Regional cities like Albury-Wodonga, Tamworth and Bundaberg could continue to experience price growth despite the national property downturn.
Founder and Head of Research at buyer’s agency InvestorKit, Arjun Paliwal said Australia was a vast country and just because prices in major capital cities, such as Sydney and Melbourne, were faltering didn’t mean the same was happening everywhere.
He said in 2020 alone, 43,000 Australians relocated from capital cities to regional areas fuelling significant price rises.
This is expected to continue, albeit at a slower rate.
“Many suggest a national property downturn is looming across the country, but it’s important to remember that Australia is a market of many local markets,” Mr Paliwal said.
“While our capital cities like Sydney and Melbourne will continue to decline due to being more sensitive to finance and monetary changes, such as 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.”
Mr Paliwal tipped five regional areas where the boom would continue, including Tamworth, Bundaberg, Toowoomba, the Barossa Valley, and Albury-Wodonga.
“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,” he said.
Positioned on the border of Victoria and NSW, property prices have risen significantly over the past decade.
Despite this, Mr Paliwal said the region remained relatively affordable with house prices ranging from $480,000 to $600,000 on the higher end.
Albury-Wodonga also has an extremely tight rental market, a vibrant city and diverse job market, all of which bode well for further rent rises and investor interest.
Mr Paliwal said there was a strong infrastructure pipeline for the twin cities as well.
“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, NSW and Queensland,” he said.
“This will have a favourable impact on local businesses and further help with the movement of goods across the major cities.”
Barossa Valley, South Australia
Well known for its wineries and foodie culture, the Barossa Valley also has manufacturing, healthcare, agriculture, retail and education among its top industries.
It’s also just an hour’s commute to Adelaide, making it an affordable option.
“The current rental vacancy of Barossa Valley is extremely close to zero per cent, with agents seeing 10-plus applications for rentals within a short period of being on the market,” Mr Paliwal said.
“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.
“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.”
Affordable family homes in the Bundaberg region average between $580,000 and $750,000, Mr Paliwal said.
It’s also a commutable distance from the Sunshine Coast, with the region of Bargara a particularly popular spot.
“Over the past 12 months, Bargara property prices have risen a whopping 32-plus per cent,” he said.
“This compares with a 30 per cent increase in Bundaberg over the past 10 years.”
Mr Paliwal said an affordable lifestyle market, low stock levels and near zero vacancy rates were driving property prices,
He said renters would shift to the buying side, which would result in rent increases of $50 to $100 per week over the next 12 to 24 months.
Over the past decade, Tamworth has experienced 53 per cent capital growth, much lower than major cities like Sydney, which indicates further opportunities for gains down the track.
Mr Paliwal said sales volumes were 30 per cent higher year-on-year and days on market had dropped 54 per cent when compared with the same time last year.
“When you combine low stock, faster selling and more buying, this indicates a rising price trend,” he said.
“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.”
Toowoomba has been earmarked as having solid investment potential due to its diverse infrastructure pipeline, which also includes the Inland Rail project and hospital redevelopment.
“Toowoomba offers its own CBD experience and is within commuting distance to Brisbane, yet offers greater affordability for buyers,” Mr Paliwal said.
“Its brief sale days on market has been a big success story with properties selling 51 per cent faster than the same time last year.
“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.”