Professionals who left the large city for a lifestyle change in the aftermath of Covid and lockdowns, according to one of Australia’s most influential bankers, may come to regret it.
Due to exceptional demand, regional housing prices have risen at a higher rate than capital city prices throughout the epidemic, with values even soaring in flood-affected areas.
According to CoreLogic statistics, ‘tree changers’ led median property values in Australia’s regional regions to rise by 24.2 percent in the year to April, compared to 16.8 percent in capital city markets.
But Dr Luci Ellis, an assistant governor on economic policy with the Reserve Bank of Australia, predicted professionals able to work from home may come to regret their decision to relocate away from the big smoke.
‘The desire for more space further from the office might wane over time as the memories of lockdown start to fade,’ she recently told a Sydney audience.
Not everyone who sought a “tree change” in the regions will find that to be the right choice in the long term.’
For much of 2021, Sydney and Melbourne were plunged into a prolonged lockdown following a surge in the more contagious Delta strain of Covid.
Dr Ellis argued many people who moved to regional areas to escape these lockdowns may get bored with the slower pace of life in the country, as the more cosmopolitan big cities opened up again.
‘So this wasn’t so much about city people wanting tree changes, but rather the interruption of the longstanding trend of others moving to the big smoke,’ she said.
Regional areas within a two-hour drive of a capital city have had some of Australia’s strongest price growth.
Queensland’s Gold Coast saw its middle house price climb by 33.1 per cent in a year to $1.095million.
On the other side of Brisbane, the Sunshine Coast has also been particularly popular with the median house price soaring by 30.2 per cent in a year to $1.069million.
Neighbouring Noosa, a more exclusive area, saw its median house price climb 30.2 per cent to $1.5million.
Less than an hour’s drive away Gympie, which recently flooded, experienced an annual 36.4 per cent surge in house prices to $612,969.
Another flood-hit town, Lismore, in northern NSW saw its median house price soar by 33.3 per cent in a year to $671,352.
Coffs Harbour on the New South Wales Mid-North Coast also had a big rise with mid-point house prices up 31.7 per cent to $874,663.
The NSW Hunter Valley also saw a surge in demand with median house prices at Cessnock climbing 41.6 per cent to $671,041.
Kiama, on the NSW South Coast, saw a 34.3 per cent surge taking prices to $1.708million.
Byron Bay’s increase of 21.1 per cent was more subdued but it has become the first regional market with a median house price in the millions at $2.004million, putting it in the same league as suburbs on Sydney’s Upper North Shore.
Australia’s most expensive regional market also had the nation’s highest Greens vote, with the minor party winning 54 per cent of the primary vote in the Byron Bay polling booth in the Labor-held seat of Richmond.
Northern Tasmania has also had above-average growth with median house prices at Launceston rising 28.4 per cent in a year to $595,988 in the seat of Bass which stayed with the Liberal Party.
The pace of house price growth is also slowing with economists expecting the Reserve Bank to raise interest rates seven more times in the coming year, which would take the cash rate to 2.25 per cent for the first time in eight years.
Headline inflation in the year to March surged by 5.1 per cent, a level well above the RBA’s 2 to 3 per cent target.
This saw the RBA raise rates in May for the first time since November 2010, with the quarter of a percentage point increase ending the era of the record-low 0.1 per cent cash rate.
So far, only Sydney and Melbourne have suffered a quarterly decline in house prices, marking the worst decline since 2020 before the RBA slashed rates.