Australian regional markets are expected to experience increased demand for housing due to the effects of the COVID-19 epidemic on the economy, working conditions and housing prices. The question, however, remains – will the epidemic cause a regional boom?
Eliza Owen, head of residential research at CoreLogic, said regional markets in Australia are considered attractive for their relatively low density levels, less congestion and generally lower prices for the property.
In fact, the median value of housing in all regions is $ 394,570, which is significantly lower than the capital's combined median of $ 641,671.
To get a full picture of whether COVID-19 will lead to increased demand in the regions, Owen said it was crucial to examine the outlook for the population before the start of the epidemic.
"The areas with the highest levels of net internal migration in fiscal year 2018-2019 include the capital region of the NSW region, the Sunshine Coast, Melbourne – West, the Gold Coast and From Ipswich. From these examples, there was already a trend of movement from more suburban or metropolitan areas to regional areas, "said Owen.
However, the two highest levels of net internal migration are still within the capital. Owen said this indicates two things. On the one hand, the available developable land is in transition to large, entirely new residential complexes. Another is that downtown tenants and first home buyers buy in more affordable areas that are always switchable to the central business districts.
"This is an important trend to consider, as it is a scenario where past migrations may have been driven by affordability rather than a preference for a regional way of life", she said.
If this is the case, Owen said that a mitigating factor in the draw for regional areas during COVID-19 is that housing closer to the city also becomes cheaper. This could slow migration to the outskirts of the city.
While the standardization of remote work in the middle of COVID-19 is likely to stimulate regional migration, the return to an office environment may still be desirable for certain employees and employers.
"In addition, it is important to note that the widespread impact of the pandemic on housing demand could cause prices to fall in regional centers in the second half of 2020," said Owen.
It is however unlikely that these price reductions will be as marked as what will be observed on the capital markets.
"Regional growth rates peaked towards the end of 2019 and could turn negative territory later this year without significant improvement in economic conditions or a demonstrated change in demand-side factors such as population growth," said said Owen.
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