House prices in regional areas by the coast have almost doubled during the past two years to become even more expensive than some nearby capital city markets.
Australia’s housing affordability crisis is now so bad real estate is typically costing seven figures despite being more than a one-hour drive from the middle of Sydney, Melbourne or Brisbane.
In late 2019, beachside homes with backyards on the NSW Central Coast, mid north coast, pockets of the Sunshine Coast and Victoria’s Mornington Peninsula had median prices under $600,000.
But now houses in these areas are typically sell for more than $1million as record-low interest rates and more people working from home spurs demand for real estate in areas offering a good lifestyle.
As recently as September 2019, Chittaway Bay on the New South Wales Central Coast had a median house price of $552,090 but last month this had jumped to $893,152 following a 35.6 per cent annual increase, CoreLogic data showed
CoreLogic research director Tim Lawless said buyers were moving to coastal areas as more bosses allowed their staff to avoid the office.
‘Coastal markets in both metro and regional locations have recorded some of the highest growth rates in housing values across the nation as demand for properties that provide a mixture of lifestyle benefits and affordability continues to surge,’ he told Daily Mail Australia.
‘With flexible working policies starting to be formalised by many businesses, especially for desk based workers, it’s likely that demand for housing across Australia’s coastal, hinterland and lifestyle markets more broadly will remain higher than prior to Covid.
‘However, the affordability advantage that makes many of these areas attractive is rapidly being eroded as prices rise so quickly.’
As recently as September 2019, Chittaway Bay on the New South Wales Central Coast had a median house price of $552,090 but last month this had jumped to $893,152 following a 35.6 per cent annual increase, CoreLogic data showed.
Some houses in this suburb on the western side of Tuggerah Lake are selling for more than $1million.
Woy Woy has seen a similar increase, with a median house price of $564,977 just two years ago growing to $962,358 in October 2021, with values soaring by 33.5 per cent during the past year.
House prices on the Central Coast have surged by 35.4 per cent during the past year to $954,330, making it one of Australia’s hottest markets, with mid-point prices nudging the $1million mark despite being a one-hour drive from Sydney.
A similar phenomenon is occurring at Rosebud, on Victoria’s Mornington Peninsula, where the mid-point house price in 2019 was just $539,591.
Median house prices during the past year have climbed by a whopping 38 per cent to $860,371 – with the annual percentage increase almost double Melbourne’s 19.5 per cent rise.
The Mornington Peninsula, in Melbourne’s outer south-east, now has a median house price of $979,554, following a 33.5 per cent annual increase, making it more expensive than greater Melbourne’s $972,659.
A similar phenomenon is occurring at Rosebud, on Victoria’s Mornington Peninsula, where the mid-point house price in 2019 was just $539,591. Median house prices during the past year have climbed by a whopping 38 per cent to $860,371
A similar phenomenon is occurring in Queensland where houses on the Sunshine Coast typically cost more than Brisbane.
Tewantin, next door to Noosa Heads on Queensland’s Sunshine Coast, had a median house price of $580,215 in 2019.
This jumped to $925,632 last month following an annual increase of 31.2 per cent.
The Sunshine Coast now has a median house price of $946,405 – making it significantly more expensive than Brisbane’s $731,392 – following a 32.3 per cent annual increase.
The story of surging house prices wasn’t confined just to coastal areas within a two-hour drive of Sydney, Melbourne or Brisbane.
Port Macquarie, a four-hour drive north of Sydney, had a median house price of $552,723 in September 2019 but last month it was $819,159, following a 26.3 per cent annual rise.
Coffs Harbour, a two-hour drive north, had an affordable median house price of just $457,984 in 2019 but in October, this had grown to $699,860 with values up 32.4 per cent in a year.
Tewantin, next door to Noosa Heads on Queensland’s Sunshine Coast, had a median house price of $580,215 in 2019. This jumped to $925,632 last month following an annual increase of 31.2 per cent
A 1950s house with an old kitchen and bathrooms in need of a renovation at the weekend sold for $1.1million, after being offered for the first time in 60 years.
Regional house prices during the past year have soared by 24.6 per cent, outpacing the 24 per cent increase in the capital cities.
Across Australia, house and unit prices surged by 21.6 per cent in the year to October, marking the fastest annual pace since early 1989.
The mid-point price of $686,339 is now so expensive someone on an average, full-time salary of $90,329, with a 20 per cent deposit, would owe the bank six times their salary paying off a $550,000 loan.
The Australian Prudential Regulation Authority, the banking regulator, considers a debt-to-income ratio of six or more to be mortgage stress where a borrower is struggling to pay their bills.
The era of 2 per cent mortgage rates is ending with the Commonwealth Bank and Westpac last week both increasing their fixed rates.
But the big banks are now lowering standard variable rates for those with larger mortgage deposits.
Port Macquarie, a four-hour drive north of Sydney, had a median house price of $552,723 in September 2019. This month, two houses sold for more than $900,000
ANZ on Monday cut its Simplicity Plus home loan rate by 0.43 percentage points to 2.29 per cent, making it cheaper than the bank’s three-year fixed rate of 2.39 per cent.
The low rate will be available for borrowers with a 30 per cent mortgage deposit.
For the first time since June 2019, the lowest standard variable rate of the big four banks is lower than their average, three-year fixed rate for owner-occupiers paying off principal and interest, a RateCity analysis showed.
Reserve Bank of Australia Governor Philip Lowe last week hinted the cash rate could be raised from a record-low of 0.1 per cent in 2023 instead of 2024.
RateCity research director Sally Tindall said borrowers with standard variable instead of fixed-rate mortgages would get burnt when the Reserve Bank eventually put up interest rates for the first time since November 2010.
‘The problem with variable rates is what goes down can also go up,’ she said.
‘While the RBA has insisted the cash rate will not rise next year, the banks can still hike these rock-bottom variable rates at any time.’
Coffs Harbour, a two-hour drive north, had an affordable median house price of just $457,984 in 2019. Just two years later, a 1950s house with an old kitchen and bathrooms in need of a renovation at the weekend sold for $1.1million, after being offered for the first time in 60 years
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