House prices are higher than a year ago in most parts of regional NSW, despite edging down in recent months as rising interest rates and the cost of living take a toll.
The median house price for regional NSW slipped 1.2 per cent to $820,000 in the September quarter, the latest Domain House Price report, released on Thursday, shows. The typical regional house in NSW still costs 2.6 per cent more than a year ago, but in some areas the past year’s rise has been steeper.
In Dungog shire in the Hunter region, the median house costs $907,500 after rising 26.9 per cent in 12 months. Inverell, north of Tamworth, jumped 23.4 per cent to a more affordable median of $475,000, while in the state’s west, Broken Hill rose 22.7 per cent to just $270,000.
There were also rises of at least 20 per cent in Armidale, Liverpool Plains and Edward River.
Investors looking for affordable properties have pushed up prices in some towns where homes cost far less than Sydney. Those buyers have thinned out recently after the federal budget’s changes to investor taxes and the ongoing high cost of mortgages. Experts say price moves can be volatile in smaller towns with few homes for sale.
Domain senior residential economist David Cannington said regional markets had not experienced as sharp a drop-off in sentiment as capital cities. Sydney house prices fell 4.7 per cent in the quarter.
“The regional market’s probably driven more so by the underlying market fundamentals, so the supply and demand balance,” he said. “Higher mortgage rates, the higher cost of living, they’re factors that are impacting the major capital cities and the regions.”
Regions offering strong employment opportunities and population growth may have jumped in price, as well as their affordability benefits, compared to Sydney, Cannington said.
“That’s creating that draw for housing demand which is, of course, going to drive some strong price growth,” he said, noting regional markets would be more resilient amid a wider property price slowdown.
Herron Todd White chief economist Cameron Kusher said rate hikes and poor sentiment for housing had translated into a lack of buyer willingness.
At the same time, sellers in regional areas were having to reduce their expectations, although many were likely to come out ahead.
“Most of the people selling in these areas have still made a significant amount of money over the past few years,” he said.
“A lot of investors were active in the market right up until the federal budget … That rush of investor buying has pushed up prices.”
Kusher said city dwellers had been moving to some of the towns where prices had risen, drawn to jobs in agriculture, mining, healthcare or education, but growth had moved away from coastal markets that previously boomed.
The Byron shire rose just 2.7 per cent in 12 months to a median house price of $1.51 million, not far below Sydney, while Kiama rose 1.7 per cent to $1,475,000.
“It’s [Byron] become out of reach for people who want to buy there but can’t afford it,” he said.
In Dungog, Dillon & Sons principal Tavis Chivers said there were not a large number of homes for sale, which underpinned price growth.
“We just don’t have the oversupply. We only sell on average 30 residential houses a year, whether things are good or bad,” he said.
“If you come up and say ‘I want a brand-new house’ or ‘I want a weatherboard’ … We’ve got plenty for sale, but nothing that suits you.”
Chivers added that there had been some upper-end sales, which had also contributed to the higher median price.
“You can buy something absolutely amazing and beautiful for $1 million. We’ve had quite a few transactions in that bracket,” he said.
“I think Dungog is a beautiful place to raise a family. I think Dungog is a beautiful place to retire to.”
In Inverell, Annabelle Gleeson of Annabelle’s Inverell had been fielding demand from investors – until recently.
“The last 12 months we’ve been inundated by buyer’s agents coming to town like investors from Sydney and Melbourne, buying anything up to the $550,000 mark,” she said.
“But since the last two months, eight weeks, it’s really slowed up, so whether that’s the cost-of-living crisis and everything, it has slowed down. But we still have people moving here,” she said.
She said investors were drawn to properties up to about the $550,000 mark, and could get a good rental return. The market for more expensive properties was a little slower, she said, although buyers are still arriving from the city.
“It is a beautiful town, beautiful country town,” she said. “And very safe and healthy to live in with jobs and good country schools, new police station, new hospital.”
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