Regional Areas Out With Buyers Focused On Inner-City
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Regional Areas Out With Buyers Focused On Inner-City

Buyer priorities have changed according to the NAB.

By Terry Christodoulou
Tue, Feb 8, 2022 1:01pmGrey Clock < 1 min

The inner-city is at the top of the residential housing market’s wishlist with buyers moving away from apartments and regional areas in favour of affordable suburbs nearby to the city new data from NAB reveals.

The NAB survey asked potential homebuyers the most important factors they consider when buying a property. Here, the survey showed that 74% consider the amount of their loan as most important.

While last year the pandemic shaped the desires of homeowners, with a home office along with a tree change top of buyers’ lists — affordability is now top of mind says NAB’s head of home ownership Andy Kerr.

“What we are now seeing is little green shoots of people returning to inner-city suburbs, looking for the balance of lifestyle and value as cities like Melbourne and Sydney have opened up. This has been aided by more subdued price growth in these areas,” said Mr Kerr.

“The trade-off between affordability and lifestyle has changed markedly throughout the pandemic, with choices around CBD proximity, additional space and price fluctuating over the last two years,” he added.

The survey of 370 property professionals also found 62% considered local shopping, restaurants, and amenities as important when buying a property, 53% preferred a house over an apartment while a further 52% considered the size of the land.

In 2021, the lockdown and other lifestyle factors led to people favouring regional location however in just 12 months the data has swung to people favouring buying in a metropolitan area at 26% compared to buying in a regional area now sat at 21%.

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House values continued to fall last month, but the pace of decline has slowed, CoreLogic reports.

In signs that the RBA’s aggressive approach to monetary policy is making an impact, CoreLogic’s Home Value Index reveals national dwelling values fell -1.0 percent in November, marking the smallest monthly decline since June.

The drop represents a -7.0 percent decline – or about $53,400 –  since the peak value recorded in April 2022. Research director at CoreLogic, Tim Lawless, said the Sydney and Melbourne markets are leading the way, with the capital cities experiencing the most significant falls. But it’s not all bad news for homeowners.

“Three months ago, Sydney housing values were falling at the monthly rate of -2.3 percent,” he said. “That has now reduced by a full percentage point to a decline of -1.3 percent in November.  In July, Melbourne home values were down -1.5 percent over the month, with the monthly decline almost halving last month to -0.8%.”

The rate of decline has also slowed in the smaller capitals, he said.  

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said. “However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.” 

The RBA has raised the cash rate from 0.10 in April  to 2.85 in November. The board is due to meet again next week, with most experts still predicting a further increase in the cash rate of 25 basis points despite the fall in house values.

Mr Lawless said if interest rates continue to increase, there is potential for declines to ‘reaccelerate’.

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire,” Mr Lawless said.

Statistics released by the Australian Bureau of Statistics this week also reveal a slowdown in the rate of inflation last month, as higher mortgage repayments and cost of living pressures bite into household budgets.

However, ABS data reveals ongoing labour shortages and high levels of construction continues to fuel higher prices for new housing, although the rate of price growth eased in September and October. 

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