Pandemic “hotspots” led to sharp falls in the Queensland regional property market in the last quarter, new data has revealed.
- Across the Queensland region, house prices suffered a slump over the past quarter, falling 5 per cent overall from a peak in June.
- Rising interest rates were beginning to hit back-pocketed buyers, fueling the cooling trend
- Meanwhile, Brisbane posted an even steeper drop in house prices than the regional market.
CoreLogic’s regional market update reported sharp declines in house prices in some of Australia’s most popular regional markets in the three months to October.
The Sunshine Coast posted the highest drop in the Queensland region, down 7.1 percent, followed by the Gold Coast, where house prices fell 6.4 percent.
CoreLogic’s head of research in Australia, Eliza Owens, said house prices in the Queensland region suffered a slump over the past quarter, falling 5 percent overall from a peak in June.
“Up until October, the values in the Queensland region were still 36% higher than at the start of COVID-19, but what is very clear is that if you look at the data from month to month, prices are starting to change. , ” she said.
“That expensive, high-end lifestyle area of the Queensland regional market is really now in decline.”
Units saw a more moderate drop in prices, around 3 percent in the Queensland region since June.
Ms Owens said rising interest rates were starting to hit back-pocket shoppers, fueling the cooling trend.
“The amount of money that people can borrow for housing is limited,” he said.
“It’s also a reflection of the higher inflationary environment, where households are facing higher rents, a higher cost of living, so many people are probably finding it more difficult to put up a deposit on the house as well.”
Central Queensland shows a modest increase
Central Queensland was the only regional Australian market tracked to see an increase in house prices over the quarter – a modest 0.1 per cent.
“If you look at areas like Wide Bay, Townsville, these are starting to drop 1 to 3 per cent in the last three months,” Ms Owens said.
“It’s definitely an example of more expensive markets leading the recession, but that recession is starting to have a broader geographic base.”
But Ms Owens said it was too early to tell if the regional market “bubble” had burst.
“Unfortunately, when it comes to a bubble burst, you really can’t tell until after the fact. I think we’re a little early in this dip to know if that’s really the case or if values just start to rise.” again once the interest rate cycle finishes tightening and starts to drop.
“Values are down about 4.5 percent from the peak, but are still 36 percent higher than a couple of years ago. We have a long way to go before the full value of the last few years has been eroded.
“This strikes me as something of a correction in response to some of the extremes we’ve seen in interest rates.”
Brisbane also posted a sharp drop in house prices.
“The Brisbane property market experienced a spike in values in June this year and so far values are down 6.2 per cent from that point,” said Ms Owens.
Rental market at ‘critical levels’
While house prices appear to be declining, he said the rental market remained at “some of the most critical levels we’ve ever seen,” particularly on the Sunshine Coast and Gold Coast.
“It’s a very disruptive and very dangerous situation, because we know that tight rental markets are one of many conditions that can actually increase the risk of unstable and unsafe housing,” he said.
“If you wait for a lease to be renewed, you can probably expect asking rents to go higher.
“It might actually incentivize more people to buy if they have the money to buy, but if not, I think we’ll probably see things like higher housing density, house share redevelopment, or even people just trying to move out.” to other areas to try to find more affordable housing.