Affordable Regional towns to Invest in
Affordable Regional towns to Invest in
If a sea change or tree change is something you are contemplating, then 2022 could be your year!
In the wake of the pandemic, there has been an increasing trend of people from the cities buying a business and moving to the regions for a myriad of reasons but most significantly for employment and financial security.
The housing market in the regions is rapidly improving, due to the fact that regional median prices are 50 percent or less than those in all major cities and housing affordability is an issue more than ever, particularly for first time buyers and investors looking to find affordable options in the capital cities.
In Sydney and Melbourne, the state average loan accounts for only around half of the median property price, at 53.3 percent and 53.8 percent, respectively. Hobart and Brisbane residents can afford more, with the state average loan accounting for 63.3 percent and 76.9 percent of the median house price in each capital city, respectively. One of the interesting opportunities in regional towns is purchasing a motel for sale.
Throughout 2020, regional locations have become the most appealing alternative, with indications of purchasers taking advantage of reduced median property costs. The report 'PRD Stand Out Regions' identifies affordable regional places in Queensland, Victoria, New South Wales, and Tasmania. These places not only have affordable median prices, but they also offer good indicators for property investment, local job growth, and a long-term economic outlook.
According to the 2021 PRD report, the following ten regional towns and cities were identified as the standout affordable regional areas with solid fundamentals for sustainable future growth:
The Top 10 affordable regional areas in 2021
- Whitsunday | QLD
- Mackay | QLD
- Toowoomba | QLD
- Port Stephens | NSW
- Greater Hume Region | NSW
- Federation | NSW
- Greater Bendigo City | VIC
- Greater Geelong | VIC
- Warrnambool | VIC
- Circular Head | TAS
Throughout the pandemic, with so much economic and employment uncertainty, there has been an increasing trend of people from metropolitan cities moving to regional areas.
“In regards to the housing market, there is definitely a trend of people moving to the regions, especially if there is a job (or increasing amount of infrastructure and commercial development – which create jobs) for them. Affordability is the main reason, not only from a property price perspective but also from a lifestyle perspective. The cost of living in regional areas can be quite different to capital cities.” Dr Diaswati Mardiasmo, the Chief Economist at PRD said.
“For first home buyers looking to enter the market, a move to a regional area, or rent-vesting in a regional area, would be one way to get around the housing affordability issue of a capital city and get a foothold in the market.”
Many of the regional areas in Australia are experiencing a phenomena wherein the median house sale price annual growth, is higher than the median house rental price annual growth which according to Dr Mardiasmo, results in lower rental yields. Purchasing a motel you can have the option of buying freehold or leasehold, giving you options to enter the property market and owning a business at the same time.
“It doesn’t mean it's not a good option for investors, particularly as the rental yields in regional areas are still higher than capital cities (most of the time); which when combined with more affordable prices and lower vacancy rates make them quite attractive. However the figures explain why those wanting to invest in regional areas might see a dip in rental yield.”
There are always exceptions to the rules, areas like Tallebudgera, Tumbarumba, Kyogle and Broome have a higher median house rental price annual growth, on par with towns like Coolangatta and Gundagai, though for the most part Dr Mardiasmo says the trend is suggesting a dip in rental yield.
Though this does not mean that investing in regional areas right now is a bad idea for investors. As the median house rental price annual growth in regional areas is still higher than in the capital cities, with a lower median sale price.
“A good example of this is the median house price for Sydney Outer (10-20kms from CBD) is $1.6M, and the median house rental price annual growth is 15.3%. If you go to, say, Albury, your median house sale price is $500K and the median house rental price annual growth is 14.9%. If you go to Kyogle, the median house sale price is $490K and the median house rental price annual growth is 33%.”
“More affordable entry price but on par/higher return.” Dr Mardiasmo said
PRD are preparing their affordable stand out a legion report for 2022, though Dr Mardiasmo gave Bsale a sneak peak into some of the early insights.
In regional Victoria, the ‘top 20’ is based on: Price growth, higher than Melbourne’s rental yield, lower than Melbourne’s vacancy rates, lower than the average Victorian unemployment rate, and a healthy amount of future development – which will sustain current growth.
Places like Yarra, Wodonga, Warrnambool, Northern Grampians, Geelong, Bendigo, and Ballarat all have $300M and above the estimated value of project development.
The median house price in all of the Top 20 Victorian regionals are below Melbourne’s median house price, which means regardless of your specific local council of choice you are already looking at higher affordability and better bang for buck.
Working and living in the regions is a new lifestyle that many are choosing as work from home, work remotely options have been proven viable with many going through multiple lockdowns over recent years.
Buying an existing business, and home, or home-based business in the regions might just be the new life you didn’t know you are looking for.
Keep an eye out for the 2022 PRD affordable housing report.
About the author
Caitlin has a background in media and communications, studying journalism at University and doing various freelance writing and production work over ...