Pristine beaches, buzzing cafes and a laid-back coastal lifestyle, a popular tourist hotspot attracting cashed-up city buyers could be on the cusp of a major revival.

No stranger to the ebbs and flows of holiday seasons, the NSW South Coast region has all the infrastructure in place for the flood of tourists that emerge on its shores over the busy summer months.

But after a sharp pullback in property prices post-pandemic, a ‘golden triangle’ stretching along the river between Terara, Culburra Beach and down the coastline past Jervis Bay has been earmarked for a major turnaround.

Prices have pulled back in these popular coastal locations, but could that be about to change? Picture: realestate.com.au/buy

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Local real estate agent Craig Hadfield from Ray White said in his view, there’s a six-month window of opportunity before wealthy city buyers descend back on the region.

“This is my 24th year [in the industry] and there's only so many periods of time where you can actually sense that you're at the bottom of a cycle,” Mr Hadfield told realestate.com.au.

“But I think that as we track through the year, my expectation is that spring could be very, very strong, potentially if inflation comes down and they start to really get serious about interest rate cuts.

“Because there's actually a lot of really good value in the market. I think there's more value in the market now that I've seen for probably three or four years."

A renewed sense of optimism has driven market activity so far this year, as expectations grow that interest rates could start to fall in the back half of 2024.

"Some of the prices [in the region] have come off 15% to 30% last year, and we're now seeing quite a good uptick in activity off the back of those readjusted prices.

“I genuinely think as soon as they cut, and a cut will happen - and it doesn't matter by how much - it's just going to drive the market.”

The great readjustment

The biggest winners of the pandemic-fuelled regional boom have also experienced some of the largest price corrections as rising interest rates, the reopening of borders and a return to in-office working saw conditions normalise.

PropTrack economist Anne Flaherty said the ‘abnormal circumstances’ surrounding these markets during the pandemic have now gone.

“We absolutely saw very significant outperformance in regional markets during 2020 and 2021, with a lot of people moving away from capital cities,” she said.

“One of the reasons why we saw homes sell for such high levels during those times was that there was a lot of buyers competing for those properties, which drove the prices up.

“And with extremely low interest rates during that period, we saw people more able to afford a mortgage on a second home, a holiday home.”

Byron Bay was the hottest market in Australia during the pandemic. Picture: Getty

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Once the hottest market in the country, emerging as a celebrity haven during the pandemic, median house prices in Byron Bay have plunged more than 23% over the past 12 months, falling out of the $3m property club to reach $2.3m in February 2024.

“Prices are still well up compared to pre-Covid,” Ms Flaherty said. “But it has seen a really strong correction, purely off the back of the fact that it was that hottest market in Australia.”

Similar corrections have played out in other regional pandemic-darlings like Gerroa on the NSW South Coast, Somers on Victoria’s Mornington Peninsula, and Sunshine Beach in Queensland’s Noosa region.

Coastal markets like Gerroa have cooled over the past year, but prices remain sharply higher than pre-pandemic. Picture: realestate.com.au/buy

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The sea-change hysteria reached a pinnacle in 2021, when a beachfront house in the South Coast town of Mollymook sold for a whopping $10m at online auction, five years after it sold for $2.26m. Nothing had been done to the home apart from general maintenance.

But while the regions have come off the boil, Ms Flaherty said they still remain well ahead nationally.

“In every state in Australia, regional property prices are still sitting significantly higher compared to pre-Covid, versus their respective capital city counterpart.

“But I think what we are seeing is that interest rates have increased massively, people are returning to offices and that competition to buy regionally has slowed significantly.”

Rather than another dramatic boom, she says regional markets will revert to the long-run trend of gradual, steady growth.  

“For the 20 years pre-Covid there's been more people migrating from the cities to the regions, and that will continue.

“One lingering effect of the pandemic, though, is that people still to this day have more flexibility in where they work.”

And that bodes well for sea- and tree-change regions with good connectivity to cities or major regional hubs.  

“Regional markets that outperform often do have good connectivity into a capital city or a large regional city,” she said.

“So for example, in New South Wales, there's a lot of regional markets that are quite close to larger cities, not necessarily Sydney but maybe other larger regional markets like Wollongong or Newcastle.

“That’s definitely attractive to buyers, so if they can live somewhere really scenic and beautiful that offers a great lifestyle and has good connectivity into a larger hub where they can access things like good health care, a more diverse offering of retail, jobs, then that's the sweet spot.”

A million dollar ‘discount’

With the prestige property market often acting as a bellwether for broader property prices, Mr Hadfield believes the idyllic South Coast – sitting around two hours south of Sydney – is on the cusp of a major revival as city buyers restart their search for a holiday home in discounted areas.

“Last year was probably the year of the readjustment off the back of Covid highs,” he said.

“People need to feel confident to buy a holiday home because you don't need one, especially one for $2m or $3m or $4m, it's a very much a lifestyle type purchase.

“But when you’ve got the more affluent areas of Sydney going really strong, they're the sort of buyers that buy down this way and buy those sort of homes, so if they feel confident then that confidence comes into our market.”

PropTrack data shows national home prices reached a record high in February, as capital city markets continue to outpace the regions.

This absolute beachfront home at 85 The Marina, Culburra Beach, represents 'unbelievable value', according to Ray White's Craig Hadfield. Picture: realestate.com.au/buy

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Homeowners sitting on additional equity are starting to re-emerge, Mr Hadfield said, with certain regional locations representing 'unbelievable value'.

Beachfront properties that previously sold for $3.5m are now receiving offers around $2.4m, he said.

“That is now representing unbelievable value,” he said. “And that's what is going to drive those more expensive homes back.

“I think that right now that if you're thinking about doing something, there's probably a six-month window in my opinion.

“Because people are hesitant, but the evidence shows a big discount. I'm expecting that we're going to have an uptick as we get into the back end of this year.”

A 'golden triangle' running along the Shoalhaven River to the coast has been earmarked for a turnaround. Picture: realestate.com.au

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But Ms Flaherty said it's not only investors and those seeking a holiday home that will drive ongoing growth in the regions.

"Even though we have seen return-to-office mandates and things like that, we have a more digital economy than we ever have and that's going to continue, so the prevalence of remote jobs is going to continue to rise and that's going to give people more flexibility in where they live.

"The number one barrier to living in a regional area for a lot of people is access to employment, and another consideration is that often jobs in regional areas have lower median salaries.

"So if you can work on a higher salary, and work remotely in a regional area, you have more buying power than someone who lives and works within that area, and that's going to support prices as well."