Australian Regional Home Demand Depletes
Kanebridge News
Share Button

Australian Regional Home Demand Depletes

Data suggests the want for a pandemic-fuelled change of scenery is diminishing.

By Terry Christodoulou
Wed, Sep 8, 2021 12:04pmGrey Clock < 1 min

In the midst of the first wave of COVID across Australia’s capital cities, reports of rising regional property demand emerged, with a number of city-dwellers looking to the regions for a socially distanced slice of life.

However, the latest report by CoreLogic shows that prices in the regions are growing at a slower pace since the start of 2021 – especially when compared to the capital cities.

From January to August house pieces in regional NSW grew by 15.5% – compared to Sydney’s 22.5% rise according to CoreLogic’s Data.

Queensland saw similar results with house prices rising 15.6% regionally, and 16.8% in Brisbane.

In South Australia, regional houses grew 9.8% compared to Adelaide’s 14.4% gain.

Victoria bucked the trend, with Melbourne recording a slightly lower growth rate of 14.9% compared to the 15.9% growth in regional Victoria.

Since the end of January, house values across the combined capitals have risen by 16.8% higher while regional house values were up by 14.7%.

Where regional growth has slowed the most include Warrnambool, Victoria – where house price gains had slowed by 6% to 3.7% in the three months to August – and Shepparton, Victoria – which slowed 5.5% to 2.4% during the same period.

NSW saw its central coast region drop by 4.3% to 7.1% – still a robust growth rate.

Before easing trends emerged, regional house values had recorded consistently higher rates of capital gain than the capitals since April 2020.



MOST POPULAR

Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts

Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Related Stories
Property
The locations where apartment rents are picking up the pace
By Bronwyn Allen 05/03/2024
Property
Hong Kong Takes Drastic Action to Avert Property Slump
By ELAINE YU 01/03/2024
Property
The Australian capitals experiencing world-class price growth in luxury real estate
By Bronwyn Allen 29/02/2024
The locations where apartment rents are picking up the pace

Stronger demand in some areas is pushing unit rents up faster than houses

By Bronwyn Allen
Tue, Mar 5, 2024 3 min

Renters are returning to the apartment market, leading to higher growth in weekly rents for units than houses over the past year, according to REA data. As workers return to their corporate offices, tenants are coming back to the inner city and choosing apartment living for its affordability.

This is a reversal of the pandemic trend which saw many renters leave their inner city units to rent affordable houses on the outskirts. Working from home meant they did not have to commute to the CBD, so they moved into large houses in outer areas where they could enjoy more space and privacy.

REA Group economic analyst Megan Lieu said the return to apartment living among tenants began in late 2021, when most lockdown restrictions were lifted, and accelerated in 2022 after Australia’s international border reopened.

Following the reopening of offices and in-person work, living within close proximity to CBDs has regained importance,” Ms Lieu said.Units not only tend to be located closer to public transport and in inner city areas, but are also cheaper to rent compared to houses in similar areas. For these reasons, it is unsurprising that units, particularly those in inner city areas, are growing in popularity among renters.

But the return to work in the CBD is not the only factor driving demand for apartment rentals. Rapidly rising weekly rents for all types of property, coupled with a cost-of-living crisis created by high inflation, has forced tenants to look for cheaper accommodation. This typically means compromising on space, with many families embracing apartment living again. At the same time, a huge wave of migration led by international students has turbocharged demand for unit rentals in inner city areas, in particular, because this is where many universities are located.

But it’s not simply a demand-side equation. Lockdowns put a pause on building activity, which reduced the supply of new rental homes to the market. People had to wait longer for their new houses to be built, which meant many of them were forced to remain in rental homes longer than expected. On top of that, a chronic shortage of social housing continued to push more people into the private rental market. After the world reopened, disrupted supply chains meant the cost of building increased, the supply of materials was strained, and a shortage of labour delayed projects.

All of this has driven up rents for all types of property, and the strength of demand has allowed landlords to raise rents more than usual to help them recover the increased costs of servicing their mortgages following 13 interest rate rises since May 2022. Many applicants for rentals are also offering more rent than advertised just to secure a home, which is pushing rental values even higher.

Tenants’ reversion to preferring apartments over houses is a nationwide trend that has led to stronger rental growth for units than houses, especially in the capital cities, says Ms Lieu. “Year-on-year, national weekly house rents have increased by 10.5 percent, an increase of $55 per week,” she said.However, unit rents have increased by 17 percent, which equates to an $80 weekly increase.

The variance is greatest in the capital cities where unit rents have risen twice as fast as house rents. Sydney is the most expensive city to rent in today, according to REA data. The house rent median is $720 per week, up 10.8 percent over the past year. The apartment rental median is $650 per week, up 18.2 percent. In Brisbane, the median house rent is $600 per week, up 9.1 percent over the past year, while the median rent for units is $535 per week, up 18.9 percent. In Melbourne, the median house rent is $540 per week, up 13.7 percent, while the apartment median is $500 per week, up 16.3 percent.

In regional markets, Queensland is the most expensive place to rent either a house or an apartment. The house median rent in regional Queensland is $600 per week, up 9.1 percent year-onyear, while the apartment median rent is $525, up 16.7 percent.

MOST POPULAR

Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts

Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’

Related Stories
Money
Economy grows by 0.2 percent in September quarter
By Bronwyn Allen 07/12/2023
Property
London’s Luxury Home Market Has Been Dragging for Years. These Sellers Are Diving in Anyway.
By RUTH BLOOMFIELD 24/11/2023
Lifestyle
A weekend to get hearts and motors racing
By KANEBRIDGE NEWS 12/02/2024
0
    Your Cart
    Your cart is emptyReturn to Shop