- Next year is predicted to become a seller's market.
- Regional areas can provide lifestyle benefits away from the hustle and bustle.
Soaring Australian house prices and a cost of living crisis are leaving many to wonder whether they will ever own a home in the capital cities.
The median Sydney house price is now a leap over the million-dollar mark, at an astonishing $1,110,660, and Melbourne and Brisbane median prices are $776,716 and $761,739 respectively.
Homeownership is starting to really feel impossible for many buyers, even after they’ve asked for help from the bank of ‘mum and dad’. It seems that first home buyers are struggling more than ever to get a foothold on the property ladder, with homeownership quickly becoming further and further out of reach.
Another kick in the guts for home buyers is that property experts are predicting house prices to rise further in 2024 when the property markets flip from the current buyer’s market (where buyers have the upper hand in negotiating a better price) to a seller’s market (where sellers have the upper hand in negotiating a higher price) due to the predictions of inflation stabilising and more certainty around interest rates.
Experts are expecting we have hit the peak of interest rates and 2024 will either see interest rates kept on hold or potentially start to decrease in the second half of 2024.
With these dire predictions for home seekers, it will certainly seem to be too late for some buyers to enter into a capital city property market.
But, it is not a dead end for property buyers.
Looking regional for a home
When you look to purchase a property regionally, the options are plentiful for most budgets and the opportunities created from buying a property regionally can really set you up for the long term, whether your long-term goal is for home ownership or to build an investment portfolio.
It does not matter if your preference is the coast or the countryside, there is so much to gain from buying regionally. Looking regionally can provide options for a larger house, larger lot size, scenic views, and an enviable lifestyle – and all this for a lower mortgage.
If you are looking for a home, the New South Wales (NSW) town of Port Macquarie (population 45,000) is a 4.5 hour drive from Sydney and offers a coastal lifestyle with picturesque beaches as well as all the lifestyle conveniences you would expect in Sydney, without the hustle and bustle.
Port Macquarie offers nice cafés, boutique shopping, and award-winning restaurants. Median house prices are now at $845,000 with prices pretty stable, showing a slight 1% decline over the last 12-month period and an average annual growth rate of 8% (based on 10 year growth rates).
Weekly asking property prices for 2444, including Port Macquarie
This is just one opportunity for home buyers who may be priced out of the Sydney market, but there are some beautiful coastal towns with all the conveniences on offer scattered all over the NSW coastline.
If country life is more your thing, then you can look towards Cessnock, NSW (population 15,000) which is a 2.5-hour drive from Sydney and is quickly growing in popularity due to the gentrification of the town centre offering cafés, restaurants, fashion, and specialty grocers.
It also provides great accessibility to the Hunter Valley vineyards, where you will find small boutique vineyards with cellar doors. The median price in Cessnock for a house is $573,000 and has an annual average growth rate of 9.6%, the average rental yield is 4.73% making this location also popular for investors.
Weekly asking property prices for 2325, including Cessnock
Buying an investment property
If an investment property is what you are after, you can get into a regional market with great future growth prospects for under $600,000, depending on location.
When looking to buy an investment property, there are a few important considerations before you jump into any region market:
Strategy
The purchase strategy when buying a property is paramount for an investor. A purchase strategy will outline the reason why you are buying a property, and what you are aiming to achieve with the property purchase.
Without a purchase strategy, you will be flying blind into the investment markets and a lack of strategy is the reason why most property investors do not make it past that first investment property.
An investment property is also able to set you up to help achieve that dream of homeownership, especially if you want to buy a home in Sydney.
Market
It is important that you look at the growth factors of the regional market and ensure you are looking only at the markets that have multiple growth drivers.
Any market that has only one growth driver (for example, mining) poses a great risk because if that one market goes down it is difficult to recover.
Look to invest in markets that have a great education system set up with multiple public and private schools, TAFE and/or University as well as other drivers such as retail, manufacturing, and healthcare. This will ensure that residents of the town won’t be quickly influenced to leave.
Also look for markets that have good transport networks.
Demographics
When buying regionally, it is not all about “getting the most bang for your buck”. It is important that you look at the demographics of the town and ensure you are buying an appropriate property that suits the demographics.
For example, you may be able to afford to buy a very large 5-bedroom house on 2,000 sqm, however, if the residents in the area favour 3-bedroom houses that are low maintenance then you will not receive the growth you want on the 5-bedroom house due to the low demand for this type of property.
Stick to buying properties that suit the demographics of the area in order to future-proof your investment.
Property Cycle
Not all markets move in the same property cycles. When Sydney is on the decline, this does not mean that all markets in the country are on the same trajectory.
It is important to research the location well and understand at what stage of the property cycle the location is currently at, so you understand when is a good time to buy.
Growth prospects
Completing thorough research and due diligence will really uncover the growth prospects of a location. If there are Government projects underway or Government spending in the pipeline this would be a great signal for the future growth prospects of the town.
It is also important to understand whether there is a new airport, bridge, or freeway going through town and what locations it will be impacting. If you don’t complete this thorough research, then you will run the risk of buying next to a proposed freeway and your investment being devalued significantly.
Where to look for more information
If you are keen to put your money regionally, there are a multitude of resources available at your fingertips.
Once you have found your favoured location you can find a lot of information on the local council website and Government websites regarding major projects in the area.
If this all seems too much for you to take in, then employing the expertise of a Buyer’s Agent can really put you a step ahead and get you on the right track to buying your property.
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