- 43,000 Australians relocated from capital cities to regional areas during 2020
- A property expert and award-winning buyers agent expects smaller capital cities and regional areas to do well amid a broader property slowdown
- Two regional areas in Queensland are among the top five
While many regional areas across Australia were witnessing an internal migration surge pre-Covid, this surge has been exacerbated during the pandemic, with 43,000 Australians relocating from capital cities to regional areas during 2020 alone – equivalent to the population of Tamworth.
Although the national property market has shown signs of slowing down, with Melbourne and Sydney leading the way, a national property expert and buyer’s agent says he expects demand for regional properties to continue – albeit at a lower rate.
InvestorKit Founder and Head of Research, Arjun Paliwal, explained that smaller capital cities and undersupplied regional cities will continue to record more growth.
“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 – and potentially even longer, with how undersupplied they are.
“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.”
Arjun Paliwal, InvestorKit Founder and Head of Research
Mr Paliwal has listed five regional areas where he expects the boom to continue over the next five years.
Top 5 regional property markets expected to boom
- Tamworth, New South Wales
- Bundaberg, Queensland
- Toowoomba, Queeensland
- Barossa Valley, South Australia
- Albury-Woodonga, Victoria
Mr Paliwal noted that Tamworth has experienced 53% capital growth. This is much lower than Sydney, signifying further opportunities for gains down the tracks.
Sales volumes are 30% higher year-on-year and sales days on market have fallen by 54% compared to the same time last year.
“Its largest positive sign is how heavily undersupplied properties for sale are in comparison to pre-pandemic listing levels,” said Mr Paliwal.
“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 noted that Tamworth is undergoing an infrastructure boom with a range of projects, such as the University of New England campus and renewable energy projects. Unemployment in the area is currently 4.3%.
Mr Paliwal signalled out Bundaberg given its coastal living at affordable prices, with family homes in the vicinity of $580,000 to $750,000.
The coastline region of Bargara in particular has seen property prices rise by 32%.
He noted that Bundaberg has an affordable lifestyle market, low inventory levels and a relatively quiet market.
Rental prices are expected to rise by $50 to $100 over the next one to 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.”
Toowoomba appears on Mr Paliwal’s list given its strong and diverse infrastructure pipeline. These include the major Inland Rail project, Tommowoomba Hospital redevelopment and a cannabis production facility.
“Toowoomba offers its own CBD experience and is within commuting distance to Brisbane, yet offers greater affordability for buyers,” he 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. It is now one of the fastest selling regions in the country.
“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.”
Barossa Valley, South Australia
The only non-eastern-state region centre on the list, Mr Paliwal noted that the Barossa Valley has the upside of commutability of a minor city while offering more living space and affordability. Although Barossa is best known for its world-famous wine region, it has a diverse economy with manufacturing, healthcare, agricultural, retail and education among its top five industries.
“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,” he 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. An affordable lifestyle market with a healthy local economy will be the talk of the decade ahead, in our opinion.”
Lastly, Albury-Woodonga in Victoira is expected to boom. Although the area has grown significantly during the past ten years, the region remains affordable with house prices ranging from $480,000 to $600,000.
The city is experiencing extremely tight rental conditions and has a strong diverse job market.
“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,” he said.
“This will have a favourable impact on local businesses and further help with the movement of their goods across the major cities.”