Sea change slowdown means major regional property markets struggle
The Australian population is highly centralised with 64.1% of all residents living within a capital city. In fact, 55.6% of Australians live within the four largest capital cities: Sydney (20.5%), Melbourne (18.3%), Brisbane (9.2%) and Perth (7.7%).
Despite a preference for capital city living there are many key regional areas across the country that are home to a significant population. This week we look at the recent performance of the 10 largest regional markets.
Although most Australians call a capital city home, the 10 largest regional housing markets account for 16.2% of the national population and every one of these regions has a greater population than that of Hobart (216,656) and Darwin (128,073).
In fact, the Hunter, Gold Coast, Illawarra and Sunshine Coast regions are respectively the 6th, 7th, 8th and 10th most populous regions of the country. It is also no surprise that all of the most populous regional areas of the country adjoin the coastline and all except for the south-west region in Western Australia are located on the country’s eastern seaboard.
Given that all of these regions are coastal, many have experienced relatively weaker housing market conditions over recent years. There are two main reasons for these conditions: firstly, the downturn in the tourism sector brought on by the higher Australian dollar and the global financial crisis (GFC) and, secondly, the slowdown of migration to these areas, known as ‘sea change’, which was so prevalent in many of these areas before the GFC.
Across these regional markets, detached house values have recorded quite a varied performance over the past year. Half of the regions have recorded value falls with the other half recording an increase, the performances have varied from a -5.2% decline in values across the Far North region of Queensland (which includes areas such as Cairns, Atherton and Cassowary Coast) to a 7.4% increase in values within the mid-north coast region of New South Wales (which includes major centres such as Coffs Harbor and Port Macquarie).
The five-year average annual change in house and unit values highlights the ongoing weakness in many of these coastal markets since the GFC. Although most regions have still recorded growth over the past five years, only the mid-north coast (6.8%pa) and Barwon (7.4%pa) have recorded average annual growth in excess of 5% pa over the period.