The inevitable ripple effect seen in regional markets at the end of capital city booms has always been driven by affordability. City buyers see phenomenal price growth in their city and buying becomes too hard, so they look further afield – usually to nearby regional areas with the best commuter access, for a cheaper family home.
While affordability remains an important factor, we are finding that more city dwellers are looking to regional areas to escape the stresses of city life, in addition to achieving better affordability.
Our McGrath Geelong Principal, Jim Cross, says “The biggest difference with the family buyers from Melbourne and Sydney compared to two or three years ago is the reasoning behind moving to Geelong, with liveability a key driver.”
CoreLogic data shows regional markets are now outperforming capital cities in terms of price growth. This trend is not surprising given the disparity between city and regional home values, and hence the demand in those areas increases and price growth ensues.
Leading the top five regional areas for price growth over the past year is Geelong at 10%; followed by Southern Highlands/Shoalhaven at 9.5%; Capital Region NSW and Newcastle/Lake Macquarie both at 8.3%; and Coffs Harbour/Grafton at 8.1%.
I asked some of our McGrath Principals in these areas to give us their insights into today’s market trends. Here’s what’s happening on the ground in Geelong, Coffs Harbour and the Southern Highlands.
10% price growth over 12 months
Our expert: McGrath Geelong Principal, Jim Cross
“The culture in Geelong has changed dramatically over the past five years with the café lifestyle in full swing,” Jim says. “There’s trendy laneway restaurants, cafes, boutique shopping all mirroring Melbourne trends so Melbourne buyers are not seeing Geelong as a sleepy, backward city anymore.
“The number of Melbourne buyers coming through open homes in the premium areas of Geelong has increased from approximately 10% to 35%, in some cases, over the past two years.
“We haven’t experienced demand like this before. In the past, Melbourne and Sydney buyers, investors and developers were a passive trickle but now the flood gates have opened, as people genuinely see Geelong as the next big property market.
“Typical scenarios include young double income professionals living in an apartment in Richmond, for example, who want to start a family and are purchasing in a trendy area of Geelong at an affordable level with great schools and lifestyle.
“Downsizers are selling the big family homes in Melbourne and Sydney for $1.5M - $3M and purchasing a nice townhouse in a trendy area of Geelong for $750,000 to $1M and putting the balance into super.
“Sydney investors are buying affordable properties in Geelong North – typically three bedroom, one bathroom brick or weatherboard homes on around 600 sqm with the intention of sitting on them for five to 10 years and subdividing or re-selling in the future.
“We are also seeing a fast growing trend in mid to large size developers focusing on Geelong for residential and commercial projects and investments.”
“Renovated period-style three or four-bedroom character homes in trendy areas are coming back into vogue in a big way. New townhouses in trendy areas near shopping strips and the waterfront are also in high demand.”
“We sold 188 Aberdeen Street, Geelong West to a young family from Melbourne for $810,000, which was $100,000 over reserve. They were living in Fitzroy in a very small dwelling with a dog and needed more space. They wanted a character home near schools and shops in a trendy suburb.”
SOUTHERN HIGHLANDS/SHOALHAVEN (NSW)
9.5% price growth over 12 months
Our expert: McGrath Bowral Principal, Anne Stone
“Eight out of 10 buyers in the Highlands are out of Sydney and this has driven prices up,” Anne says. “They’re coming here to escape Sydney’s traffic congestion, find a more affordable home and enjoy the beautiful climate and good schools.
“The majority of our market is Sydney downsizers looking to sell in older areas, often where they have lived for a long time, buy in the Highlands and put money into their super funds.
“There are also families who generally work from home or commute to Sydney once or twice per week. They tend to buy in the newer established areas.
“Schools have been a big drawcard to our area; and now with more flights leaving Canberra, we are attracting more work-from-home businesspeople.
“We sold 70 Centennial Road, Bowral for $1.55M prior to auction to a couple from Chatswood, who are intending to semi-retire. They sold their Sydney home well through McGrath Crows Nest, which allowed them to buy well here opposite the golf course for a great lifestyle change.”
COFFS HARBOUR/GRAFTON (NSW)
8.1% price growth over 12 months
Our expert: McGrath Coffs Harbour Principal, Martin Wells
“The population shift out of capital cities is quite noticeable at the moment,” Martin says. “Sydney is the most notable with approximately 30% of all buyer enquiry at the $750,000-plus level originating there.
“There’s many young families leaving the capitals to live a more ‘simple life’ with significantly smaller mortgages.
“We are seeing an increase in executive purchasers who can commute to Sydney, Melbourne or Brisbane on numerous flights a day. Air travel to Sydney of just 60 minutes is less than a lot of people spend in their cars from home to work in Sydney.
“We are also one of the only major regional cities to have benefitted from Fibre to the Premises NBN access, which has enabled city executives to establish start-ups or tech businesses as part of their lifestyle change.
“The Coffs Harbour population is forecast to grow to almost 95,000 by 2036, significantly up from around 77,000 in 2017. This means we will be facing a supply shortage of approximately 10,000 homes. This will keep price growth strong and likely outstrip numerous regional markets and capital cities moving forward.
“We sold a seven bedroom home overlooking the ocean at 25 Charlesworth Bay Road, Coffs Harbour for $1.75M. It sold to a Sydney family looking to escape the city hustle and take advantage of the coastal lifestyle and employment opportunities at tertiary medical and specialist facilities here.”
As with any property purchase particularly in a new area, savvy buyers will do their research and build a good relationship with a local area expert in order to secure the right property.
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