5 regional markets defying the property market downturn

Despite a declining national property market, led by the activity of Sydney and Melbourne, there remain numerous regional markets where prices are on a slow uptick.

Arjun Paliwal, founder and head of research at InvestorKit, has identified five regional Australian markets set to continue the COVID-pandemic boom and administer strong capital growth moving forward.

“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,” he 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 the interest rate hikes, many of Australia’s regional cities will continue to see strong performance until at least 2023.” 

With 104,100 Australians escaping the capital cities for regional markets in the quarter leading up to March 2021, according to the latest census data, Mr Paliwal is adamant that strong regional growth will continue in spite of declining values in all capital cities.

“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 added.

Mr Paliwal’s five regional areas that will continue to boom are:

Tamworth, NSW:

Strong capital gains of 53 per cent over the last 10 years still place Tamworth below the likes of Sydney, yet Mr Paliwal believes this highlights the potential for future growth in the state’s home of country music. Sales volumes are up 30 per cent year-on-year, and days on market have fallen 54 per cent when compared to last year, which ties into its most positive sign for investors — how heavily undersupplied properties for sale are compared to pre-pandemic levels.

“When you combine low stock, faster selling and more buying, this indicates a rising price trend. Tamworth’s extremely low vacancy rates sitting well below 1 per cent will see rents rise, so we can expect Tamworth property to be on an upward trend,” he said.

Bundaberg, Qld:

An attractive and affordable coastal lifestyle is one of the main attractions of Bundaberg. Family homes average between $580,000 to $750,000, paired with their proximity to the Sunshine Coast, make it a feasible option for many buyers. He particularly highlighted the region of Bargara, where property prices have climbed 32 per cent in the past year, as opposed to the 30 per cent growth in Bundaberg over the past decade, as an area to watch for investors.

He outlined that, for investors worried about rising interest rates, low inventory levels, a near-zero vacancy rate and a market that has lacked recent movement mean that rents could increase by $50 to $100 over the next 24 months.

Toowoomba, Qld:

An infrastructure boom is a major contributing factor behind Toowoomba’s inclusion on the list. Ranging from the major inland rail project and the redevelopment of the Toowoomba Hospital right through to the creation of cannabis-producing facilities and more than $1.8 billion in energy projects, the diverse portfolio of local projects increases the area’s liveability and attraction to investors, according to Mr Paliwal.

“Toowoomba offers its own CBD experience and is within commuting distance to Brisbane, yet offers greater affordability for buyers,” he said. He also outlined how the town is one of the country’s fastest-selling regions, before adding that extremely low vacancy rates could see rents jump by $50 to $100 per week over the next two years.

“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,” he concluded.

Barossa Valley, SA:

The Barossa Valley, located one hour from Adelaide, offers living space and affordability as well as a deeply entrenched food and wine culture, aided by the region’s well-known wineries. 

Mr Paliwal outlined how the “current rental vacancy of Barossa Valley is extremely close to 0 per cent, with agents seeing 10-plus applications for rentals within a short period of being on the market” makes the region incredibly enticing to investors.

Moreover, increasing levels of infrastructure, which includes “the Twin Creek Wind Farm undergoing development stages and a new six-star hotel being approved for development”, will propel the Valley further into Australia’s mind and increase its global appeal.

AlburyWodonga, Vic:

Mr Paliwal advised investors to not be put off by the massive boom that occurred in this border-town over the past decade. He outlined how, with house prices ranging from $480,000 to $600,000, it still offers investors affordable options, and its tight rental conditions, strong job market and predictions of further rent increases make it a favourable investment hub.

“Albury-Wodonga will become a key hub as part of the long-term Inland Rail, a 1700 km freight rail network that will connect Melbourne and Brisbane via regional Victoria, New South Wales and Queensland,” he said.

From his perspective, “this will have a favourable impact on local businesses and further help with the movement of their goods across major cities”.

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