Regional house price jump on the way

The chief executive of Australia's third largest credit union, People's Choice Credit Union, expects robust house price growth in regional areas close to capital cities as the work-from-home shift triggers permanent lifestyle changes.

Steve Laidlaw said demand for housing in regional centres in various states was rising and home lending activity in July and August was solid, fuelled by extremely low interest rates such as the group's one-year fixed rate offer of 1.99 per cent.

But he is cautious about the overall economy as the JobKeeper program reverts to lower levels of payments at the end of September and the uncertainties around COVID-19 roll on.

People's Choice Credit Union, which increased its home loan book by 4 per cent to $7.4 billion in the 12 months ended June 30, has 36 branches across South Australia, Victoria, the Northern Territory and the ACT.

Total profit before tax was down 5.8 per cent to $31.2 million, with costs increasing by $7.2 million as the group booked an extra $5 million in provisions.

Mr Laidlaw said about 3500 loans across the group's entire book were on deferred payment schedules, which represented about 8 per cent of the home loan book by dollar value.

"We're at the better end of the range,'' he said, referring to industry figures which show most banks are reporting 10 to 11 per cent of customers are on payment deferrals.

Mr Laidlaw said the latest round of three-month ''check-ins'' with those customers revealed about 40 per cent are continuing to make some form of payment.

If the economy worsened and job losses spiked, then a forced sell-up would be pursued but only if all other avenues had been exhausted.

'Absolute last resort'

"That's obviously your absolute last resort,'' he said.

He said regional centres close to Sydney and Melbourne would experience strong house price growth, while towns such as Victor Harbor, about an hour south of Adelaide, had generated a price increase of 12 per cent in the past year.

"I do think we are seeing a change in the social fabric,'' Mr Laidlaw said.

"There will be winners and losers.

"I expect property prices in regional centres to grow, and grow strongly.''

Mr Laidlaw said people were reassessing their work patterns and living arrangements because of the big shift to work-from-home.

"A million bucks doesn't buy you much in Sydney and Melbourne,'' he said. But regional centres with good transport links into those cities were good options and people were now weighing up different paths.

People's Choice Credit Union had reviewed its own situation, and now required most people to be physically in the office for only two days out of every fortnight.

Mr Laidlaw said even in the tough lockdowns in Victoria there was solid activity in home loans, with the group over-represented in growth corridors in outer Melbourne and beyond.

People's Choice Credit Union is chaired by Michael Cameron, who exited the top job at Suncorp in May 2019 after four years at the helm when investors were unconvinced by a ''marketplace strategy'' he had introduced.