Tree-change towns where house prices jumped

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“We’re really seeing a slowdown in momentum, but prices are really holding up. That affordability is going to look different to a local, but there’s still that appeal of a Sydneysider because it’s [medians] half price,” Powell said.

The ability to work from home has enabled Sydneysiders to continue seeking regional housing, changing the demographics and outlook for house prices in these areas, she said.

Byron Bay Shire was one of the few regional councils to lead the recession outside of Sydney.Credit:Destination NSW

Most regional markets have peaked and will see a significant slowdown in annual change, Powell said, but it would not fall below pre-COVID levels.

“It is very unlikely that we will see these markets return to where they were. We have seen a shift and that shift is here to stay.”

She said popular councils like Byron, Bellingen and Kiama led the downturn as they did during the upswing.

“These markets peaked first and experienced stronger growth rates. Byron was the heartbeat of regional growth.”

KPMG regional economist Terry Rawnsley said most regional areas continued to record year-over-year increases in home prices because of sustained demand.

“There will be more population growth. The economy is stimulated even more. The underlying fundamentals continue to drive the housing market,” said Rawnsley.

Because many of these areas are still relatively more affordable than their urban counterparts, home prices were unlikely to fall to pre-COVID levels now despite the broad housing crisis, Rawnsley said.

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“What the pandemic has done is a major re-pricing of housing in regional areas. Housing has become more expensive across the board,” he said.

Most of those regions are unlikely to return to pre-COVID prices due to continued demand and tight rental vacancy rates, he said.

“The increase in population, the change in demographics, it will hold more of their post-COVID levels instead of returning to their pre-COVID levels.”

Rawnsley said regional housing markets ultimately move more slowly, for reasons such as longer settlements, and that interest rates will have a delayed impact in the coming quarters.

Home prices in Kiama are starting to fall.

Home prices in Kiama are starting to fall.

But for some regional municipalities, such as Byron Bay, the heat has come out of the market, Rawnsley said, as buyers overpriced and started looking elsewhere.

“They had that really strong 2021 as people left the cities. Last year, some of that heat came from the market,” he said.

Ray White Byron Bay sales director Damien Smith said the combination of a surge in prices coupled with flooding and eight months of rate hikes contributed to the fall in median home prices in the 12 months to December.

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“That will definitely contribute to Byron LGA [house prices] come off. In parts of the county, house prices have come back by 20 to 25 percent. Mullumbimby was hit hard,” Smith said.

He said half of Byron’s buyers are still from Sydney, but they have more bargaining power: “You’ll see sellers take a little less to move on to the next place.”

Elsewhere, Professionals Armidale’s Kyle Garrahy said that while the local real estate market has calmed down since the height of the pandemic, there are still more buyers than there are properties.

“We sold houses 30 percent faster than we put them on the market. That goes for every agency in town. We sold more than we marketed,” said Garrahy.

Tight vacancy rates below pre-COVID levels have also attracted investors, boosting demand, he said.

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