead, these workers, who are generally in highly specialised roles such as IT programmers and management consultants, can provide services without physically being present.
This has led to investors snapping up older-style properties in places such as Byron Bay, Noosa and Mornington Peninsula to cater for these cashed up travellers. Renovations are undertaken and then the properties are put to work on short-term rental sites where the returns can be up to 10 per cent per year.
According to the most recent McGrath property report, in the year to May 31, 2021, the top five regional council areas in NSW for house price growth were Byron (39.3 per cent), Kiama (31.1 per cent), Snowy Monaro Regional (30.3 per cent), Ballina (26.9 per cent) and Shoalhaven (20 per cent). In Queensland, the top five were Noosa (21 per cent), Sunshine Coast (15.2 per cent), Fraser Coast (14.8 per cent), Gold Coast (13.5 per cent) and Cairns (7.1 per cent).
In Victoria, Mansfield had the highest house price growth at 26.9 per cent, followed by the Surf Coast (24.6 per cent), Macedon Ranges (23.5 per cent), Bass Coast (22.4 per cent) and Mornington Peninsula (21.3 per cent).
And it is not just people who are taking “workcations” that are living in holiday rentals for a few months at a time; there is another group of people who are making the move on a more permanent basis.
Michael Coates, the owner of @realty who works in the Newcastle region, says: “We do not have enough stock to keep up with the people who are relocating from Sydney to the Lake Macquarie and Newcastle region.
“Where people previously thought of the area as just an attractive holiday option, they can now realistically make the permanent move as their obligations to attend their Sydney office have reduced considerably.
“For under $1.5m you can be on a waterfront property. In contrast, you would be lucky to get an entry level house in most parts of Sydney on the same budget.”
McGrath confirmed the trend in its recent annual property report, where it found that NSW regional prices rose 21.1 per cent last financial year compared to 15 per cent in Sydney metropolitan.
And the same trend was seen across both Victoria and Queensland. Regional Victoria prices rose by 15.9 per cent versus Melbourne at 7.7 per cent while regional Queensland rose 17.1 per cent versus Brisbane at 13.2 per cent.
Although Australians have a strong affinity for the sun and beach, inland locations have also been popular for the permanent move out of capital cities.
Trent Iverson, principal and director at Harris Iverson Real Estate who specialises in the Hawkesbury River region just north of Sydney, says: “Corporate tree changers are buying into the area in droves. We are seeing both couples and families sell their Sydney homes and buy amazing properties all up and down the Hawkesbury region with change left over.
“I recently sold a five acre property on the Hawkesbury River with its own private beach for $1.65m. Important to the incoming buyers are reliable high-speed internet services and a flexible floorplan with at least one dedicated area that can be used as the home office.”
Many thought that once the first lockdown finished everybody would simply go back to the office, but this has not been the case.
Associate Professor Christhina Candido from University of Melbourne analysed workplace research and found that employee preferences are shifting from having remote working arrangements as a “nice to have” to a “must have” in the post-Covid world.
Although there is much to be said about being able to have an impromptu chat with a work colleague at the photocopier, with the acceptance of video communication as a means of doing business, people from all walks of life have been relocating.
And while the prices of regional properties have outpaced metropolitan prices, Iverson says: “People who have been priced out of capital city properties are finding they can still crack the market with a property located one to two hours travel away from their nearest capital city. This is the sweet spot where we are seeing both housing affordability while retaining the practicality of being able to commute into town when needed for work meetings or medical appointments.”
Whether the growth of regional properties will continue is unclear. For many who have made the plunge, moving out of their capital city seems the best decision they ever made, but it’s still very early days and too early to appreciate what they have (or have not) left behind.
James Gerrard is principal and director of financial planning firm www.financialadvisor.com.au
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