Regional Resurgence - Is it Over?
After an extended period of extreme demand, the surge of regional property prices is finally slowing down along with the rest of the market. Is this the end of the regional reign? We examine the impact of this property roller coaster on the ground in Byron.
The Golden Period
For a 2-year period, regions were indisputably experiencing the silver lining of Covid-19. With significant changes to work patterns and a good proportion of people working from home, a seachange or treechange became a very achievable dream for many Australians. Coupled with a drive for more space, and a rise in the purchase of holiday/second homes in beachside locations, regional areas were inundated, causing market extremes. The data were full of glowing numbers about soaring migration to regional areas, rapid rates of price growth and frantic search trends for regional property.
The Shine Wears Off
As the post-Covid19 dust settles, and with the whole market rebalancing, things are looking less rosy for the regions. If highly inflated prices wasn’t enough to slow things down, the market downturn alongside interest rate hikes has ground the gears even more. Figures show property prices in Byron have plunged 25% in the past 12 months, compared to a decrease of 18.6% in the wider Richmond Tweed area to which it belongs. A lot has changed in this period, with borders reopening, outbound travel returning and many workers returning to the office, at least partially — all impacting lifestyle choices around where to live and invest. In this market downturn, it’s likely that holiday and second home purchase will also slow down massively,
Not A Win For Everyone
Whilst the hot market was beneficial to some locals who sold at the height of the hype, achieving headline prices — many have been negatively impacted by the inflated housing prices. In particular, a lack of affordable housing and worker accommodation has revealed itself as a serious issue. Whilst its detrimental impact on the hospitality workforce reared its head during the pandemic when prices were surging, housing affordability is settling in as a long-term problem for the region.
The Long Game
The question is, What to do about it? Clearly, there needs to be an increase housing provision across a range of budgets to meet demand. Focussing on the right types of stock is key to servicing these markets, and as an area that not many people are playing in — opportunities exist for savvy investors playing a long game.
Because whilst fluctuations are having critical impact on housing affordability, Byron’s long-term appeal is irrefutable. As both a property and lifestyle region, it has so much going for it. It’s easily accessible with nearby airport and highway connections. It has a diverse economy that’s not just reliant on tourism, but also agriculture, fashion and lifestyle. Government stimuli focused on growing regional jobs has attracted more skilled workers to regional areas, prompting a cycle of sustainable business growth. The seeds for Byron’s long-term success have been planted long ago with infrastructure, community and of course natural appeal. So in the short- to medium-term, it’s a matter of adapting to the push and pull of local demand, and working with the market forces that are clearly here to stay.
The data supports this: even though the recent housing price drops in Byron seem severe, the strength of the 5-year median price spike means capital growth is barely affected.
At Propel, we’re seeking out opportunities in Byron and other locations with scarce stock, to meet demand for specific market categories such as affordable housing and workers. Get in touch to hear about our current and upcoming projects for consideration in your portfolio.
