Regional NSW dwelling values dwindle amid national growth

Cotality’s November Regional Market Update, which analysed Australia’s largest 50 non-capital city significant urban areas (SUAs), found national regional dwelling values rose 2.4 per cent over the three months to the end of October.

While regional Western Australia (WA) led the regional quarterly growth, NSW’s Bowral-Mittagong region took the titles of lowest annual growth, longest days on market, and highest vendor discounts.

The market, located in the NSW Southern Highlands, recorded a 1.2 per cent fall in annual dwelling values, with a 77-day median market time and vendor's discounting rate at 5.4 per cent.

Bowral-Mittagong was also one of only four NSW regions to record a quarterly fall, dropping 1.1 per cent alongside St Georges Basin – Sanctuary Point (-1.2 per cent), Batemans Bay (-1.1 per cent), and Bathurst (-0.4 per cent).

Meanwhile, Lismore was the region with the lowest change in annual sales volumes, recording a 22.7 per cent decline.

According to Cotality Australia economist Kaytlin Ezzy, Bowral-Mittagong recorded a surge in value growth during the COVID-19 era as city buyers flocked to the region, but it has seen a drop in demand since the start of the rate-tightening cycle.

While the other regions had seen similar supply-and-demand factors affect values, Ezzy said Bowral-Mittagong was particularly impacted by tighter affordability.

“Over the first two years of COVID-19, values rose by about 65 per cent, and that was driven by that pool of people away from Sydney during the COVID period,” she said.

“That pushed values to about $1.3 million. So it's by far the most expensive regional market outside of Byron Bay, and actually one of the most expensive regions out of Byron Bay and Sydney.”

She said that, despite interest rates slowly coming down, stretched affordability meant the Bowral-Mittagong market was taking longer to recover than other areas.

The Agency Southern Highlands property partner, Corey Cook, said that despite the declining dwelling values, he believed the local market was beginning to even out after a drop in activity a year prior.

“We're just starting to see the vendors meeting the market where it's at now because they obviously had that recycle of high activity down to very quiet 12 months ago,” he said.

He added that activity and listings had been picking up, and while demand wasn’t always strong, desirable properties were usually met with interested buyers.

“If we get everything right, we've got a very well-maintained, desirable property at a good price, they move. If you miss the mark… you're going to be hanging around for a bit longer on the market,” he said.

Cook also said that investors had been returning to the region in increasing numbers, with confidence bouncing back after a period of stunted activity.

“Last weekend, there were a number of them around, which we haven't seen for a while. Also, investors from a development point of view, looking at buying and developing sites.”

While it’s not clear what prompted the renewed confidence, Cook said buyers and investors may finally be taking action after focusing so long on how lower rates might impact the market.

He said increased stability and predictability in the Bowral-Mittagong region may also be fuelling confidence, projecting the momentum will continue into next year.

“It's not a buyer's market, it's not a seller's market, it's a nice market, that's what I feel we are right now. You go back 12 months, it was a buyer’s market at this point.”

Ezzy said that, compared to the Bowral-Mittagong area, restricted supply across broader regional NSW had played a part in dwelling value increases in other areas.

She noted that she expected the accelerated pace of growth across regional NSW to continue into the next couple of months, before buyers are blocked by decreasing affordability.

In contrast to NSW, Western Australia led the way for regional value growth, taking out three titles for top-performing indicators.

Kalgoorlie-Boulder, northeast of Perth, recorded the highest growth of the state’s regions, with dwelling values rising 8.1 per cent value growth over the three months to October.

Geraldton, in the state’s mid-west region, saw a 7.4 per cent value increase, while Albany’s dwelling values rose by 6.2 per cent over the quarter.

Albany also performed strongly in the annual results, recording a 23.3 per cent rise, the largest increase among the top 50 regional SUAs.

Ezzy said that WA had been performing well in the past three and a half years due to low supply and strong demand shaped by the mining industry.

“The strength in the resource sector seeing a lot more work, a lot more jobs and economic prosperity, bringing more people to those regions, driving up demand and helping to push those prices higher,” she said.

She added that affordability had been a factor driving popularity in the past few years, after many WA regions saw a lack of growth over the past decade.

“They're losing arguably some of that affordability advantage now, but they have continued to see some of the strongest growth because of that mix of factors,” Ezzy concluded.

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