The great Australian dream of owning a home is still alive, with a new report identifying the Top 10 affordable regional areas in the eastern states.
The Roaring Regions report from PRD Real Estate named regional cities such as Toowoomba, Wodonga and Wagga among the nation’s most affordable, with opportunities and infrastructure high, but where vacancy rates and unemployment are low.
Other cities to make the list include the Whitsundays and Mackay in Queensland, Griffith and the Upper Hunter region in NSW, Greater Bendigo and Northern Grampians in Victoria and the Central Highlands in Tasmania.
Report author, economist Dr Diaswati Mardiasmo, said the regional areas were “very attractive” for first home buyers as they all recorded a median house price under $550,000.
“Housing affordability is a pressing issue, especially within metro capital cities,” he said.
“Regional areas became the most attractive option in 2021, with buyers capitalising on lower median property prices and utilising flexible remote working conditions introduced amidst COVID-19. “
Dr Mardiasmo said in 2021 the rate of wage increases did not keep pace with property price growth.
“Over the past 12 months, to the December quarter 2021, the weighted average Australian median house price increased 25 per cent to $1,021,710,” he said.
“In the same period, median family weekly income also grew 5.3 per cent. But this is nowhere near median house price growth.
“Thus, the proportion of family income needed to meet loan repayments increased to 37 per cent and the home loan affordability index decreased 10.6 per cent.”
But Dr Mardiasmo urged buyers not to despair completely, as regional areas were still offering good value.
To come up with their list of the 10 most affordable regional areas, PRD analysed affordability, property trends, investment opportunities, the unemployment rate and project development in the regions.
“The Australian dream of property ownership still exists, with regional areas leading the way in affordability and livability,” Dr Mardiasmo said.
The Whitsundays in tropical north QLD has a median house price of $400,000 and recorded an annual increase in prices of 4.1 per cent in 2021, most likely due to lower supply and increased demand on the back of rising travel post-Covid.
“Median price growth in the Whitsunday LGA over the past 10 years has been significant for land, showing a growth of 22.1 per cent,” Dr Mardiasmo said.
“In the same timeframe, median house prices grew by six per cent and median unit prices grew 1.9 per cent.
“Queensland’s COVID-19 conditions resulted in higher confidence from interstate buyers and Queenslanders residing outside of Whitsunday LGA, driving up demand in the second half of 2021. Now is an ideal time to transact, advantageous for both sellers and buyers.”
As of the end of 2021 the Whitsundays had an unemployment rate of 4.1 per cent, a vacancy rate of 0.8 per cent and an estimated $2.4 billion worth of project development due to start in 2022.
Over the past decade, Toowoomba recorded positive price growth for all residential property types, including 36.9 per cent increase for houses, 32.3 per cent for land and 19.2 per cent for units.
Toowoomba has a median house price of $430,000 and $310,000 for units.
“In December 2021, investors in Toowoomba LGA benefited from 4.8 per cent average rental yields for houses, which sits well above Brisbane Metro (3.4 per cent),” Dr Mardiasmo said.
“Units saw an average rental yield of 5.8 per cent in the same period.
“The Toowoomba LGA recorded a significantly low vacancy rate of 0.5 per cent in December 2021, well below Brisbane Metro (1.3 per cent); and have remained within the 1 per cent mark in the past 18 months.”
About $1.4 billion worth of development is due to start in Toowoomba in 2022.
Mackay has a median house price of $412,000 and a median unit price of $309,000, with investors benefitting from a house rental yield of 5.9 per cent and a unit rental yield of 6.4 per cent.
Dr Mardiasmo said almost $950 million worth of infrastructure and commercial projects were planned in 2022 and with COVID-19 triggering lifestyle changes, population growth was “imminent”.
“In the September quarter of 2021, Mackay LGA recorded an unemployment rate of 3.5 per cent, sitting well below QLD’s 4.3 per cent,” he said.
“This is great news for the area as it signals local job growth and a healthy economy, particularly post COVID-19 recovery.”
Upper Hunter, NSW
The Upper Hunter has a median house price of $373,000 and a median unit price of $231,00, with rental yields of 6.1 per cent (houses) and 6.4 per cent (units).
“Upper Hunter LGA’s rural location has become more popular in 2020 and 2021, with a 36.7 per cent annual and 62.8 per cent 10-year growth in house sales,” Dr Mardiasmo said.
“Increasing prices in capital city and metro areas, and work from home capabilities during COVID-19 and beyond will ensure positive price growth into the future.”
A total of $211.7 million in developments are due to start in 2022, including a limited $1.25 million on residential projects.
“An absence in residential development will result in continued upward pressure on property prices, thus buyers must act quickly to secure their property at current levels of affordability,” Dr Mardiasmo said.
“Now is the time for the local government and developers to formulate a plan for new ready-to-sell stock.”
Known as the “Garden City” for its beautiful parks, Wagga has recorded significant median price growth over the past decade, including 45.4 per cent for houses, 23.8 per cent for units and 55.1 per cent for vacant land.
In the past 12 months alone the median house price climbed 14.8 per cent to $436,250. Wagga’s median unit price sits at $259,950.
“From an investment perspective, investors within Wagga LGA have benefitted from average rental returns of 4 per cent for houses and 3.9 per cent for units as of December 2021,” Dr Mardiasmo said.
“These returns are well above those achieved in Sydney Metro, at 2.2 per cent and 3.5 per cent for houses and units respectively.
“Further, Wagga LGA recorded a very low vacancy rate of just 0.7 per cent in December, with a declining trend in the past three years and being within the 1 per cent mark for the past 12 months.”
Wagga’s unemployment rate is 2.5 per cent, which is well below NSW’s 3.9 per cent average for the year to December 2021.
Median property price growth in the Griffith City LGA over the past 10 years has been exceptional, with growth of 77.5 per cent for houses, 70.7 per cent for units and 91.9 per cent for land.
“In addition, Griffith City LGA recorded 380 house sales in 2021, representing a 52 per cent increase in the past 10 years and 4.9 per cent increase in the past 12 months,” Dr Mardiasmo said.
“The market is expected to grow due to increased demand in the area.”
Griffith’s median house price is $464,250, while the median unit price is $350,000.
This year development worth $375.8 million is due to commence.
“A total of 33 lots, 28 units, 57 dwellings, and 25 townhouses will be added to the Griffith City LGA market in 2022,” Dr Mardiasmo said.
“This will answer current high demand for property and assist in managing increasing population in the area.”
Northern Grampians, VIC
House prices in the Northern Grampians region have risen 74.2 per cent over the past decade to sit at a median of $287,500, with units at $285,750.
“Strong median price growth was recorded in the vacant land market over the last year (2020-2021), increasing 83.5 per cent,” Dr Mardiasmo said.
“Last year (2021) was also the strongest year for vacant land sales in the past decade, with 89 sales occurring.
“House sales grew 30.5 per cent in the past decade and unit sales grew 37.5 per cent.
“Real returns in capital growth are evident in the area, as median price growth is alongside increased sales. Now is the time to transact.”
Over the past decade house prices in Wodonga have grown 73.1 per cent to a median of $450,000, while units have increased 52.3 per cent to a median of $288,250.
The cost of a median block of land is now $172,000, which is 56.7 per cent higher than in 2012.
“From an investment perspective, investors within the Wodonga City LGA have yielded average rental returns of 4.7 per cent for houses and 5.1 per cent for units as of December 2021,” Dr Mardiasmo said.
“These averages are well above those achieved in Melbourne Metro (2.6 per cent and 3.9 per cent for houses and units respectively). A very low vacancy rate of just 0.3 per cent in December 2021, and always within the 0.5 per cent mark in the past 18 months, ensures rental properties are occupied relatively quickly.”
Greater Bendigo has the highest median house price of the top 10, sitting at $510,000, following strong 10-year price growth of 76.9 per cent.
The median unit price has increased 67.1 per cent in the same timeframe to sit at $368,000, while vacant land has risen 73 per cent, to a median of $199,000.
“In December 2021, investors in Greater Bendigo LGA benefited from average house rental yields of 3.9 per cent, which sits well above Melbourne Metro at 2.6 per cent,” Dr Mardiasmo said.
“Greater Bendigo LGA’s vacancy rates were recorded at a low 1.6 per cent in December 2021, below Melbourne Metro (3.2 per cent) for the same period.
“Vacancy rates in Greater Bendigo LGA have trended below the 2 per cent mark in the past 18 months, thus further minimising vacancy risks.”
Central Highlands, TAS
Between 2012 and 2021 the Central Highlands LGA recorded significant median house price growth of 85.2 per cent to sit at $250,000.
The median unit price is $180,000, while the median land price is $66,775.
As of December 2021, the Central Highlands LGA had a vacancy rate of just 0.3 per cent, which is on par with Hobart.
“Further, vacancy rates in Central Highlands LGA has trended below Hobart Metro’s in the past three years,” Dr Mardiasmo said.
“With a much lower median price level compared to Hobart Metro, solid rental returns and low vacancy rates, Central Highlands is attractive for first time investors.”