Sydney's property market has long held a mortgage on real estate headlines, but analysts say home values in regional NSW are poised for stronger growth than those cooling off in the state capital.
The August CoreLogic Hedonic Home Value Index shows houses in the regions – including the coastal belt from Newcastle to the Tweed, and the areas surrounding rural arterial centres such as Bowral, Orange, Tamworth, and Dubbo – will increase in value into 2019 better than those in most of Greater Sydney.
Moody’s Analytics said on Monday demand for houses in areas outside of Sydney had increased due to better affordability, with supply constraints, tighter credit conditions, and a strong recent run-up in home values a major factor.
Greater Sydney house prices, offset by trend-busting growth in the Central Coast region, are down 5.1 per cent year on year, and forecast to grow by only 0.6 per cent in 2019 before jumping to 3.9 per cent in 2020.
“As potential homebuyers’ incomes have not kept pace with the Sydney housing market, demand for areas outside of Sydney have increased, as affordability is better,” the Moody’s report said.
“These include the Central Coast, which has become a hotbed for those tied to Sydney for employment but unable to afford the prices.”
But the housing value jump has not been quarantined to Sydney’s immediate neighbours.
Moody’s says the rest of NSW as a whole is up 3.7 per cent in 2018 and will grow 3.5 per cent and 3.9 per cent over the next two years respectively.
Houses in the Hunter Valley region, excluding Newcastle, will post a 5.4 per cent growth in 2018, followed by 4.6 and 4.4 per cent over the following two years, while the Mid North Coast will grow 3.6 per cent this year and increase to six and seven per cent out to 2020.
Over the Great Divide, house values in the Far West and Orana region, up four per cent on this time last year, are forecast to grow in value by 11.5 per cent in 2019, before dropping back to a 1.5 per cent growth rate in 2020.
Only houses in the Murray and Riverina areas are tipped to drop below zero growth in 2018 (down 1.2 per cent and 0.7 per cent respectively) but but both are forecast to recover in 2019 and 2020.
Moody’s says by 2019, the Sydney correction is forecast to have largely passed, but house value growth will be far from the lofty gains of recent years.
National values are forecast to fall by 1.6 per cent year on year in 2018, following a 9.5 per cent gain in 2017, driven primarily by Sydney trends.