No tree changers: Why prices in this town are up more than 60 per cent

Good weather conditions and strong demand for agricultural exports have seen rural property values surge. Photo: Shutterstock
Good weather conditions and strong demand for agricultural exports have seen rural property values surge. Photo: Shutterstock

As tempting as it may be to lay the blame for sky high regional property prices squarely at the feet of sea and tree changers, there's another key reason for the recent spike in values, according to a leading economist.

Towns in Western Australia's Wheatbelt are posting growth rates as high as 62 per cent per annum, higher than that of Byron Bay, according to Ray White Chief Economist Nerida Conisbee, and it's not because of cashed-up city buyers.

She has compiled a list of the strongest towns for price growth in the 12 months to July 2021 in the region, as well as in Outback Queensland, based on CoreLogic data for residential properties and only including markets with 30 sales or more.

Vastly improved agricultural conditions led to a 62 per cent rise in residential property prices in Merredin, Western Australia and a 47 per cent rise in Blackall in Queensland.

The end of drought conditions in many parts of the country and sustained demand for Australian products, particularly wheat and beef, meant that Australia's agricultural production would hit a record high of $66.3 billion this year, according to Ms Conisbee.

"For property, this is flowing on to strong prices for farms, as well as growth in regional towns," Ms Conisbee said.

Demand from farm workers moving to the area was behind part of the rise, but the bigger factor was more likely a general boost to local residents' buying power.

"I think fundamentally it's just wealth - we've got people making a lot more money [in these towns] and that flows into the community, resulting in more investment, and that pushes up values," she said.

Prices may be growing fast, but they're still coming off a low base, with the median price in Merredin now sitting at $149,000.

"Look at the median prices - they're sitting at around $200,000, if you have a look at it in dollar terms you're not looking at Byron Bay," Ms Conisbee said.

"The WA Wheatbelt was one of the lowest growth region in the country prior to the pandemic," she added.

Price growth would likely taper in the next 12 months, according to Ms Conisbee.

It's not just the agricultural sector driving gains, with improved demand for mining commodities leading to increased values in towns associated with that industry, such a Newman and South Hedland in Western Australia.

Prices were still short of their previous peak, achieved around 2012, but were headed in that direction.

"Everything to do with mining right now, it's hard to find bad news highly likely we will get back to that level."

In less remote parts of the country where mining has traditionally played a large role in the housing economy, the impact of recent commodity rises was less clear.

Ms Conisbee said that in Orange, in the NSW Central West, local gold mining operations were likely driving some of the regions dwelling price gains, with mining contributing around 25 per cent of city's economy.

"Orange is such a fascinating city because it's not only benefitted from gold mining, but it's also seen quite a significant lifestyle shift. It's not like Port Hedland - nobody is moving to Port Hedland to make a lifestyle change," she said.

Local agent Ash Brown of One Agency Orange said that mine workers still drove plenty of demand for local property.

"The mines are still an integral part of Orange, and their workers are very active in the real estate industry - they love to own their own homes, they are very active players in the market who tend to rent first and then buy nine or so months after," he said.

But other industries were increasingly playing a part in attracting people to the city.

"What we're finding now is government departments are slowly trending to de-centralisation, and they're ending up in towns like Orange," he said.

And the biggest external market now consisted of Sydneysiders looking to move to Orange for lifestyle reasons.

"I talk to someone from Sydney every day," Mr Brown said.

"There's more interest from Sydney and it's purely lifestyle-related. If you ask people from Sydney what their top reasons for moving are, I think in their top five would be traffic - congestion and the time to get to work and back," he said.

Of buyers in this category, around half were choosing to keep their Sydney-based job and work remotely.

Michael Wright, of Peter Fisher Real Estate, said that around 20 to 30 per cent of his buyers were from out of town, and that many were relocating for lifestyle reasons.

"What happened last time, when we had to shut down for Covid [in Sydney], we had a lot of people saying we've had enough of living in Sydney," he said.

This story The other reason regional property prices are booming first appeared on Newcastle Herald.