Exclusive million-dollar clubs in Sydney and Melbourne have expanded out of the city and into regional areas.
The Covid-19 pandemic, lockdowns and work-from-home orders caused a sea- and tree-change shift which saw Aussies flee city suburbs in search of lifestyle suburbs, more space and more affordable property.
In the regional million-dollar club, the booming property market has priced out locals and, in some cases, forced them to move hours away, an effect experts say will be felt for generations to come.
Million-dollar median house prices were once exclusive to blue-chip inner-city suburbs, but now 6 new local government areas in Sydney, and 2 more in Melbourne, have made the list, Domain data shows.
And in some cases, they have even outpaced city prices.
Here’s a breakdown for each state.
The new $1 million sea-change LGAs in NSW
In NSW, Byron Bay Shire topped the list of regional areas with median prices above $1 million, with an impressive 19.8% climb to $1.81 million in the year to June, the latest Domain House Price report revealed.
In second place was Kiama, where the median house price reached $1,595,000, which is a 22.2% increase over the year to June.
Both these LGAs have now overtaken Sydney’s $1,552,015 house price median.
And according to Domain, these regional councils, sought after by pandemic-era sea-changers who left cities to work remotely, were not alone as their popularity spilled into neighbouring areas.
Wingecarribee Council, which takes in much of the Southern Highlands west of Kiama, came third on the list, recording a median house price of $1.3 million after jumping 28.7% over the same period.
In fourth and fifth place are Ballina and Tweed, both near Byron Bay, which each cracked the $1 million median house price by jumping 31.3% and 26.2%, respectively.
Wollongong rounds out the list with a 18.8% increase in prices – or $212,000.
Domain chief of research and economics Dr Nicola Powell said million-dollar house prices along the NSW coast pointed to Australians’ penchant for lifestyle locations.
“What this highlights is Australians’ willingness to pay a premium in prime lifestyle locations,” she said.
“Australians are driven by lifestyle, it was drawn out even more so during the pandemic. Ballina has always been viewed as that more affordable place to purchase than Byron.”
She also pointed out that interest in these markets has been compounded by investor demand as they are also holiday destinations where many homes had been taken off the sales and rental market for short-term letting.
The new $1 million sea-change suburbs in VIC
Regional NSW isn’t the only regional market with newcomers to the million-dollar club.
In Victoria, the popular Surf Coast LGA near Geelong and the Macedon Ranges also made the list, Domain data shows.
The median house price on the Surf Coast has risen 20.8% to $1.45 million over the 12 months to June, surpassing Melbourne’s $1,074,369 house price median.
Meanwhile prices in the Macedon Ranges have risen 13.7% to $1 million.
Powell pointed out that these suburbs offer a great lifestyle and an opportunity to travel to the office or work from home are still highly desirable.
“You’ve now got two LGAs above the $1 million mark, and it’s just such a milestone,” Powell said.
“It really throws the spotlight on regional Victoria and in particular lifestyle locations where buyers can get a greater parcel of land and a bigger house than you would for the same price in Melbourne.”
Location, location, location… and investment grade
While the price increases in these growth areas might make for a tempting investment, they don’t necessarily make good investment sense.
And they aren’t necessarily the suburbs I would recommend investing in.
At Metropol we always advise on the importance of investment grade properties and locations, rather than chasing a hotspot or growth area.
But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.
Because aside from remembering that you should focus your efforts on investment grade properties and locations, you also need to remember that property investing is a process, not an event.
That means that things have to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
Fact is, the property you will eventually buy will be the result of a sequence of questions you will need to ask and answer and a series of decisions you’ll need to make before you even start looking at locations.
Long before we talk about a property or the right location with our clients at Metropole, we look at factors including their age, their timeframes, and the desired end results in other words, what do they really want the properties to do – are they looking for cash flow, capital growth, or a combination of both.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.
So at Metropole it all starts with helping our clients formulate a Strategic Property Plan which takes into account their surplus cash flow position, their risk profile (for example would they consider undertaking renovations or small development), whether they currently own a home or are wanting to buy a new home or upgrade their existing home in the future, if they are going to earn more income in the future, or if they’re going to decrease their family income because they’re having a baby, how many other investment properties they own, where they are located and how they are performing plus 35 other considerations.
So whether you’re looking to buy a new home or an investment property and you want more certainty and direction in these interesting times, my recommendation is to sit with an independent property strategist to formulate their plan.
It’s just too difficult to do on your own and I’ve found most investors tend to be too emotionally involved to see their situation objectively. If you’re a beginner looking for a time tested property investment strategy or an established investor who’s stuck or maybe you just want an objective second opinion about your situation, please leave us your details here and we’ll be in contact and give you more details about how to book a Strategic Property Plan Consultation.
