Are regional properties the way to go?

Written by realestateview.com.au in Buying

Are regional properties the way to go?

Regional properties in Australia continue to show promise for a range of demographics, including first home buyers and investors. In the last quarter, combined capital city dwelling values fell for the first time since April 2016, decreasing -0.5 per cent. This figure hides the fact that the only falls were located in Darwin (-2.9 per cent) and Sydney (-2.1 per cent down, despite being 3.1 per cent higher over the past year), while the majority of other cities saw very modest increases. Melbourne saw an increase of 0.9 per cent, Perth 0.1 per cent, Adelaide 0.3 per cent, and Brisbane 0.3 per cent. Hobart continued its growth trend to see a 3.1 per cent increase in dwelling values, propping up the rest of the country’s capital cities.

“Growing interest in Australia’s regional property markets cannot be attributed to one sole cause,” says CEO of view.com.au, Enzo Raimondo. “ Whilst Affordability remains a major appeal for those looking to buy in regional areas, other factors such economic conditions, rental vacancy rates and intra state migration all play a part.

“Lifestyle aspirations are pushing younger buyers, especially families, to seek a more balanced lifestyle and the sorts of homes with backyards and close communities that their parents enjoyed before them. Add low wage growth to this, as well as an increase in the proportion of part time jobs within the economy and it’s not surprising that regional towns and cities continue to attract buyers and renters from the capital cities.”

Combined regional markets in Australia saw a 0.5 per cent increase in dwelling values last quarter, indicating that 2018 will likely see regional markets prove themselves as sustainable investment options and possible areas for real growth, while the major markets (Melbourne and Sydney) may have the brakes applied to the significant rise in dwelling values that has been the general trend for this decade.

Good news for investors in regional areas comes in the form of an increase in rental growth (3.0 per cent) over the past year, compared to combined capital cities (2.6 per cent). Famous for high yields and low vacancy rates, Hobart continued to prop the capital cities up in this regard, with a 9.4 per cent increase in rental growth over 2017, followed by Canberra with a 4.9 per cent increase.

According to View.com.au’s most recent data, where are the best regional properties in which to invest?

VIC

Geelong: Victoria’s second largest city saw a 21.2 per cent increase in the median sale price of houses in the past year and a 47.6 per cent increase over three years to reach a median of $755,000. Surrounding suburbs also performed well, with East Geelong houses seeing a 15.1 per cent rise in 2017, West Geelong seeing a 18.3 per cent rise and South Geelong seeing a 21.6 per cent rise over the same period.

Ballarat: while Central Ballarat has seen a -10.3 per cent decrease in the median sale price of houses over the past year, Ballarat North has seen a 6 per cent rise over the past year and a 12 per cent rise over three years to reach a median of $353,500. Houses in Ballarat East have seen a 6.2 per cent rise over the past year and a 14 per cent rise over three years to reach a median of $300,000. This indicates that these outer areas of Ballarat continue to show modest growth, without falling victim to surging real estate prices that have defined the larger markets.

Castlemaine: despite a relatively small population (2016 ABS figures show a population of 9,933), Castlemaine continues to show considerable opportunities for investment. The median sale price of houses increased 15.2 per cent this past year and 23 per cent in the past three years to reach a median of $455,000, showing that the bulk of this growth occurred in the last 12 months.

Wodonga: on the banks of the Murray, Wodonga has shown strong growth over three years, with a 14.7 per cent increase in the median sale price of houses (2017 saw 9.8 per cent growth) to reach a median of $335,000. The median sale price of units in Wodonga also increased 8.3 per cent in 2017 and 24.8 per cent over three years to reach a median of $215,000.

NSW

Newcastle: NSW’s second largest city saw a 32.9 per cent rise in the median sale price of units in 2017 to reach a median of $652,500, while houses in Newcastle East saw a median sale price value surge 31.3 per cent in 2017 and 78.8 per cent over three years to reach $1,300,000.

Wollongong: this regional city’s coastal location, close to Sydney, continues to fuel growth in property prices. In 2017 the median sale price of houses increased 12.7 per cent and 41.6 per cent over three years to reach a median of $885,000. The largest increase was in North Wollongong, where house prices increased 33.9 per cent in 2017 to reach a median of $1,450,000.

Wagga Wagga: 2017 showed strong growth in the median sale price of houses in suburbs around Wagga Wagga, often fuelled by a drop in some suburbs’ sales volumes. Median sales volumes for houses in Central Wagga decreased from 119 in 2014 to 96 in 2017.

Bourkelands saw median sale prices for houses grow by $37,750 over three years, while Tatton median sale prices rose from $460,000 in 2014 to $545,000 in 2017.

Boorooma experience a decline in the sales volume of houses from 2016, from 21 to 15, while seeing a median sale price increase of $36,500.

Albury-Wodonga: one of the most exciting areas for investment continues to be Albury-Wodonga, with median sale prices for houses in Albury increasing 29 per cent to $550,000 in 2017 and 10.2 per cent (reaching $420,000) in East Albury.

Wodonga houses saw a median sale price increase of 9.8 per cent over 2017, reaching $335,000 compared to $292,000 three years ago.  

QLD

Toowoomba: East Toowoomba steals the show for this heart of the Darling Downs region, with a median sale price increase of 15.2 per cent in 2017 for houses in the area, reaching a median of $515,000 (up 20.5 per cent since this time three years ago).

Gympie: 160 km north of Brisbane, the town of Gympie has a population of roughly 21,000 and has seen modest but steady growth in its property prices. In 2017 the median sale price of houses spiked in the area, increasing by 7.5 per cent to reach a median of $258,000 (up a total of 9.8 per cent over three years). Units fared well in the area as well, with the median sale price increasing 10.5 per cent in 2017 to reach $243,000.

Bundaberg: North Bundaberg carried this town in 2017, with a median sale price for houses increasing 12.4 per cent to reach $235,000.

TAS

Launceston: there is little surprise that some of the considerable interest in Hobart properties has rubbed off on other areas in Tasmania. Houses in Launceston saw a median sale price growth of 16.9 per cent in 2017, reaching $450,000.

Devonport: the third largest city in Tasmania saw a modest increase in the median sale price of houses in 2017 (4.4 per cent) to reach $238,000.

SA

Mount Gambier: the second largest city in South Australia saw a modest increase in the median sale price of houses in 2017 (3.5 per cent) to reach a median of $254,500, which is up 10.7 per cent from three years ago.