NORTH-WEST Victoria has surged into the top growth areas for house values across regional Australia.
CoreLogic figures released on Monday show the north-west is in the top five ranked non-capital regions for house value increases.
North-west Victoria was ranked in fifth spot with an annual dwelling increase of 5.3 per cent, behind only Launceston and north-east Tasmania (9 per cent), south-east Tasmania (8.9 per cent), Warrnambool and south-west Victoria (8.1 per cent) and west and north-west Tasmania (7.3 per cent).
House prices across regional Victoria rose by 2 per cent in the past 12 months, while 13 of the 42 non-capital city sub-regions across Australia recorded a fall in housing values over that time.
CoreLogic said the weakest conditions were typically in the rural agricultural areas where drought had had an adverse effect on economic conditions and local housing demand.
Outback Queensland, covering most of the western portion of the state, saw values drop by almost 21 per cent over the year, while Western Australia’s wheat belt and southern Outback region also saw large falls.
Sydney and Melbourne were the two best capital city growth areas in the past 12 months, while values in both Darwin and Perth declined.
CoreLogic head of research Tim Lawless said that despite the strong north-west Victoria surge, regional markets were generally lagging behind capital cities with housing values only 1.4 per cent higher over the past 12 months compared with a 7.3 per cent rise across the combined capital city markets.
“The diversity across regional Australia is extreme, with drought affected areas impacting the regional index,” Mr Lawless said.
“Meanwhile, the regional centres adjacent to the largest capitals, as well as coastal lifestyle markets, show a stronger performance,” he said.
But Mr Lawless said the strong growth in some regions meant that entering the housing market was beyond reach for some.
“The primary factors driving this rebound remain in place and include extremely low cost of debt and improved borrowing capacity,” he said.
“However, considering the sluggish pace of household income growth, housing affordability is eroding rapidly which is likely to see some parts of the market become less active.”
Mr Lawless said a downturn in consumer sentiment related to the coronavirus could become a determining factor that impacted the market over coming months.
He said the economic impact on key export sectors such as education, tourism and commodities was likely to result in weaker economic conditions and lower consumer sentiment.
“Consumer sentiment readings are already low, and a further deterioration could see housing market activity start to slow,” he said.
