As a direct result of COVID-19, March 2020 will probably remain a month that is firmly etched in people’s memories for many years to come. However, during the early stages of the COVID-19 pandemic, who would have thought that housing values would hold up as well as they have in Australia for the remainder of 2020? If you were following the commentary of projected housing values in the mainstream media, this was certainly a topic where opportunity was taken to cast fear and uncertainty into the minds of many Australians.
Interestingly, CoreLogic indicated that during the month of October 2020, the national housing index demonstrated the first month of growth since COVID-19. However, not every capital city market has performed the same since March 2020, as highlighted in the chart below.
Similarly, regional housing markets have not performed the same as capital city housing markets post March 2020. Regional housing markets have generally continued to outperform the capital cities throughout 2020. CoreLogic’s Tim Lawless recently stated, “in the seven months since March (2020), regional dwelling values are up 1.7%, while values across the combined capitals index have fallen by 2.3%.”
There is no doubt that COVID-19 has helped to drive greater demand for regional housing markets. The internal migration chart below, created by CoreLogic utilising ABS data, helps substantiate this fact.
Source: CoreLogic, ABS
The chart identifies that almost 10,500 residents left capital cities for regional locations during the June quarter 2020. Approximately 8,000 people left Melbourne during this quarter alone on a net basis. However, some capital cities, including Brisbane, Perth and Canberra experienced a different trend during the quarter; they recorded an increase in new residents.
Global pandemics or not, regional markets will always have their own appeal. Improvements in technology, remote working opportunities, affordability, lower densities and lifestyle factors will only continue to drive demand for housing in the regions. However, the best employment opportunities are still likely to remain within, or in close proximity, to capital cities in the future.
Therefore, when considering regional markets for investment, it will be wise to look for locations that can benefit from the best of both worlds so to speak. Areas that are distant enough from major population nodes, to maximise the benefits noted above. But that still remain within practical commute distance to capital cities, should direct access to their subsequent employment opportunities become required.
Astute Property Network