The desire for more space during COVID-19 has driven house hunters to areas offering coastal and scenic landscapes, with more than 100 regional suburbs joining the million-dollar club in the past year.
But there are growing concerns that renters are being priced out of regional areas as supply fails to keep up with the lifestyle change so many are seeking.
In the 12 months to June, 110 new regional suburbs joined the million-dollar club in Australia, analysis from realestate.com.au has found, as low interest rates and a capital city exodus drive property prices higher.
Million dollar suburbs are defined as areas where the median house price is $1 million or higher. To meet the data requirements, suburbs had to have at least 10 sales over the 12 months to the end of June 2021. All up there are now 823 million-dollar regional suburbs.
REA Group economist, Anne Flaherty said historically low levels of new housing stock in popular regional towns will continue to support price growth, as demand outstrips supply.
“There is enormous competition in these areas, particularly in beachside suburbs; those are the ones where you’ll probably see the most demand relative to supply,” Ms Flaherty said.
“A lot of the demand has come from people moving away from cities, chasing that lifestyle driven in some ways by COVID.”
The sleepy beachside town where values have doubled
The new and existing million-or multimillion-dollar suburbs that recorded the strongest growth over the past year offered similar lifestyle traits, such as proximity to the beach, great views or larger blocks.
Prices in the small coastal town of Gerroa on the New South Wales south coast, which was already a million-dollar suburb, have more than doubled in 12 months to hit $2.48 million.
Real estate agent Kate Morgan from Ray White –Gerringong, who works in the Gerroa region, said the geography of the town had boosted its exclusivity.
“Gerroa is quite landlocked, so there’s only a limited number of houses and the majority have beautiful ocean views,” Ms Morgan said.
“At the moment with people wanting to escape Sydney or buy their holiday home, anything with good views and easy access to the beach is in high demand, so somewhere like Gerroa where there’s only ever one or two houses for sale at any point in time, demand has just gone through the roof with people fighting over them,” she said.
Other seaside towns recording strong growth included Byron Bay, where median house prices rose by 86% to $2.7 million. Prices in Marengo, near Victoria’s picturesque Apollo Bay surged 45% to enter the million-dollar club for the first time, as did Quindalup in south-west WA.
Ms Flaherty said she expects more suburbs to join the list in the months ahead.
“I think we’ll definitely see more regional suburbs join the million-dollar club because property prices haven’t finished rising, and the level of price growth in regional Australia has been outperforming the greater capital city areas of Australia,” she said.
“There’s still a lot of momentum [in regional Australia] so there are a lot of suburbs that are going to tip over that million-dollar mark over the coming months.”
Early signs of another capital city exodus
Recent internal migration data from the Australian Bureau of Statistics showed a record 11,845 people left the capital cities for regional areas in the three months to March 2021, as the number of people moving away outweighed arrivals.
Between March 2020 and June 2021, almost 35,000 people have left Melbourne, while Sydney lost almost 40,000 residents.
While the data pre-dates Greater Sydney’s extended lockdowns, SQM Research’s Louis Christopher said there are already early signs of another exodus, as residential vacancy rates across Sydney’s hard-hit CBD market rose during July.
“SQM Research believes the new lockdowns may have triggered another wave of interest in regional living as many of the community seek freedom away from harsh COVID measures,” Mr Christopher said.
Regional shift leading to rental crisis in popular coastal towns
Separate data by realestate.com.au revealed the push to popular coastal and scenic locations is also causing a rental crisis, with weekly asking prices increasing by more than 70% over the past year in some locations.
The new analysis shows that median rent prices between July 2020 and July 2021 have risen considerably in some regional areas.
“The only way to increase rental supply is for investors to buy or build properties,” Mr Pressley said.
“Investor activity has definitely returned, but when you look at the volumes now compared to historical levels, not just the last 12 months, it’s a long way down on where it needs to be.”
He said some clients have been getting up to 50 applications on their rental properties.
“There’s people who work in industries like hospitality and they can’t actually afford to live in those towns anymore,” Mr Pressley said.
“100% of our clients are investors, and we’ve seen it in the flesh, when a lease expires, if either the tenant or the landlord don’t want to renew that same tenancy arrangement, the next tenant will be paying $100 a week more than the last tenant. That’s $5000 a year!” Mr Pressley said.
“So someone’s got to earn an extra $8000 in their household budget before tax to cover that, and that’s one example of what I’m saying, it’s really sad, we’re in a rental crisis.”
Data by realestate.com.au showed weekly median rents in Marcoola on Queensland’s Sunshine Coast have surged 78% in a year, rising from $365 in July 2020 to $650 in July 2021.
Ms Flaherty said remote working arrangements and COVID-19 lockdowns prompted many renters to revaluate their living arrangements.
“The pandemic has driven an unprecedented upheaval in where Australians are choosing to live, with many fleeing cities to move to sea and tree change suburbs,” Ms Flaherty said.
“Properties in the Sunshine Coast have been beneficiaries of this migration, as well as the demand for lifestyle, and are among the suburbs which have seen the strongest rent growth over the past 12 months.”
Of the suburbs to record the strongest rental growth for houses, five of the top ten suburbs were located on Queensland’s Sunshine Coast, with Elliott Heads, Sunshine Beach, Sunrise Beach and Coolum Beach all recording rental increases of more than 47%.
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