House values have fallen rapidly in popular sea and tree change destinations, dropping by six-figure sums in parts of regional NSW and Queensland.
Markets that soared during the property boom have recorded steep price falls amid the downturn, and flood-affected regions have borne the brunt of declines.
Mullumbimby and Byron Bay had the largest falls in value in regional Australia last year, recording drops of 25.7 per cent and 23.9 per cent, respectively, in their median house values, CoreLogic figures show.
Mullumbimby’s median fell more than $358,000 over the year to $1,036,653, while Byron Bay’s median dropped almost $711,000 to $2,258,816.
Nearby Suffolk Park, Lismore, Ocean Shores and Lennox Head also had six-figure declines, recording price falls of more than 20 per cent.
Thirteen of the top 20 largest regional declines were in the flood-affected Richmond-Tweed region, and 19 were in NSW — the exception being Noosaville on Queensland’s Sunshine Coast, where the median dropped 13.2 per cent.
The remaining six suburbs were in the Illawarra region, where Bulli (down 16.1 per cent) and Thirroul (-14.9 per cent) recorded the steepest drops.
CoreLogic Australia’s head of research Eliza Owen said regional suburbs that had some of the largest upswings during the boom were posting the biggest declines.
Many were more expensive regional centres, which made them more sensitive to rising interest rates that are limiting buyer borrowing power.
However, market weakness in some areas had been exacerbated by flooding last year, Owen said.
“It probably caused a bit of a shock [to the market],” Owen said. “Some people may be wanting to move away … [and the floods could be] deterring demand in the short term. And that could be compounding the broader cyclical market trend, which is that more expensive pockets of the market are losing value more quickly.”
Regional markets were also dealing with a slowdown in demand from sea- or tree-changers, which peaked earlier in the pandemic, she said.
Even so, values in Byron Bay were still 10 per cent higher than March 2020 levels, while Mullumbimby house values were 17.8 per cent higher.
Ray White Byron Bay sales director Damien Smith said reduced borrowing power and flood events had taken a toll on prices.
Properties priced up to about $1.6 million had been affected most by rising interest rates, Smith said, as buyers of high-end homes were less likely to be reliant on financing. Out-of-area buyer demand, particularly for holiday homes, had also slowed, but Sydney buyers still made up about half of enquiries.
Meanwhile, housing supply in areas like flood-affected Mullumbimby and Ocean Shores had picked back up, as some decided to relocate after a post-flood renovation. Even some whose homes escaped damage had opted to move, Smith noted, including one client who sold a Mullumbimby home for almost $160,000 less than she paid for it in 2021.
“The house didn’t go under … but she decided she didn’t want a part of it,” he said.
While buyers in such areas remained cautious, transactions continued, Smith said. Local buyers knew what flooded badly and what didn’t, while some investors were picking up properties now they were a lot cheaper.
In Queensland, eight of the 10 largest declines were on the Sunshine Coast. Noosaville (-13.2 per cent) was followed by Mount Coolum (-11.7 per cent), Tewantin (-9.5 per cent) and Peregian Beach (-8.4 per cent).
Tom Offermann of Tom Offermann Real Estate, said the edge had come off the market with the first official cash rate hike in May. Buyer demand had also pulled back as the frantic drive to buy properties in south-east Queensland, caused by COVID-19 lockdowns, eased.
“While some of those suburbs have fallen 10 or 12 per cent, the prices being achieved are still at higher levels [than pre-pandemic],” he said.
“The same suburbs that have had the bigger priced falls … also correlate to some of the suburbs that had the bigger price gains.”
In Victoria, the town of Drouin in the West Gippsland region had the largest decline at 10.8 per cent.
It was followed by East Geelong (-10.2 per cent), nearby Belmont (-8.8 per cent) and Newcomb (-8.3 per cent), and Ballarat Central (-8 per cent).
Geelong sales agent Nathan Ashton from Gartland said prices had pulled back five to 10 per cent, and larger falls were again typically in suburbs that previously had strong growth.
In Newcomb, a suburb popular with first home buyers, demand had been affected by rising interest rates, while East Geelong had been affected by the slowdown in demand from Melbourne buyers.
“We’re just getting back to a normal market where you might get one or two [buyers] for a particular property as opposed to mid- to early last year when you were getting six to ten,” he said.
Price falls were more limited in Western Australia. Newman (-7.3 per cent) in the Pilbara region, Katanning (-5.5 per cent) in the Wheatbelt region, and the suburb of Somerville in Kalgoorlie, were the only areas where median house values fell.
