Although prices in the big cities are finally starting to fall, the strength of the regional property market in Australia tells an entirely different story.
It’s been a big few years for the world of real estate, and nobody predicted the record breaking property prices that we’ve seen right around the nation. However, the real surprise has come from the surge in buyer activity outside of the capital cities, with regional Australia dominating the headlines thanks to its largely double digit growth.
While the most recent quarter has found that property prices have barely moved in Sydney, and have even dipped slightly in Melbourne and Canberra, in contrast the average price of a house in regional Australia increased by 3.1%.
In Victoria alone, the regional property market is still booming. House prices outside of Melbourne and its suburbs grew at the fastest rate in two decades, with the median house price ballooning by 27% to reach $565, 000. While many of the nation’s capital cities are showing that what goes up must come down, will the same apply to the regional property market?
The Regional Property Market Outlook For 2022
While plenty of factors influence the housing market, the fundamental law of supply and demand plays a major role, and forms one of the biggest reasons why Australia’s regional property market has been protected against fluctuating interest rates.
As the median house price in regional Australia is often much lower than what consumers could expect to pay in the big cities, the price tags aren’t as steep – meaning that they don’t have as big of a margin to potentially lose. In addition, supply for both homeowners and renters is significantly more restricted, as there simply aren’t enough properties to go around.
Perhaps unsurprisingly, the Property Council of Australia – the group that represents the nation’s property developers – argues the main way to improve affordability in the regional hubs is to increase supply. While this may sound great in theory, it’s also important to note that the current trade shortage and delays linked to new builds certainly aren’t helping matters.
As recently as the last election in 2019, the conversation on housing affordability involved a debate over whether the government should try to slow or stop the growth in house prices. Labor tried to do this with its policies on negative gearing and the capital gains tax, but we all know what happened there – it cost the ALP the election.
This time, the incoming Prime Minister Anthony Albanese seems intent on not upsetting the enormous group of existing homeowners, and has opted for a different approach. With a range of incentives on offer to encourage retirees and empty nesters to downsize, the introduction of the Regional First Home Buyer Support Scheme is specifically targeted at those trying to buy their first home in regional Australia.
Aimed to provide a government guarantee of up to 15% for eligible first home buyers, the condition is that applicants must have already lived in the area for twelve months, with the scheme allowing locals with as little as a 5% deposit to get their foot on the property ladder.
While it’s not an envious position to try and balance affordability and growth, it’s also worth noting that while the regional property market is indeed approaching its peak, it’s still growing at a rate much faster than the capital cities. As to how rising interest rates will influence this unique portion of the market, we’ll just have to wait and see.
Should you be looking to sell your home or purchase a new one, enlisting the services of a free property advisor like ESPA can often be a game changer. As an example, your advisor would likely research the property, local agents, check the zoning, evaluate market conditions, and communicate clearly with you regarding all of your options – but where do you find one?
Take The Stress Out Of Selling Property
As a completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.