Housing markets in some areas of regional Australia at mercy of farm outlook

A leading property analyst said strong demand for homes across regional Australia largely went under the radar while prices plunged in the capital cities last year.

House prices dipped slightly last year in the country as well but early sales this year have wiped out those losses, according to Ray White chief economist Narida Conisbee.

Ms Conisbee and other property analysts say within two months, it is likely the declines experienced in 2022 will be "erased completely".

But she says the big loss of demand "will be areas supported primarily by agriculture".

"Agricultural production hit a record high in 2022 however conditions have changed considerably in 2023," Ms Conisbee said.

"Prices for livestock have pulled back while far better farming conditions overseas have led to softer demand for Australian produce."

Some commodity prices are still at record highs although there is an official forecast of a drier season ahead.

Farm prices themselves are still at record highs and price growth is tipped to ease but still keep rising.

The more isolated parts of Australia supported by mining will however remain strong for house sales, she said.

Those regional areas still experiencing strong population growth will continue to see prices moving upwards.

Ms Conisbee said regional Australia was the standout during the pandemic with the virus sparking the greatest movement of people to the regions ever recorded.

During the pandemic, a survey found one in five city residents wanted to move to the country to escape lockdowns and improve their quality of life.

Data from the Australian Bureau of Statistics in one quarter alone during the pandemic revealed the nation's capital cities had a net loss of 11,200 people.

CoreLogic said house prices in regional areas rose almost eight per cent while capital city house prices lifted about two per cent at the same time.

Research from the Regional Australia Institute showed one-in-five city residents were looking to move to the regions, with more than half wanting to make the jump within the next year.

That city search for homes moved further and further away from the cities as the available housing quickly dried up.

READ MORE: Bidding war to convince rural landowners to host power lines

Ms Conisbee said the population growth, combined with travel restrictions leading to strong demand for holiday homes, as well as outstanding mining and agricultural conditions led to very strong house price growth.

"But like the rest of Australia, this price growth stalled once interest rate increases started up again," she said.

Ms Conisbee and other analysts agree this growth has now returned.

While some parts of regional Australia saw price declines in 2022, most didn't.

Specifically houses prices fell last year in 17 regional statistical areas (SA4) which have populations of between 100,000-300,000 people.

Ms Conisbee said the areas which did decline were mainly holiday destinations.

Meanwhile the south-east of South Australia, as well as the Wide Bay region of Queensland kept increasing "likely driven by strong agricultural performance", she said.

The region which includes Kangaroo Island, the Fleurieu Peninsula and the Limestone Coast, remains the best performing regional house market on an annual basis, with value growth of 10.8 per cent in the past year, argees CoreLogic.

CoreLogic's quarterly Regional Market Update, which examines Australia's 25 largest non-capital city regions, shows the number of areas where house values increased in the year to April has been slashed to just seven.

The New England and North West (NSW) and Bunbury (WA) regions were the next best performers.

In contrast, NSW lifestyle markets, including the Richmond-Tweed, Southern Highlands, Shoalhaven and Illawarra regions recorded the largest annual declines in house values, CoreLogic said.

Don't miss out on all the latest rural property news. Sign up to receive our free twice weekly Farmonline property newsletter.