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Byron Bay’s property boom has begun to slow down, as new figures show its rate of house price growth has halved and experts say prices could plateau or fall later in the year.
The regional coastal hotspot skyrocketed in popularity when the pandemic hit Australian shores in March 2020 as home buyers left the major cities in droves for warmer climates, driving prices through the roof.
City buyers flocked to Byron Bay from the start of the pandemic with demand barely subsiding since.Credit:iStock
As a result, it consistently featured among the top areas for price growth, clocking double-digit gains within the first months of the pandemic that outpaced Sydney, and attracting celebrities and business moguls.
But its rapid growth has come to an end. Byron Bay council area’s annual house price growth reached a peak of 44 per cent in the March quarter and more than halved in the year to June to a still-sizeable 19.9 per cent.
While that added $10,000 to the median house price in the June quarter, taking it to a record $1.81 million, it was also the slowest annual growth rate since the pandemic hit, and experts say it is a turning point in Byron’s property boom due to rising interest rates and the impact of floods.
Affordability is also stretched, after the suburb of Byron Bay alone reached a median house price of $2,525,000. More affordable areas topped the latest regional house price league table, such as the Murray River shire where prices jumped 49.1 per cent in the year to June, to a median $656,000.
Byron Bay’s annual house price growth has been in the double digits since March 2020.Credit:iStock
The slowdown coincides with a push in the autumn for workers to return to their CBD offices at least part of the week, after long stretches of working from home that prompted a wave of families to consider a sea change.
Domain chief of research and economics Dr Nicola Powell said there had been a marked slowdown in Byron’s property market.
“What it illustrates is one, that the boom has eased, that has gone and passed, and two, people who have investment properties, or locals, have decided to sell out because it has been such a lucrative time during the pandemic,” Powell said.
“Byron Bay property is certainly on the slowdown. When you look at those regional markets, Byron experienced phenomenal growth. It was extreme price growth.
“We saw this boom of demand as a result of the pandemic and the outward exodus of cities.”
This unprecedented price growth also meant Byron’s housing market was more vulnerable to price declines, Powell said.
“It’s one of those that is a bit more vulnerable to a bit of a correction because we saw such a significant rate of growth,” she said.
“We could see a pullback in price as a result of not only the rapid incline in prices but also the damage to borrowing capacity due to increase in interest rates and inflation.”
This four-bedroom house at 43 Kinsley Street, Byron Bay has a price guide of $6.38 million.
Bryon Bay Real Estate Agency’s Liam Annesley said the region experienced a slowdown earlier than other areas due to the two floods at the start of the year.
“We experienced the slowdown earlier than most and that’s because of the floods that happened in the area,” Annesley said.
The March quarter peak would have captured settlements from sales in January and February, Annesley said, while the flood-induced slowdown showed up in the June quarter figure.
Annesley said buyers were also factoring the rising cost of living and mortgage repayments into their offers and expected the market to plateau for at least six months as they adjust.
“They are getting used to the words interest rate rises and are factoring it in,” he said.
“There will be a period of lull as they adjust their income and expenses. It’ll get to a point where it will plateau out for a time but beyond six months you need a crystal ball.”
Amir Mian, of Amir Mian Prestige – originally based on the Gold Coast – said the market had peaked, but it had not stopped him from opening a Byron office and fielding strong buyer demand.
“We’re newcomers to the area … I’m actually amazed by the level of inquiry. The peak for sure has happened, but the constant demand is there, but there is not much for sale,” he said.
This Byron Bay house sold for $22 million.Credit:
Mian said buyers were mainly from Sydney, Melbourne and the Gold Coast and the market was transitioning from holiday homes to more owner-occupier held housing.
“We’re selling to end users now. It was a holiday destination. The end-user market twist is a benefit to the region,” Mian said, adding that many sellers were from overseas, offloading holiday homes. “Holidaymakers have been replaced by end users.”
Both agents said demand and prices could pick up again in spring and summer as it was a highly seasonal market.
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