The heat is coming out of Sydney and Melbourne property booms but regional areas are thriving as cashed-up sea changers take advantage of lower prices and a trend towards remote working.
In the 12 months to September, Sydney and Melbourne property prices are up 2.1 and 9.1 per cent respectively, according to Domain Group.
Record prices have allowed many people to sell up and buy in more affordable regional hubs, which are experiencing strong price growth.
These include areas in and around Wollongong, Newcastle and the northern rivers of New South Wales, including boutique markets like Byron Bay, which have achieved house price growth in the order of 10 per cent, 9.3 per cent and 20 per cent respectively.
Units in Wollongong have also seen 17.5 per cent price growth in the 12 months to September.
“There is no doubt that Wollongong and Newcastle are experiencing a good old fashion boom as they benefit from the Sydney market and their own affordability advantages,” says Domain Group senior economist Andrew Wilson.
The value proposition of selling is apparent when you look at the price difference in Sydney areas like Parramatta where median house prices are around $1.02 million.
Compare that to the typical house price at Wollongong, Newcastle and Byron Bay and the difference in the median house price is $649,000, $530,000 and $780,000 respectively.
Tim Lawless director of research at CoreLogic says faster Internet speeds, wide spread adoption of secure networks and cloud-based storage are some of the factors likely to result in high demand in outer city areas.
“More employers are utilising video and conferencing technologies that reduce the requirement to be on site.
“Another factor that’s likely to push this trend along is a wider acceptance of remote working from employers.
“As employers are better able to monitor worker productivity and remote working becomes more common, it’s likely there will be less of a physical requirement to be in the office,” he said.
Data from Deloitte’s Build the Lucky Country Purpose of Place research shows a strong correlation between property prices and telecommunication services.
That said there are many other factors that affect this, such as proximity to employment, major services and transport.
“There’s a chicken and egg dilemma at play,” says Daniel Terrill, Financial Advisory partner at Deloitte.
“The economics of providing good telco services are more attractive in areas with denser activity and, hence, higher property prices to begin with.
“But no doubt if the technology making telecommuting possible were to suddenly stop in regional areas, then property prices in the affected regional areas would be eventually be lower than they otherwise are.
“So long as at least some people want the ability to work remotely in their choice of location – to do business or to live and the technology that makes it possible, that can only be a positive for property prices in that area,” he said.
Charles Tarbey chairman of real estate group Century21 says while there’s not enough evidence to suggest a major trend in sea changers affecting city property prices, that’s not to say it couldn’t in the years ahead.
“New transport links can provide access to more affordable housing but as is often the case, property prices very quickly accelerate to reflect the new infrastructure spend and demand in these areas.
The pace of house price growth is expected to slow in the next twelve months with popular city areas in Sydney and Melbourne likely to see between 4-5 per cent annualized growth. Wollongong, Newcastle and Byron Bay should see 5-6 per cent growth, according to APM Price Finder.