Over the last three years, thousands of aspiring Aussie investors have “sat frustrated on the sidelines" because of skyrocketing house prices in Sydney and Melbourne. At the same time, dozens of other locations throughout Australia were producing strong price growth and were significantly more affordable, according to Simon Pressley, head of property market research at Propertyology.
“One of the biggest myths in real estate is that capital cities are the best investments,” Pressley said. “It always fascinates me how so many investors are oblivious to the opportunities throughout regional Australia where, generally speaking, it costs much less to enter the market, annual holding costs are lower, and potential for price growth can be superior to many high-profile cities.”
Had these aspiring property investors expanded their search beyond the capital cities and high-profile council areas, they may very well have been able to enter the market sooner and built up sizeable nest eggs.
Regional New South Wales
“Throughout parts of NSW, investors will find proof that well-chosen regional locations do produce that sought-after mix of affordable investment properties with high price growth and a better annual cash flow,” Pressley said.
Locations that have produced compound price growth of 15% or more over the last three years, and have a current median house price of about $400,000 or less, include Coolamon (25.6% compound growth), Kempsey (23.6%), Dubbo (19%), Leeton (17%), Bathurst (15.7%), and Forbes (15.2%).
Pressley also singled out Guyra as having achieved a rate of growth comparable to that of Sydney’s blue-chip suburbs. “Today’s median house price in the Northern Tablelands township is an incredibly low $280,000, after increasing by a whopping 50 per cent over the three years ending May 2017.”
Regional Queensland
The Sunshine State has its fair share of hidden gems. “The median house price in Goondiwindi is still only $310,000, and investors would have achieved a far better total return on investment over the last three years [here] than in metropolitan Brisbane. The Sunshine Coast ($550,000) and Gold Coast ($618,000) have also outperformed the state’s capital,” he said.
Regional locations – such as Scenic Rim, Cairns, and Toowoomba – have produced similar total returns as the Greater-Brisbane municipalities of Logan, Ipswich, and Moreton Bay.
Regional Tasmania
“Throughout most of [Tasmania], the low entry price and high rental yields mean that an investment property will usually be cash flow neutral or better – good luck getting that in Sydney or Melbourne!” Pressley said.
He singled out the northern Hobart municipality of Glenorchy as having produced 18% price growth over the last three years, and is cash flow positive to the tune of $2,500 per annum.
“Instead of sitting on the sidelines frustrated at being unable to afford to invest in Melbourne, one could have enjoyed 21 per cent price growth over the last three years from a typical property in the Victorian local government authorities of Colac or Alpine, where the median house price is under $340,000. That growth is on par with many parts of Greater-Melbourne, and a typical investment property would be cash flow neutral.”
Propertyology has a full list of lower-profile locations that have performed strongly over the last three years.
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