Property crash? What property crash, Riverina residents are asking, as housing prices in the region continue to surge, while the big cities experience substantial falls.
Media pundits and economists keep predicting a real estate slump, however Wagga’s house prices have increased by a staggering 32 per cent on average between December 2021 and December 2022, according to the latest market report released by real estate website Domain.
Griffith (13 per cent), Cootamundra (15 per cent) and Leeton (17 per cent) also experienced healthy rises over the same period.
This contrasts with Sydney and Melbourne, where house prices fell by an average of 11 per cent and 6 per cent respectively.
Ryan Smith of PRD Real Estate Wagga explained why the Riverina was bucking the big city trend.
“People see that Wagga is still very affordable compared to the city. We’ve got very secure industries. We’re seeing investment in HumeLink and Snowy 2.0, improvements to Kapooka [army base] and this hospital, we have very secure employment.”
By contrast, the Sydney market has suffered from a sharp decline in immigration since Covid-19 and an oversupply of apartments, Mr Smith said.
In Griffith, the average house price was $335,000 in December 2017. Now, it’s $550,000. Luke Papandrea of Griffith Real Estate isn’t all that surprised by this growth.
“Griffith’s supply and demand issues have been the issue for years,” he said. “Our property prices are at a premium because we’ve had a good level of buyers getting into the market and not enough property to service them. That’s why the last 12 months has stayed as strong as it has … we’ve always been resilient.
“The big cities exploded so much that it couldn’t be sustained. Sydney came back 10 per cent in the last year, but when you look at how much it shot up over the [previous] three years, it’s really just a correction.”
While rising interest rates have fuelled fears (or hopes) of property price falls in the Riverina, Mr Smith and Mr Papandrea don’t see a crash coming to their town anytime soon.
“Prices are not going to drop, the doomsayers love a headline … we’re not going to get growth of 32 per cent again for a while, but sensible buyers realise that even with interest rate rises, rates are still low compared to what they were 15 years ago,” Mr Smith said.
Mr Papandrea said: “Griffith always features in the top 10 towns to invest in, our yields are still quite generous, you can still get a 5 per cent return on a residential investment … which is still far better than any metro area.
“I don’t think there’s been a better time to be a buyer, there’s not as many buyers looking and there now are more listings on Domain compared to last year.”
He said one advantage that the Riverina had over big cities was that investors never had to worry about finding tenants.
“As long as I’ve been a real estate agent for eleven and a half years, the rental market has never taken a backward step … we do create a vast range of jobs in the region and we don’t supply enough housing to keep up with that level.”
The flip side is that things remain tough for renters, particularly in Griffith where the vacancy rate is below 1 per cent and homelessness is on the rise. In Wagga, the vacancy rate is 2.5 per cent.
The NSW Coalition and Labor have promised to strengthen protection for tenants if elected on 25 March, but experts say the big problem is the lack of investment in social housing and slow pace of new building approvals.