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Australian property: Sea change areas where house and unit prices are falling

House prices are falling in areas where the sea is changing as interest rates hit regional markets a short drive from capitals.

Idyllic towns near the beach are popular with professionals who can work from home, but that is changing now that banks’ lending capacity is limited.

The Richmond-Tweed area of ​​northern NSW, which covers Byron Bay and Ballina, has been the hardest hit housing market since the Reserve Bank began raising cash interest rates from a record low of 0.1 percent in May.

In the three months to July, the median home price fell 4.5 percent to $1,034,826.

The Richmond-Tweed area of ​​northern NSW, which covers Byron Bay (pictured) and Ballina, has been the hardest hit housing market since the Reserve Bank began raising cash interest rates in May from a record low of 0.1 percent in May. May

The Richmond-Tweed area of ​​northern NSW, which covers Byron Bay (pictured) and Ballina, has been the hardest hit housing market since the Reserve Bank began raising cash interest rates in May from a record low of 0.1 percent in May. May

It was one of 10 regional regions to experience a quarterly decline in home values, CoreLogic data showed.

Where regional real estate prices plummet

RICHMOND TWEED (NSW): Median home price down 4.5 percent to $1,034,826 in the three months to July; apartments fell 3.8 percent to $702,863 in the quarter

ILLAWARRA (NSW): Median home price down 3.5 percent to $1,043,277 in the three months to July

BALLARAT (VICTORIA): Median unit price fell 3.2 percent in the three months to July to $393,977

SOUTHERN HIGHLAND SHOALHAVEN (NSW): Median home price fell 3 percent in the three months to July to $1,019,326

The Illawarra region, which includes Wollongong and upmarket towns on the south coast like Kiama, saw average house prices fall 3.5 percent in three months to $1,043,277.

The adjacent Southern Highlands and Shoalhaven area, which stretches from Bowral to Nowra, fell three percent in the three months to July, pushing media home prices back to $1,019,326.

The value of apartments is also falling with seven regional markets falling in the three months to July.

The Richmond-Tweed area fell 3.8 percent, bringing the average unit price back to $702,863.

The interior is also on the decline, with Ballarat in Victoria seeing a 3.2 percent drop, pushing the average apartment value back to $393,977.

Geelong’s single market fell 1.9 percent during the quarter to $565,732.

All 25 regional markets, based on a map area from the Australian Bureau of Statistics, experienced annual growth off the back of the Reserve Bank in November 2020, pushing spot interest rates to a record low of 0.1 percent, leading to a question from the pandemic era.

But interest rate hikes in May, June, July and August — the strongest since 1994 — pushed the spot rate to its six-year high of 1.85 percent.

CoreLogic economist Kaytlin Ezzy said rising interest rates and higher inflation are now affecting regional markets, which were among the strongest in Australia last year.

In the three months to July, the median home price has fallen 4.5 percent to $1,034,826 (pictured is a young woman in Splendor in the Grass in Byron Bay)

In the three months to July, the median home price has fallen 4.5 percent to $1,034,826 (pictured is a young woman in Splendor in the Grass in Byron Bay)

In the three months to July, the median home price has fallen 4.5 percent to $1,034,826 (pictured is a young woman in Splendor in the Grass in Byron Bay)

The Illawarra region, which includes Wollongong and upmarket towns on the south coast like Kiama (pictured), saw average house prices drop 3.5 percent in three months to $1,043,277

The Illawarra region, which includes Wollongong and upmarket towns on the south coast like Kiama (pictured), saw average house prices drop 3.5 percent in three months to $1,043,277

The Illawarra region, which includes Wollongong and upmarket towns on the south coast like Kiama (pictured), saw average house prices drop 3.5 percent in three months to $1,043,277

“Usually higher median markets tend to lead the broader market as they go through different cycles,” she said.

After registering some of the strongest value growth during the COVID period, each of these areas now has a median home value of over $1 million.

“As we move further into the downward phase of the cycle, we expect this decline in value to spread to more regional areas.”

All banks expect another rate hike of 0.5 percentage points in September, bringing the cash interest rate to a seven-year high of 2.35%.

ANZ is the most pessimistic of the major banks and expects a high yield of 3.35 percent over 10 years by November.

But Ms Ezzy said regional markets are still immune to the sharp downturn expected to hit Sydney and Melbourne particularly hard in 2022 and 2023.

“As the Australian housing market moves further into the downward cycle of the cycle, it is possible that the regional areas may be a little more isolated than the capitals, thanks to the relative affordability of these markets and the low advertised supply,” she said.

“In addition, the strong growth of the past two years should help protect regional homeowners from the most extreme effects of the economic downturn.”

The adjacent Southern Highlands and Shoalhaven area, which stretches from Bowral to Nowra, suffered a three percent drop in the three months to July, pushing the media house price back to $1,019,326 (Pictured is the Mermaid's Cove at Jervis Bay)

The adjacent Southern Highlands and Shoalhaven area, which stretches from Bowral to Nowra, suffered a three percent drop in the three months to July, pushing the media house price back to $1,019,326 (Pictured is the Mermaid's Cove at Jervis Bay)

The adjacent Southern Highlands and Shoalhaven area, which stretches from Bowral to Nowra, suffered a three percent drop in the three months to July, pushing the media house price back to $1,019,326 (Pictured is the Mermaid’s Cove at Jervis Bay)

The interior is also on the decline with Ballarat (pictured) in Victoria dropping 3.2 percent, pushing the average apartment value back to $393,977

The interior is also on the decline with Ballarat (pictured) in Victoria dropping 3.2 percent, pushing the average apartment value back to $393,977

The interior is also on the decline with Ballarat (pictured) in Victoria dropping 3.2 percent, pushing the average apartment value back to $393,977

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