House prices across Australia have fallen since their mid-year peak, but in some regional towns, the cost of buying a house has continued to rise.
- The Reserve Bank’s latest rate rise is expected to push national house prices down further
- The cost to buy a house in some country towns is cheaper than renting
- WA’s rural housing market is being supported by people moving to the country for work
In the Goldfields town of Kalgoorlie-Boulder, demand for accommodation has been stretched by workers in the mining and resources sector.
Almost half of all homes in Kalgoorlie were occupied by renters, with the vacancy rate at 0.3 per cent.
Local realtor Gavin Gilmore said the demand for rentals had pushed prices rise to the point where buying a property could be more affordable than renting.
“Our rental vacancy rate is hovering around zero per cent, that puts enormous pressure on companies in one respect, but also employees to find accommodation,” he said.
“In the past, they may have said, ”look, we’ll just rent” but, now there’s a trend to purchase property.”
Mr Gilmore said long-term owners selling for higher returns were also becoming more common.
“People who entered the market when it was very slow and struggled to sell chose to put their properties into the rental market rather than sell and take a loss,” he said.
“That’s changed now and they’re in much more of a position if they want to realize their assets and make a profit, and there’s a lot of them attempting to do so.”
Rates rise to keep prices down
Property data firm PropTrack’s senior economist, Eleanor Creagh, said home prices in regional WA fell in October by 0.15 per cent, 0.87 per cent below their peak in July.
She said rising interest rates were putting more pressure on borrowers and expected the Reserve Bank of Australia’s latest 0.25 of a percentage point would push house prices down further.
“With the cash rate sitting at 2.85 per cent maximum borrowing capacity will have been reduced by more than 20 per cent and that is weighing on home prices,” she said.
Although some regional markets had bucked the national trend, Ms Creagh said it was a case of demand outstripping supply.
“We’ve seen that sales volumes have fallen off the exceptionally strong volumes that we saw throughout much of last year,” she said.
“The number of properties listed for sale is still well below pre-pandemic levels and that means regional buyers have a lot less choice and a lot less negotiating power.”
Country sellers insulated
The Australian Bureau of Statistics said the total value of residential dwellings in Australia had fallen to about $9 billion in the last financial quarter.
But Real Estate Institute of WA president Joe White said the state’s rural housing market remained strong.
“We’re not seeing any weaknesses there at all, selling days are still short, there’s still a shortage of stock and leasing activities are still brisk,” he said.
“Certainly, all the feedback we’re getting not just from Kalgoorlie, but the other regions are still actually very strong.”
Mr White said more people moving to the country to work in the agricultural and resources sectors had brought a new wave of homeowners to regional communities that would keep prices high.
“The economy is incredibly strong, and we’ve still got the cheapest housing in the country so I just can’t see prices coming back in the near future,” he said.