Property Hub - Investment Insights & Inspiration - Realty Talk: Regions outstrip capitals + COVID impact overstated + Avoid ‘diwersefication’

Episode Date: June 26, 2021

The annual growth rate of combined regional dwelling values at … 13%, was more than twice that of the capital cities in the 12 months to April according to CoreLogic.  Remarkably, rent values across the combined regional markets have outpaced capital city rents even more. Bushy Martin catches up with CoreLogic’s Eliza Owen to dig a bit deeper into the findings.     When the COVID pandemic struck and the country was locked down in March last year, everyone was predicting gloom, doom, and the potential collapse of property markets. Everyone that is except Simon Pressley.  He tells Bushy today why he was so bullish.    It’s a generally accepted investment principle that diversification can reduce your risk and improve your investment returns.  But are there times when property investors shouldn’t diversify?  Stuart Weymms tells Bushy it could be called ‘diwersefication’.  That’s a new word and Stuart explains what it means.    But first up – Bushy talks to Eliza Owen about some amazing findings emerging from CoreLogic’s Quarterly Regional Property Report. RealtyTalk is your trusted voice in property investment and Australia’s most popular online property show.  Founded by Kevin Turner and hosted by property expert Bushy Martin, RealtyTalk brings you exclusive interviews with Australia’s property industry leaders who deliver the latest, red hot property investing news and insights.  Subscribe now to get the latest episodes delivered to your inbox three times a week.   RealtyTalk is brought to you by Realty, Australia’s leading search and  social property distribution platform that helps investors like you beat the crowd, giving you the earliest access to property opportunities, listings, and insights. Check out Realty. RealtyTalk is hosted by top property investment expert, author, and founder of KnowHow Property, Bushy Martin. Find out how Bushy’s KnowHow team helps investors unlock freedom with finance and property here, and check out Bushy’s podcast Get Invested.  RealtyTalk is supported by BMT helping property investors save thousands of dollars each year by maximizing tax deductions from investment properties. Find out more.See omnystudio.com/listener for privacy information.

Welcome to Realty Talk, the show that brings together the country's most authoritative and respected property experts. Follow us on all the socials and subscribe for updates and exclusive offers. Realty Talk is powered by Realty.com.au, connecting buyers, sellers and agents differently. Hello once again, welcome to the show. Well, the annual growth rate of combined regional dwelling values at 13% was more than twice that of the capital cities in the 12 months up till April this year. That's according to CoreLogic. Remarkably, rent values across the combined regional markets have outpaced capital city rents even more. Bushy Martin today catches up with CoreLogic's Eliza Owen to dig a little bit deeper into the findings.

You know, when the COVID pandemic struck and the country was locked down in March last year, everyone was predicting doom, gloom and the potential collapse of the property markets around the country. Everyone, that is, except Simon Presley. He tells Bushy today why he was so bullish. You know, it's a generally accepted investment principle that diversification can reduce your risk and improve your investment returns. But are there times when property investors shouldn't diversify? Well, Stuart Weems tells Bushy that it could be called diversification. Now, that's a new word.

and Stuart explains what that means today. But first up, Bushy talks to Eliza Owen about some truly amazing findings that are emerging from CoreLogic's quarterly regional property report. Welcome. Now, CoreLogic has recently released its quarterly regional report, which reveals that the annual growth rate of regional dwellings at around 13% It's more than double that of the capital cities at about 6.8%. And even more remarkably and interestingly, rent values across combined regions have increased almost three times more than the capital cities over the year. So to discuss this and the details and implications behind it, I'm joined by Realty Talk regular and leading property analyst, Eliza Rowan from CoreLogic. Welcome back to the show, Eliza.

Thanks for having me back. Awesome. Liza, now, can you start by giving us a bit of a rundown on what's happening with rent across the country? Yeah, so we've seen somewhat varied rental performance, depending on what kind of market you're looking at, whether it's in a city, whether it's houses or units. But generally, overall, rental values have been increasing. Across the regions, there's been a pretty broad-based increase in rents across both houses and units.

So we saw that in the year to May, growth in regional rents was sitting up at around 10.5% over the year. Across the capital cities, however, there was still an increase, but it was only about 4% in the 12 months to May. So there's this enormous differential that's kind of opened up between rapid rental increases across regional Australia, and kind of more of a recovery in rental conditions that we've seen across the capital cities. Yeah, okay. Well, so what are you seeing as the factors that are contributing to tightening rental markets, but particularly in the regions? I think the big one for the regions is that, you know, we talk a lot about this migration story where people were leaving in droves from Sydney and Melbourne to elsewhere across Australia. And to an extent, there were more departures from Sydney and Melbourne over the COVID or since COVID hit Australia. But that narrative is a bit overblown. what is uh less reported is the fact that not a lot of people left regional Australia to go

to cities um since the onset of COVID whether it was because they had a job lined up and they no longer needed to go to the city or they were going from a regional part of Australia maybe to a big city for university or something like that and for obvious reasons that didn't happen for um since COVID. So the overall movement of people from regions to the capital cities was about 4% below levels that we would usually see. And as a result, I think we didn't get as much stock being freed up across the regions. So I think demographically that that's been a huge driver of keeping those regional rental markets quite tight. We've also seen that the nature of movement from capital cities to regional Australia has been more

in that wealthy, mobile worker who can, you know, do a professional kind of job and afford to work remotely. So that's put additional pressure not just on rental markets but on the purchase prices of properties, particularly in lifestyle areas, Geelong, the central and north coast of New South Wales, and the Sunshine Coast and the Gold Coast. So once you get those property prices being pushed up, that means when locals are priced out of their market, they might have to rent instead of buy, and that puts more pressure on the local rental market as well. And the final factor I'd say would be, as we've started to see

eased restrictions as COVID is more contained we get this resurgence in domestic tourism in interstate travel and that has reversed the narrative that we heard initially of you know this Airbnb stock being flooding the market and and loosening up rental markets. I'd say the reverse is probably true now where because of the boom in domestic tourism we're seeing a lot more of that stock be reverted to short-term accommodation, namely Airbnb, and that's supported by some data from AirDNA where in bigger markets like Richmond Tweed or Gold Coast, we're starting to see those short-term

accommodation volumes rise.