Terry Ryder is the founder of hotspotting.com.au.

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Terry Ryder

9 July 2018

Australia's three strongest residential property markets

Australia's three strongest residential property markets

Australia has some very strong property markets right now.

But if you rely on mainstream media for information, you’re unlikely to know about them.

Most of our media originates in Sydney and Melbourne and those two places are obsessed with themselves. Writers would rather tell us about the decline in the two biggest cities than the strongly-rising markets elsewhere.

They also commit the cardinal sin of generalising and treating Australia as a single market. So you’ll be seeing headlines like “Property prices fall across Australia” which means the national average, according to one heavily-featured source, is in the negative, dragged down by Sydney’s correction.

If we hear about anywhere other than Sydney and Melbourne, it will be confirmation that Hobart is the No.1 capital city market on speed of sale, price growth and low vacancies (but no longer the cheapest of the capital cities, Hobart having overtaken depressed Darwin).

But Hobart is not the strongest market in the nation. The locations competing for that title are all in regional Australia, that large place largely forgotten by economists, journalists and investors.

If you’re a property investor looking for the next growth possibility and you’re not considering the regions, then you’re missing opportunities to buy affordably in areas with strong yields and great potential for growth.

I would venture that, right now, the three strongest market jurisdictions in Australian real estate are:-

  1. Regional New South Wales
  2. Regional Victoria
  3. Regional Tasmania

The common denominator here is this: as the capital city markets in those states wind down, their regional markets are cranking up.

This is a regular pattern in real estate cycles. The growth cycle starts, often, in the inner-city areas of the capital cities, then ripples out through the middle ring to the outer ring over 3-4 years – and the growth eventually ripples beyond the capital city to regional areas nearby.

Regional markets are not totally reliant on their capital cities for growth – many are strong economies in their own right and will show growth regardless of what’s happening in the big city. 

But there’s no doubt that some of their momentum comes from events in the capital – and the closer they are geographically to the big city, the more likely it is that they will catch the growth wave.

Some regional markets close to Sydney and Melbourne got on their growth paths quite early and have already reached their peaks. That’s true of Geelong just outside Melbourne and also for Wollongong and the Central Coast near Sydney. Newcastle, arguably the strongest market in Australia right now, is also well advanced in its cycle.

But most of the regional markets are just getting started. So, if you’re an investor looking for growth possibilities at attractive prices, these places should be considered.

Regional NSW

Many Newcastle suburbs have grown their median house prices by more than 20 percent in the past year. Now that growth surge is rippling out to nearby areas, like the Lake Macquarie LGA and the towns of the Hunter Valley.

But growth markets are spread across regional NSW. Having recently analysed the latest batch of quarterly sales figures, I’ve found 38 local government areas in regional NSW with locations where sales activity is upwardly mobile.

They include major regional centres like Albury, Dubbo, Orange, Tamworth and Wagga Wagga (pictured top) - and also small towns unlikely to ever trouble the minds of city investors, like Cootamundra, Inverell, Kempsey and Tumut.

Regional Victoria

The rise of the Geelong market is widely know. It’s been the market leader in Victoria for the past 12-18 months, generally out-performing Melbourne. Some of the cheaper suburbs of Geelong have had growth above 20 percent in the past year.

But now Geelong has been overtaken by Ballarat, which is attracting lots of attention from Melbourne buyers and others. And, just lately, Bendigo has decided to challenge.

Ballarat and Bendigo each has its own character but some factors in common, such as strong economies, growing populations, major infrastructure spending, good links to the state capital and lots of affordable homes. They’re both worth a look.

The main towns in Cardinia Shire, namely Pakenham and Officer, have had exceptional growth recently. Pakenham’s median is up 20% and Officer has grown almost 30%.

Many other regional centres are rising, including Shepparton, Warragul and Bass Coast towns like Wonthaggi.

Regional Tasmania

Hobart’s market has been barrelling along for the past two years and more recently Launceston joined the party. But now smaller centres have sparked to life, notably up in the north of the state, including Devonport, Ulverstone, Burnie and Latrobe.

I’m not suggesting you should rush out and buy in these places – but to be aware of the trend.

It’s not true that “the property boom is over”, nor is it true that “Australian property prices are falling”. There are green shoots popping up in many different places – it’s just that many of them are in regional Australia, so you’re unlikely to hear much about them from mainstream media. 

Terry Ryder is the founder of hotspotting.com.au

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