Australian Property Market Rebounds: Regional Suburbs Lead the Way - Property Inc

Australian Property Market Rebounds: Regional Suburbs Lead the Way

The Australian property market is experiencing an unexpected rebound, with home values rising for the first time since April 2022. Strong buyer demand, a limited supply of homes for sale, and a highly competitive rental market have contributed to the turnaround, according to Kate Burke’s article “Where are property prices forecast to head next?” [1]. Meanwhile, the Thought & Leadership’s article “Which suburbs are leading the market bounce-back?” reveals that the increase in home values has been led primarily by regional suburbs, with 20 of the top 25 performing suburbs this quarter located in regional Australia [2].

Nationally, home values increased by 0.6% last month, reducing the decline to 4.7% below the market peak, as reported by CoreLogic [1]. NAB Group Chief Economist Alan Oster has revised his peak-to-trough forecast from a fall of 20% to 12%, now predicting house prices to drop another 3.5% before flattening out until the end of the year [1]. Oster attributes the change to factors such as stronger population growth, a tight rental market pushing renters into buying, and a strong labor market offsetting the impact of rate rises on buyer borrowing power and demand [1].

The rebound has been most evident in regional suburbs, where the average median value of top-performing suburbs was $442,468 [2]. Dinner Plain, located in the Victorian Alps, is a notable exception among regional top-performing suburbs, with values trending higher following a slight dip in the second half of 2022 [2]. In contrast, Sydney, the only capital city represented in the top-performing suburbs, has experienced strong recovery concentrated in the high end of the market, where the top five performing suburbs have median dwelling values of at least $1.5 million [2].

According to the Thought & Leadership article, the prevalence of highly affordable regional markets in the top-performing suburb list differs from previous market inflection points, potentially reflecting a hangover from the pandemic and interest rate environment, where affordable regional property remains desirable [2].

As the property market continues to rebound, it will be interesting to observe whether the regional market’s dominance will persist or if higher-tier markets in Sydney and Melbourne will show more suburbs in upswing over the coming months.

References:

[1] Burke, K. (n.d.). Where are property prices forecast to head next? Retrieved from https://www.smh.com.au/property/news/where-are-property-prices-forecast-to-head-next-20230419-p5d1k6.html

[2] Research News, Thought & Leadership. (n.d.). Which suburbs are leading the market bounce-back? Retrieved from https://www.corelogic.com.au/news-research/news/2023/which-suburbs-are-leading-the-market-bounce-back

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