The current market slowdown that was initially felt in some major cities are now manifesting in regional areas, but some markets are expected to defy this slowdown and continue to boom over the next few years.
InvestorKit founder Arjun Paliwal said most regional areas were already seeing an internal migration surge pre-pandemic that continued over the past two years, resulting in these areas outperforming capital cities in terms of price growth.
“While our capital cities like Sydney and Melbourne will continue to decline due to being more sensitive to finance and monetary changes such as the interest rate hikes, many of Australia’s regional cities will continue to see strong performance until at least 2023 – and potentially even longer, with how undersupplied they are,” he said.
“There are still plenty of regional areas with strong growth potential, due to common factors, including an undersupply in both properties for sale and rent, booming local job markets, a strong outlook of infrastructure development in the pipeline, accessible lifestyle, and affordability.”
CoreLogic’s June Home Value Index showed that every broad rest of state region is already past their peak rate of growth, with price gains easing across these markets.
However, here are five regional markets that are set to extend their boom times over the next few years.
Tamworth, New South Wales
Tamworth experienced a 53% capital growth over the last decade — while this growth is lower than the major cities, it suggests further opportunities for gains.
In fact, this region is already shaping up, as sales volumes rise by 30% year-on-year while days-on-market fall by 54%.
Mr Paliwal said Tamworth is heavily undersupplied compared to its position pre-pandemic.
“When you combine low stock, faster selling and more buying, this indicates a rising price trend. Tamworth’s extremely low vacancy rate sitting well below one per cent will see rents rise, so we can expect Tamworth property to be on an upward trend,” he said.
Another upside for Tamworth is the undergoing infrastructure boom, with projects ranging from the University of New England campus to the renewable energy development for solar and wind farms along with the Narrabri Gas Project.
Its local market is also thriving, with unemployment levels at 4.3%.
Boasting its affordability despite the appeal for attractive lifestyle and coastal living, Bundaberg offers family homes with values ranging from $580,000 to $750,000.
Bundaberg is also within commuting distance to the Sunshine Coast.
Over the past year, property prices in this market have risen by 32%, on top of the 30% increase over the past 10 years.
The market remains undersupplied, even the rental market that would likely see rental prices increase by $50 to $100 over the next two years.
“While many are concerned about rising interest rates, the good news for investors is the increased rent prices will balance out the rising cash rate,” Mr Paliwal said.
Investors who are looking for solid growth fundamentals should consider Toowoomba, which is supported by its diverse infrastructure pipeline. These projects include the major Inland Rail project, Toowoomba Hospital redevelopment, the cannabis producing facilities, and more than $1.8bn in various energy projects across gas, solar and wind.
Despite being within commuting distance to Brisbane, Toowoomba offers greater affordability for buyers.
A testament to its popularity is its brief sale days-on-market, with properties selling 51% faster than the same time last year. This makes it one of the fastest selling regions in the country.
Meanwhile, the vacancy rates in Toowoomba are extremely low, with data suggesting it will see $50-100 rental increases over the 12 months ahead.
“So, when you combine affordability, a diverse and strong infrastructure pipeline, rising rents to combat interest rates and also a strength in the local job market, it provides a very positive outlook for investors,” Mr Paliwal said.
Barossa Valley, South Australia
Buyers who prefer more living space at an affordable price without being too far from the state capital should put the Barossa Valley on their list.
Mr Paliwal said aside from its well-known wineries and emerging foodie culture, the Barossa Valley is now becoming known for five industries: manufacturing, healthcare, agricultural, retail, and education.
“Like many of the other regions, Barossa Valley has an extremely healthy property market as it underperformed over its 10-year averages, but is now catching up,” he said.
“Further, there are increasing levels of infrastructure, with the Twin Creek Wind Farm undergoing development stages and a new six-star hotel being approved for development — this will put Barossa Valley on the map for Australia and add to its global landscape.”
Albury-Wodonga has boomed considerably over the past 10 years, but it remains one of the affordable markets with house prices ranging from $480,000 to $600,000.
Investors can also find comfort in the market’s tight rental conditions, which would certainly drive rent rises.
“Albury-Wodonga will become a key hub as part of the long-term Inland Rail, a 1700km freight rail network that will connect Melbourne and Brisbane via regional Victoria, New South Wales and Queensland,” Mr Paliwal said.
“This will have a favourable impact on local businesses and further help with the movement of their goods across the major cities.”
Article source: www.yourinvestmentpropertymag.com.au