As the housing market begins to slow from the peaks of capital gains recorded last year, some markets are bucking the trend.
Coastal markets and regions associated with tourism and lifestyle properties are generally seeing an improvement in their housing market conditions after a slump in values and buyer demand between 2008 and 2014. The slump was caused by a combination of many holiday homes being placed on the market at a time when buyer demand for discretionary assets was very low, a downturn in tourism numbers and a slowdown in the sea and tree change migration trends.
High profile lifestyle markets like Queensland’s Golden Triangle including the Gold Coast and Sunshine Coast, plus Cairns and Byron Bay have seen house values rise by more than 20% over the past three years. The indicators for improving market health are now broader than just rising home values; transaction numbers are trending higher as buyer demand picks up, homes are selling faster and rents are also showing an upwards trend.
Growth conditions are apparent across most lifestyle markets around the country. House values along Victoria’s Surf Coast have increased by 19% over the past three years, South Australia’s Victor Harbour is up by 9% over the same period and even Margaret River is bucking the broad Western Australian trend of falling values to see house values move almost 19% higher over the past three years.
The reason for the positive trend in housing market conditions across these regions are varied and include:
- Higher levels of discretionary spending on second homes and holiday homes. A great deal of equity has been accrued in housing markets like Sydney and Melbourne, with dwelling values in these cities up 76% and 66% respectively since the beginning of 2009. Add to this a partial recovery in equity markets and a lower rate of household savings and it is clear that more households are now willing to consider buying a lifestyle property.
- A return to the sea change and tree change trend where mature aged cohorts are revitalising their retirement plans after many put their wind down on hold after their accrued wealth deteriorated during the GFC. A renewal in the migration towards coastal and lifestyle markets is also likely to continue to drive home buyer demand in these areas, particularly in those areas that are well serviced by health care amenity, airports and proximity to major cities. Recently released data from the Australian Bureau of Statistics highlights that migration into lifestyle markets amongst young families is also ramping up.
- Improved tourism numbers are driving a boost in business confidence and employment in many coastal and lifestyle based areas. Higher levels of tourist visits from both domestic and overseas is also likely to act as an incentive to investors who will benefit from the higher occupancy rates.
Another factor likely to influence demand in these markets is improved internet speeds and growing flexibility from businesses allowing staff to work remotely. Workers who are able to work away from the office can take advantage of what are often more affordable housing prices compared with capital city locations.
Looking forward, coastal and lifestyle markets are likely to continue to see rising demand which should help to push prices higher after a long period of weak conditions post GFC.
Do you have your eye on a coastal or lifestyle market? Tell us which one in the comments below.