It’s hard to ignore all the negative media about property prices in Australia, especially if you live in a pricey capital city. Throw in all the uncertainty surrounding the impending election, and it’s tempting to just sit on your hands and wait for a “better time” to buy.
However, the reality is that NOW is a great time to buy, while the fence sitters are doing nothing.
Savvy buyers priced out of capital city areas are turning their attention to the rich pickings that exist in nearby regional areas – especially once they realise many of these offer comparable infrastructure and lifestyle benefits, but at a much more affordable price point.
A recent report, National Top 10 Regional Hot Spots: February to June 2019, by Terry Ryder’s Hotspotting, emphasises just how many regional areas are booming right now.
“While mainstream media obsesses over the decline in prices in Sydney and some parts of Melbourne, the untold story is the high number of thriving property markets in the nation’s regional areas,” says the Introduction. In fact, “…all of the significant growth markets in Australia are in regional areas”.
The markets in both regional Victoria and regional Tasmania are “going ballistic. Sales activity has risen sharply and annual price growth above 10% is common. Many locations have recorded median price growth above 20% in the past year.”
For example, the report identifies regional Victoria as the strongest performing market in Australian real estate for the year, with Bendigo claiming number one spot, and Ballarat number three. “Geelong has been the strongest market anywhere in Victoria, including Melbourne, over the past two years and now regional cities like Ballarat and Bendigo are rising.”
Affordability seems to be the number one driver, along with solid rental yields and steady capital growth, providing strong incentives for investors to buy in regional Australia.
Regional Victoria is the strongest performing market in Australian real estate…
Bendigo (130km north-west of Melbourne)
For example, the report notes that Bendigo has long been one of Victoria’s key regional centres, boasting a steady local economy, proximity to Melbourne and good transport links to the capital – especially with the completion of the $5 billion Regional Rail Link.
A lot of major infrastructure projects have been completed, such as the $630m redevelopment of Bendigo hospital.
“It has had steady long-term price growth (averaging around 5-6% per year) in its housing market but remains affordable, with solid rental yields available for investors. Market activity picked up markedly in 2018 and prices are now rising,” says the report.
Most suburbs have median house prices under $370,000 while investors can expect yields in the 4.5–5.5% range.
Ballarat (110km north-west of Melbourne)
Ballarat’s “affordable, character homes with good yields” have proved an irresistible lure for investors. Its proximity to Melbourne makes it a popular commuter city, with billions of dollars in spending earmarked by State and federal governments for improved rail and road links.
Median house prices in Ballarat range from $280,000 to $495,000, so it’s a very affordable entry price point.
While Townsville came in at number two in the report, this was obviously before the devastating floods, which will undoubtedly impact the city’s property landscape.
Queanbeyan (16km south-east of Canberra’s CBD)
Number four on the list is Queanbeyan, technically in NSW, but more a satellite suburb of Canberra.
“Queanbeyan continues to stand out as an affordable growth alternative to Canberra, a situation that has been amplified since the NSW Government introduced concessions on stamp duty in 2017.”
But the most appealing aspect of Queanbeyan is its affordability relative to Canberra, with median prices for both houses and units below those in the national capital.
Good rental yields are another attraction, with several suburbs having median yields around 4–5% for houses and 5–6% for units.
Queanbeyan continues to stand out as an affordable growth alternative to Canberra.
Sunshine Coast (100km north of Brisbane)
Rounding out the top five is the Sunshine Coast, Queensland’s strongest real estate market, with “more suburbs with rising demand than any other location in the state, outperforming Brisbane and the Gold Coast on price growth.”
While tourism used to be the mainstay of the economy, making consistent growth difficult, times are changing.
“Nothing supports property price growth like major new infrastructure spending, which generates jobs, economic activity and improved amenity for residents,“ says the report, noting that over $20 billion in major infrastructure projects and private investment is recently completed, under construction or in the planning pipeline for the Sunshine Coast.
In terms of performers, houses have fared better than units, which have had little growth in median prices in the last 10 years “although this is improving”.
Rounding out the top five is the Sunshine Coast.
For houses, suburbs at the southern end of the coast recording strong growth include Maroochydore (up 11%); Mooloolaba (up 10%); Pelican Waters (up 15%); Twin Waters (up 24%) and Wurtulla (up 13%). The better returns are to be found in the southern end with yields of 5.0–5.2% recorded at Kawana, Nambour and Sippy Downs.
The neighbouring Noosa market has returned to growth after a lengthy downturn, with median prices up 13% for houses and 19% for apartments.
This report confirms a trend we’ve been seeing for a while. In the past year, I’ve written about three of my students who have opted for regional real estate over their capital cities. One of my Melbourne students bought in Geelong and I have Sydney students who bought in Wollongong and the Central Coast.
My recent blog on the inevitable property cycle every area goes through underlines the challenges of trying to time the market. The smarter strategy is to step up your due diligence and find affordable areas that still offer good prospects for long-term capital growth and solid rental returns.
To purchase the Top 10 Regional Hot Spots 2019 report, click here.
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