With Australian households spending an increasingly large chunk of their incomes on housing, it’s no wonder some of us are looking for more affordable alternatives.
Experts say it’s one of the many reasons why property prices have surged in the second largest cities in each state and territory.
New CoreLogic data shows that property values in these areas — like the Gold Coast, Geelong and Newcastle — have largely outstripped their capital counterparts over the past five years.
“We all know that when it comes to affordability … it kind of sucks at the moment,” says Dr Diaswati Mardiasmo, chief economist at real estate company PRD.
“I’m not surprised that the second cities, so to speak, are growing faster than their first city, simply because people are looking for more bang for buck.”
What else is happening outside the capitals?
The rise of working from home has also made regional centres a more viable option for many workers.
“[It] gives a broader range of options of where people choose to live,” says Dr Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute.
“If you’re going to work and live from home 24/7, you might as well have a bit more space and the regions often offer that opportunity.”
While capital cities still grab the bulk of headlines on property prices, smaller cities aren’t singled out as often.
So, what are we looking at here?
The CoreLogic data below looks at the change in dwelling values between capital and secondary cities over the past five years.
It shows that, overall, the smaller cities outpaced their state or territory capital in terms of growth. The only exception was Mount Gambier in South Australia.
Also, a “secondary city” is a term that can refer to regional hubs a short drive from capital cities. It works in some of the cases below, but not all of them.
An omission in this list is Canberra because it’s the only city in the ACT. You can check how property prices are looking in this story here. Otherwise, skip to where you live below or read on:
New South Wales
Increase over five years:
- Greater Sydney: 45.4 per cent
- Newcastle: 50.7 per cent
Dr Mardiasmo says while prices are considerably lower in Newcastle, wages have also been increasing faster there than in Sydney over the past two years.
Queensland
Increase over five years:
- Greater Brisbane: 63.4 per cent
- Gold Coast: 76.9 per cent
Brisbane recently became the second-most expensive capital city for property prices. It turns out the Gold Coast is even more expensive.
However, Dr Mardiasmo says there are more affordable areas in the Gold Coast’s northern suburbs than in Brisbane.
“If you go to upper Gold Coast, it is still around like $600,000, $650,000 and $700,000, which is more affordable than Brisbane,” she says.
Victoria
Increase over five years:
- Greater Melbourne: 24.8 per cent
- Greater Geelong: 32.2 per cent
The two Victorian cities recorded some of the lowest growth levels on the list, which Dr Mardiasmo puts down to COVID lockdowns.
“It kind of had a double whammy between COVID lockdowns and then they didn’t really have a lot of time to recover before the cash rate hikes happened,” she says.
South Australia
Increase over five years:
- Greater Adelaide: 61.5 per cent
- Mount Gambier: 58.8 per cent
Mount Gambier was outpaced by Adelaide.
But with more than a four-hour drive separating the pair, Dr Fotheringham says they operate differently from the other cities on this list.
“It’s an economic centre, it operates somewhat separately from Adelaide,” he says.
Northern Territory
Increase over five years:
- Darwin: 25.0 per cent
- Palmerston: 27.7 per cent
It could be hard for outsiders to tell Palmerston apart from Darwin. Technically they’re a 20-minute drive from each other.
“You could argue that [Palmerston] is less a separate city and more [of] a satellite,” Dr Fotheringham says.
“[Growth] is a bit more muted of a pattern there.”
Western Australia
Increase over five years:
- Greater Perth: 61.6 per cent
- Mandurah: 77.5 per cent
Dr Mardiasmo says there are similarities between Perth and Mandurah and Brisbane and the Gold Coast, but a key difference is that on average property is more affordable in Mandurah. Although the city did have the highest growth on the list.
“It’s $630,000 and an hour away from Perth, I’m not surprised people would have flocked to it,” she says.
Tasmania
Increase over five years:
- Greater Hobart: 37.2 per cent
- Launceston: 57.3 per cent
Dr Fotheringham says the two cities operate in a slightly different way from other Australian locations.
“Not so much as major capital and satellite city but as quite similar significant cities within the state,” he says.
What can we learn from the data?
There’s been plenty of focus on increasing density within our capital cities, but Dr Fotheringham says movement away from the capitals is also a good thing.
He says Australia is “unusually concentrated” with its population based in a small number of cities.
“We’ve got the vast majority of Australians living in the capital cities and a relatively small number of cities for the size of the continent,” Dr Fotheringham says.
“So, it’s actually healthy to have people moving around to regional centres.”
Dr Mardiasmo says life isn’t too different in regional centres.
“It’s no longer a case of, ‘Oh my God, you’re moving out to a regional area, why?’, it’s more like, ‘That’s actually a pretty smart move’.”
