Many of the prime hinterland regions near capital cities have seen an uptick activity as homebuyers appear to be falling in love with the countryside, rather than urban areas or the coast.
CoreLogic Head of Research Tim Lawless on Tuesday took a closer look at the matter, which he described as a “tree change” (think sea change), and speculated on possible reasons behind it.
First, he found that the shift was linked to the ‘wealth effect,’ where homeowners have significantly increased their wealth through property holdings, particularly those located in the capital cities.
Moreover, many baby boomers are likely to consider these locations for holiday homes or potential relocation options as they move closer to retirement.
Another factor luring investors to the rural sites is the increasing popularity (and workplace acceptance) of ‘telecommuting.’ This was driven by faster internet speeds and the broader availability of technologies such as VPNs, which provides a secure connection for working remotely.
Finally, homes are more affordable within these areas. “It’s often the case that hinterland properties will provide a lower entry point to the market relative to their coastal or big city counterparts, especially when you take into consideration that typical block sizes are much larger,” Lawless said.
To better guide onlookers and interested market players, here’s what the research revealed regarding values and growth conditions in some of the most popular hinterland regions adjacent to capital cities.
The hinterland areas of the New South Wales (NSW) Southern Highlands and the Macedon Ranges in Victoria were deemed to have the most significant value premium.
For reference, the median dwelling price across the Southern Highlands of NSW is just over $735,000. The Macedon Ranges, meanwhile, have a dwelling value of approximately $700,000. According to Lawless, the value is not considered cheap, according to Lawless, however when compared to the two regions’ respective capital cities, they still have lower median dwelling value.
In comparison, a typical house at Tasmania’s Central Highlands is worth just over $200,000.
In terms of growth, Lawless noted a disparity between this year and 2017. “The regions to see the strongest growth over the past five years are generally very different to the best performers over the past twelve months. The hinterland areas peripheral to Sydney have dominated the capital gain stakes over the past five years, however growth in those areas has slowed substantially over the past twelve months. “
“The past twelve months have seen the Gold Coast hinterland record the fastest rate of capital gain, with dwelling values up 8.1%, followed by Vic’s Macedon Ranges where growth seems to have rippled away from the previously more popular Yarra Ranges,” he concluded.
