Are there financial benefits to moving regionally

Living in a regional area offers a breath of fresh air, less congestion, and more affordable housing. These benefits are attracting an increasing number of Australians to regional living, including a chance to potentially reduce your home loan.

According to recent Commonwealth Bank research, more people are relocating from cities to regional areas, with such moves now 20% higher than pre-COVID levels. This trend highlights the appeal of regional towns and cities. A major attraction for this move is the affordability of housing.

Top relocation destinations

Currently, the Sunshine Coast in South East Queensland is the top choice, capturing 16% of net internal migration over the past year.

Other sought-after areas include the Gold Coast, Wollongong, Newcastle, Lake Macquarie, Moorabool, Geelong, the Alexandrina region, the Fraser Coast, and Launceston.

In Western Australia, Busselton, Capel, Greater Geraldton, Northam, and Albany are becoming popular relocation spots.

Home values: regional vs. cities

CoreLogic data shows the median home value in capital cities is about $864,780.

In regional markets, it’s $626,888—a difference of $237,892.

This gap can widen based on specific locations. For example, Sydney’s median house value is $1,441,957, while in regional NSW, it’s around $760,000, potentially saving $680,000.

Lower loan repayments

Affordable homes lead to lower stamp duty and home loan repayments.

Imagine choosing between an $864,780 city home and a $626,888 regional home.

With $173,000 deposit (that’s 20%) and 6.4% home loan rate (current average by Reserve Bank of Australia) over 30 years, the initial mortgage for the city home would be about $692,000, with monthly repayments around $4,329.

For the regional home with the same $173,000 deposit, the initial mortgage would be about $454,000, with monthly repayments around $2,840. This means a monthly saving of $1,489, providing more financial flexibility.

Considering capital growth

While future property values are unpredictable, but historical trends of regional house prices can show insight.

CoreLogic reports a 51.1% ($212,000) increase in regional property values across the nation since March 2020, compared to an average of 31.5% ($207,000) across our state capitals.

In dollar terms, capital gains across both markets have been fairly comparable in recent years.

Thinking about moving?

Regional living requires careful planning and research, even for those committed to the idea. If you’re interested in a home with a more manageable mortgage, contact our Lending Solutions team to discuss loan options that could facilitate your move.

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