Rents hit record highs
MARKET ANALYSIS
CoreLogic Head of Research Australia Eliza Owen explores how rents are accelerating in the Tweed Valley market, while value growth is easing.
Home value growth across the Tweed Valley region eased slightly in the three months to May. Dwelling values did increase a further 0.5% in the period, but this slowed from a rise of 2.5% in the three months to February.
Notably, some of the desirable coastal spots of the Tweed Valley have seen a slowdown in growth, with values steadying in the house segment in particular. Bogangar home values were down -1.4% in the three months to May, led by a -2.8% fall across the house segment. In Casuarina, home values rose 1.1% in the three months to May, comprised of a 2.3% increase in unit values and a 0.8% increase in the house market. Casuarina has a particularly large gap between the median house and unit value across the region, of around $1.3 million, which could be diverting more interest to the relatively affordable unit market.
In Kingscliff, median dwelling values were recorded at $1.3 million in May, including $1.7 million across houses, and $853,000 across the unit segment. Dwelling stock as a whole has seen a slow, steady uplift of 0.9% through the year to date, but as with Casuarina and Bogangar, growth has been faster in the more accessible unit market. Unit values increased 3.3% in the past three months to May, while house values were relatively steady with a 0.2% uplift.
The trend of unit value increases outpacing house values in these markets mirrors the trend in some major cities where affordability is becoming increasingly constrained, such as Brisbane. High interest rates, low consumer sentiment, lower household savings rates and high cost of living pressures may be placing a limit on growth in some higher end parts of the Richmond Tweed area.
“Rents have since hit fresh record highs across the region.”
Rent growth rises in the regions
While capital growth is showing signs of easing, rent value growth across the Tweed Valley region has picked up through the year to May, with rent values sitting 9.2% higher over the past 12 months.
This followed an extended upswing in rents of 39.9% between June 2020 and February 2023, and a modest 2.8% fall in rents between February and August 2023. Rents have since hit fresh record highs across the region, and are currently 47.6% higher than where they were at the onset of the pandemic in March 2020. This is the equivalent of a $260 increase in weekly median rent values, from $545 to $805.
Of around 150 regional SA3 markets analysed in regional Australia, median rent values across the Tweed Valley region rank 13th nationally, and 2nd in regional NSW. The highest median weekly rent value in regional NSW is the Richmond Valley – Coastal market, at $814 per week. The highest median weekly rent values across the Tweed Valley market was in the suburb of Casuarina ($1,034 per week), where rent values have lifted 6.1% in the past 12 months.
The pick up in rent growth across the Tweed Valley market follows a trend that is being seen in many parts of regional Australia. At the national level, annual rent growth was 6.9% across regional Australia in May, up from 3.7% in the 12 months to September last year. In other words, regional Australian rent values are not only rising, but they are rising more quickly than at the end of last year.
The reasons for higher rental demand in the regions may include a ‘spillover’ from capital cities and other major regional centres, where rental markets generally remain over-heated amid a temporary spike in net overseas migration. The combined capital cities rent growth was 9.1% in the year to May, including 8.5% in Sydney, 8.6% in Brisbane and 8.0% in the Gold Coast. This is also broadly in line with internal migration trends, with CBA and the Regional Australia Institute reporting an uptick in movers from cities to regional Australia in the March quarter of 2024.
While rent values have seen strong uplift over the past year, growth in dwelling values across the Tweed Valley have risen slightly faster, at 10.2%. This has resulted in gross rent yields ticking slightly lower across the dwelling market year-on-year, by 5 basis points to 4.24%. However, with the slowdown in capital growth setting in across some Tweed Valley markets, gross rent yields may start to stabilise.
