Bundaberg is one of 5 areas where the regional boom is set to continue over the next few years.
Arjun Paliwal, founder and Head of Research of data-driven buyer’s agency InvestorKit, reveals 5 areas where the regional boom is set to continue over the next few years.
Most regional areas across Australia were already seeing an internal migration surge pre-pandemic; however, we saw a second surge over the past two years, along with rising property prices and capital growth rates far exceeding many capital cities. In 2020 alone, 43,000 Australians relocated from capital cities to regional areas.
Despite the national property market showing signs of slowing, led by Sydney and Melbourne declines, and many speculating the regional movement trend is over, an award-winning property expert and buyer’s agent says it will continue and strengthen – albeit at a slower rate.
Arjun Paliwal is the founder and Head of Research of data-driven buyer’s agency InvestorKit. He says the regional areas set to grow even further are the smaller capitals and undersupplied regional cities. He shares five markets across the country where the regional boom is set to continue and will see stronger capital growth in the coming years.
Arjun says: “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. 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 reveals 5 areas where the regional boom is set to continue over the next few years:
Tamworth, NSW
Over the last 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. Sales volumes are 30 per cent higher year-on-year and sales days on market have fallen 54 per cent when compared with the same time last year. Its largest positive sign is how heavily undersupplied properties for sale are in comparison to pre-pandemic listing levels. Arjun says: “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.”
Arjun says Tamworth is also undergoing an infrastructure boom consisting of various-sized projects including the University of New England campus and renewable energy projects for solar and wind farms along with the Narrabri Gas Project. Paired with the extremely low unemployment levels at 4.3 per cent, it indicates highly positive growth prospects for the local economy and job market.
Bundaberg, Queensland
Bundaberg offers an attractive lifestyle of coastal living at affordable prices, with family homes averaging between $580,000-750,000. It is also commutable to the Sunshine Coast, which enhances the appeal for buyers. In particular, Arjun says the coastline region of Bargara is particularly popular and has outperformed most surrounding areas. Over the past 12 months, Bargara property prices have risen a whopping 32-plus per cent. This compares with a 30 per cent increase in Bundaberg over the past 10 years.
Arjun says the main factor driving up Bundaberg's property prices is a combination of an affordable lifestyle market, low inventory levels, a market that hasn’t seen a lot of movement for a while, and the near-zero vacancy rates giving renters a reason to shift to the buying side. This will result in rental price increases of $50-100 over the next 12-24 months. “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, Queensland
Toowoomba has great potential for investors due to its strong and diverse infrastructure pipeline, ranging from the major Inland Rail project and Toowoomba Hospital redevelopment to the cannabis producing facilities and more than $1.8 billion in various energy projects across gas, solar and wind. Arjun says its earmarked projects strengthen the area’s liveability, combined with its bonus of commutability to a fundamentally strong Brisbane market, too.
Arjun says: “Toowoomba offers its own CBD experience and is within commuting distance to Brisbane, yet offers greater affordability for buyers. 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
Situated within one hour’s commute to Adelaide, Barossa Valley has the upside of commutability to a major city but with more living space and affordability than any other capital city could provide for the same distance. In addition to its well-known wineries and emerging foodie culture, the Barossa Valley is extremely diverse, with manufacturing, healthcare, agricultural, retail, and education among its top five industries.
Arjun says: “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. 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.”
Albury-Wodonga, Victoria
While Albury-Wodonga has boomed massively over the past 10 years, which can make some investors weary, the region still remains affordable with house prices still ranging from $480,000 to $600,000 on the higher end, despite doubling over the past decade. Albury-Wodonga is also seeing extremely tight rental conditions, a vibrant city with a strong and diverse job market and a market that is expecting further rises in rents, which is favourable for investors.
Arjun says the strong infrastructure pipeline in the region also makes it a standout investment. “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. This will have a favourable impact on local businesses and further help with the movement of their goods across the major cities.”