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Regional NSW houses prices nudged downwards recently, but most areas remain much higher than a year ago, as the gap between the cost to buy a home in the regions and Sydney fuels demand.
The price of a typical house in regional NSW fell 0.6 per cent ($5000) in the three months to June, to hit $835,000, the latest Domain House Price Report shows. This ended six consecutive quarters of uninterrupted growth. Annually, gains eased to 7.8 per cent ($60,500), a nine-month low.
By contrast, Sydney’s median house price fell by 3.3 per cent ($59,884) over the quarter to $1,733,891 and rose 1.1 per cent on an annual basis.
Leading regional gains was the Broken Hill local government area (LGA), where the median house price surged 30 per cent in 12 months to $260,000. The Armidale Regional LGA followed, up 27.7 per cent to $655,000.
Inverell also notched steep climbs, up 25.3 per cent to $475,000, and Dubbo, 18.4 per cent higher to $681,500.
Nicola Powell, Domain’s chief residential economist, said the data demonstrated the regional NSW property market’s resilience.
“Values may have nudged down – the first quarterly fall in almost two years, in fact – but it was really only a nudge. When you consider the economic conditions this year, it is remarkable.”
Powell said disparity between regional and Sydney prices was fuelling demand.
“It is a similar story in other states, where the regions have an affordability edge over the capitals, but nowhere is it more pronounced than in NSW.”
The strong performance of lower-priced regional areas underscored the trend, Powell said.
“Some of our most affordable LGAs are seeing some of the strongest rates of house price growth, which is that affordability edge really coming out.”
Terry Rawnsley, KPMG’s director of planning and infrastructure economics, said Sydney’s house price growth over recent years had created a ripple effect still working its way across regional NSW.
“What we’ve seen in the data during that time is a repricing of housing across the regions. People are being priced out of Sydney, so they might move to Newcastle. That causes prices in Newcastle to rise, pushing people out to Maitland.”
It’s not only owner-occupiers fanning the regional ripple effect, but also investors, Rawnsley said.
“Historically, an investor might have bought something cheap in Sydney or on the Central Coast, or looked interstate at the Goldie or the Sunshine Coast. Now, those markets are too expensive, so they’re looking at places like Wagga and Orange.”
Daniel Clyde-Smith, director of Laing & Simmons Armidale, said out-of-area investors had descended on the Northern Tablelands town in the past year.
“They’ve come from all over the country and have driven the bottom end of our market pretty significantly.”
Clyde-Smith said several major renewal-energy projects and the reopening last year of the Hillgrove Mine, which excavates the rare-earth mineral antimony, had brought high-paid workers to town, in turn attracting investors chasing strong rental yields.
Some locals had been able to take advantage of the booming conditions, he said.
“If you’re lucky enough to be in the market already, you can sell at a good price and trade up. But if you’re trying to buy your first house, it’s harder now because you’re almost certainly going to be competing with investors.”
Clyde-Smith said the federal budget measures and this year’s interest rate rises had done little to alter the Armidale market’s trajectory.
“To be honest, we haven’t really felt it. When the budget came out, we had a couple of quieter weeks because of the uncertainty, but now we’re performing very strongly again.”
Investors had also been active in Inverell, a town on the Macintyre River near the Queensland border, according to Ray White Inverell principal Ron Berkley.
“Last year, we saw a lot of interest from investors while the capital city markets were quite buoyant. But we’ve also seen large numbers of people relocating here because of the good cost of living and our blue-collar employment opportunities.”
Those include work at a local abattoir currently employing over 500 staff, and engineering and mechanics’ jobs at an agricultural equipment building company.
Berkley cited Inverell’s council for encouraging economic activity in the town and supporting new building. But he said new homes supply was not keeping pace with demand.
“Building has slowed right down since COVID due to the lack of trades and the increased cost of materials. That is an issue in many regional towns.”
Berkley said the federal budget had tightened Inverell’s market further.
“Owner-occupiers are confused about the implications, so they are holding their properties. I know developers who are nervous about attempting to build with all the uncertainty too.”
Despite the price jump over the past year, Berkley expected Inverell’s market to keep performing strongly.
“Bottom line is that we’re still a very affordable place to live. Just compare us to Sydney.”
