Capital cities outdone by country cousins: Terry Ryder

Almost 100% of the market analysis and media focus in real estate is devoted to the capital cities. But in two major states the regional markets are outperforming their capital cities.

And they’re not just any old cities that are being outdone by their country cousins. Sydney is one of them, which will amaze many people, and Brisbane is the other one.

I explained in a recent column why Sydney has passed its peak and is slowly losing its heat. You won’t be reading about it in mainstream media because journalists lack expertise and are reliant on press releases from research companies. And those research companies base their market analysis on median price movements. And median prices are six months behind the market.

The real story of markets is told by sales volumes. And sales activity has been gradually falling across metropolitan Sydney – to the extent that I count just 36 growth suburbs (compared to 114 six months ago).

Regional New South Wales has almost double the number of growth markets of Sydney. The momentum that started with regional areas close to the state capital – like Wollongong and Gosford – has spread throughout the state.

The Gosford LGA remains the most buoyant regional NSW market, followed by nearby Wyong. The Newcastle region – where the Newcastle, Lake Macquarie, Maitland, Cessnock and Port Stephens LGAs all have multiple growth suburbs – is also on a positive trajectory.

The Southern Highlands market has more recently sprung to life, with Moss Vale, Bowral and Mittagong all looking strong.

Further afield in NSW, Port Macquarie looks really good and the Tweed region at the Queensland border is joining the growth party. At the opposite end of the state, the twin cities of Albury and Wodonga on either side of the Victoria border are attracting growing attention from investors.

Dubbo continues to be one of the strongest regional economies in the state and the nation, while Goulburn and Orange also look good.

Everywhere I look in New South Wales there are markets percolating, without (with the exception of Gosford) having delivered price growth of Sydney proportions.

Brisbane is still producing plenty of growth markets, although the limelight has switched from the north to the south. While the Brisbane City Northside precinct was the first to burst into life with elevated activity and good price growth in 2014, the leading markets are now Brisbane City Southside and, a little further south, Logan City.

But there busy markets across Brisbane, with upwardly-mobile suburbs springing up in the Redland, Ipswich and Moreton Bay LGAs around the periphery of the metropolitan area.

And regional Queensland is matching the Greater Brisbane area for the number of growth locations. The regional action is headed by the Gold Coast, which continues to gather momentum and has now overtaken Logan City to be the No.1 LGA in Australia, in terms of the number of growth suburbs.

Fortunately, most of the growth markets in Gold Coast City are genuine residential markets – i.e. inland housing markets, rather than the high-rise precincts along the glitter strip. Let’s hope that’s where investors focus their attention, because the new mega towers will return the Gold Coast to its grand tradition of apartment over-supply.

The Sunshine Coast, which continues to progress as a more well-rounded regional city, is the next biggest growth market, while resurgent Cairns is still featuring strongly. 

But there’s a new contender – the Fraser Coast region based on Hervey Bay is now producing more growth suburbs than Cairns and almost as many as the Sunshine Coast. Townsville is slowly spluttering back to life.

Toowoomba, which was the first regional city in Queensland to get on a growth path, looks to have had its run. This is demonstrated by the high number of “plateau” markets among the Toowoomba suburbs. The big infrastructure investment happening in and around the city should keep its market solid, but sales activity has undoubtedly tapered off in Toowoomba.

No other states have regional markets as prominent as NSW and Queensland, although there are good possibilities for investors in Victoria and Western Australia – but that’s another story.

TERRY RYDER is the founder of hotspotting.com.au. You can email him or follow him on Twitter.