Af­ford­abil­ity: Pam Walk­ley Be­yond the hotspots

Re­gional cities and towns are an at­trac­tive al­ter­na­tive for first-time buy­ers

Money Magazine Australia - - CONTENTS - STORY PAM WALK­LEY

Re­gional ar­eas pro­vide some of the most pleas­ant places to live in Aus­tralia, with open spa­ces, clean air, lim­ited traf­fic has­sles, beau­ti­ful vis­tas and, best of all, houses that cost a frac­tion of those in the cities. But the down­side is that many of these towns and cities have a lack of jobs and lim­ited growth prospects. And for re­tirees some also have lim­ited health ser­vices.

Of course, this is not true of all re­gional ar­eas, as high­lighted in a new re­port from PRD­na­tion­wide, the Top 10 Af­ford­able Ma­jor Re­gional Ar­eas.

To as­sist those seek­ing an af­ford­able prop­erty, the re­port high­lights re­gional ar­eas across Queens­land, Vic­to­ria and NSW, says Di­aswati (Asti) Mar­diasmo, na­tional re­search man­ager at PRD­na­tion­wide. “These key ar­eas iden­ti­fied not only high­light price af­ford­abil­ity but also solid fun­da­men­tals for sus­tain­able growth.”

The ar­eas are Toowoomba, the Fraser Coast and Ip­swich in Queens­land; Tam­worth, Mait­land, Wagga Wagga and the City of Shoal­haven in NSW; and Bal­larat, Greater Bendigo and Shep­par­ton in Vic­to­ria.

“As cap­i­tal cities, es­pe­cially Syd­ney and Mel­bourne, con­tinue to see prop­erty price growth and in­fla­tion lev­els be­yond the stan­dard wage in­crease, the bat­tle to en­ter the prop­erty mar­ket has be­come more dif­fi­cult,” says Mar­diasmo.

The re­search con­cen­trated on the three east­ern states for a cou­ple of rea­sons.

“First of all, the ques­tion of af­ford­abil­ity – which is what the re­port is mainly geared around – is more of a prob­lem on Aus­tralia’s east coast. Sec­ondly, we wanted to en­sure that re­gional ar­eas nom­i­nated fit­ted into the se­lec­tion cri­te­ria and we found that there was a larger vol­ume of those in the east coast states,” says Mar­diasmo. (See Se­lec­tion cri­te­ria.)

Any­one look­ing to buy a home or in­vest in res­i­den­tial real es­tate in re­gional or outer ur­ban ar­eas should not only pay at­ten­tion to short-term price growth, says Mar­diasmo. “Look at price growth over the past five to 10 years. It partly de­pends on your mo­ti­va­tion. Some in­vestors are out to make a quick buck but most home buy­ers and in­vestors want sta­ble, pos­i­tive price growth in­di­cat­ing con­tin­u­ing cap­i­tal growth.”

Check­ing va­cancy trends is es­pe­cially im­por­tant for in­vestors, but also some home buy­ers will even­tu­ally move and may want to rent out their prop­erty, so choos­ing ar­eas with enough rental de­mand is im­por­tant, she says.

Also tied to rental de­mand is jobs growth, so find out from the lo­cal coun­cil what fu­ture de­vel­op­ments there are in the pipe­line. Some coun­cils hold reg­u­lar ses­sions where they out­line their vi­sion for the next 10 years. “Re­mem­ber, no jobs, no growth,” Mar­diasmo points out.

If you stick to ar­eas with good con­nec­tiv­ity to ma­jor hubs – es­pe­cially within a twohour com­mute to ma­jor cen­tres like Syd­ney or Mel­bourne – these should flour­ish. Make sure there is re­li­able and pleas­ant pub­lic trans­port avail­able, if not now at least planned for the fu­ture, she says.

Re­tirees mov­ing to re­gional ar­eas will need to make sure there are re­li­able health fa­cil­i­ties. The good news is that lots of re­gional hos­pi­tals are get­ting an up­grade, says Mar­diasmo. Fam­i­lies with chil­dren will pay spe­cial at­ten­tion to ed­u­ca­tional and re­cre­ation fa­cil­i­ties.

“The ar­eas we have cho­sen are not in ‘Woop Woop’, they all have good ameni­ties in­clud­ing en­ter­tain­ment and shop­ping. They are highly live­able,” she says.

With mort­gage rates at an all-time low and the like­li­hood that these will rise, buy­ing re­gional or outer-ur­ban prop­erty means less of your dis­pos­able in­come will go to­wards pay­ing the mort­gage, which means more to sus­tain a bet­ter life­style.

Se­lec­tion cri­te­ria

Af­ford­abil­ity – ar­eas with a me­dian be­low the av­er­age loan for each re­spec­tive state. Prop­erty trends – in­dica­tive of fu­ture growth such as me­dian price, low va­cancy rates and good rental yields.

In­fra­struc­ture – it has the ca­pac­ity to im­prove sur­round­ing prop­erty val­ues.

Com­mer­cial prospects – in­ter­est from pri­vate en­ti­ties in­di­cate eco­nomic growth and em­ploy­ment op­por­tu­ni­ties.

Other eco­nomic fac­tors that in­di­cate a vi­brant and grow­ing area such as pop­u­la­tion growth, in­come and wage growth, strong em­ploy­ment rate and lo­cal coun­cil plans.

PRD na­tion­wide’s top 10 1 TOOWOOMBA QLD

Toowoomba, 127km from Bris­bane, with a pop­u­la­tion of ap­prox­i­mately 163,000, is Aus­tralia’s sec­ond largest in­land city. It’s ex­pe­ri­enced 15-year price growth (to 2016) av­er­ag­ing 7.9% for houses, 8.4% for units and 9.1% for va­cant land.

A key de­vel­op­ment has been the Bris­bane West Well­camp Air­port, 15.6km from the Toowoomba CBD, which caters to in­ter­na­tional flights.

Dur­ing 2017 Toowoomba is set to see about $615 mil­lion in new project de­vel­op­ment, demon­strat­ing sub­stan­tial in­ter­est from pri­vate en­ti­ties.


The Fraser Coast, about 276km north of Bris­bane, has a pop­u­la­tion of about 102,000, hosts over 32,000 lo­cal jobs and pro­duces a gross re­gional prod­uct of $3.18 bil­lion.

Over the 15 years to 2016, Fraser Coast Re­gional Coun­cil has ex­pe­ri­enced an av­er­age an­nual price growth rate of 7.2% for houses, 8.8% for units and 7.7% for land.

Over 2017 there will be about $704 mil­lion in new de­vel­op­ments, in­clud­ing the Mary Har­bour mas­ter planned com­mu­nity, val­ued at about $500 mil­lion. Ex­pected to start in De­cem­ber 2017 it will add 1097 res­i­den­tial lots to the mar­ket.

Lo­cal and state govern­ment are in­vest­ing an es­ti­mated $69.1 mil­lion in in­fra­struc­ture this year and pri­vate en­ti­ties are show­ing in­ter­est with about $66.4 mil­lion of com­mer­cial projects.


Ip­swich is lo­cated about 42km from Bris­bane, and com­bines af­ford­able hous­ing with di­rect train trans­port to the Bris­bane CBD. Its pop­u­la­tion of about 190,125 is ex­pected to grow to 435,000 by 2031.

Over the 15 years to 2016, Ip­swich has ex­pe­ri­enced an av­er­age an­nual price growth rate of 9.8% for houses, 9.5% for units and 9.9% for land.

This year new de­vel­op­ment val­ued at about $2.3 bil­lion is planned, with the ma­jor­ity com­mer­cially fo­cused.


Tam­worth, about 405km from Syd­ney, is fa­mous as Aus­tralia’s coun­try music cap­i­tal. It’s one of the largest coun­cils in the state with a pop­u­la­tion of over 58,000.

Over the 15 years to 2016, Tam­worth ex­pe­ri­enced an av­er­age an­nual price growth rate of 6.6% for houses, 5.8% for units and 7.5% for va­cant land.

In April 2017 Tam­worth’s rental yield for all houses was 5.3%, well above Syd­ney’s 2.7%, mak­ing it an at­trac­tive place for in­vestors.

This year Tam­worth is set to see $125 mil­lion of new de­vel­op­ment start, mostly from the com­mer­cial sec­tor.


Mait­land, about 164km from Syd­ney, is set on rich agri­cul­tural land with a di­verse range of eco­nomic ac­tiv­i­ties in­clud­ing min­ing, agri­cul­ture, tourism and man­u­fac­tur­ing. The pop­u­la­tion is 76,607.

In the 15 years to 2016, the area has seen an av­er­age an­nual price growth of 7.4% for houses, 6.1% for units and 7.4% for va­cant land. House and unit stock grew 7.1% and 13.8% re­spec­tively in the year to 2016.

An es­ti­mated $365.4 mil­lion of new projects will start this year ($234.5 mil­lion res­i­den­tial and $83.6 mil­lion com­mer­cial), sig­nalling eco­nomic growth.


Shoal­haven City Coun­cil, about 192km south of Syd­ney, has a pop­u­la­tion of 99,299. It’s known for its na­tional parks, coastal wa­ters and lakes.

House prices have grown 5.9% a year over the 15 years to 2016, with unit prices grow­ing 5.4% and va­cant land 9.2%.

Shoal­haven City Coun­cil has recorded an­nual growth lev­els well above the 15-year av­er­age in the three years to 2016: houses 9.9%, units 9% and land 19%. In 2017, $542.1 mil­lion of new de­vel­op­ment is ex­pected to start, with in­fra­struc­ture val­ued at $313 mil­lion the main fo­cus.


Wagga Wagga, about 459km south-west of Syd­ney, is the state’s largest in­land city with a pop­u­la­tion of 65,537. It’s host to about 5443 lo­cal busi­nesses, with gross re­gional prod­uct es­ti­mated at $3.6 bil­lion.

Over the 15 years to 2016, the area has seen an­nual price growth of 6.3% for houses, 5.8% for units and 6.1% for va­cant land. Yields, which have re­mained above 4% since 2009, have been a draw­card for as­tute in­vestors.

Wagga Wagga is set to see $329.2 mil­lion of new projects this year, in­clud­ing a med­i­cal school val­ued at about $50 mil­lion.


Bal­larat, about 115km from Mel­bourne, has a pop­u­la­tion of 99,841, mak­ing it the third largest in­land city in Aus­tralia. House prices have in­creased an av­er­age of 6.5% a year in the 15 years to 2016. Unit prices and land prices re­spec­tively grew 4.6% and 6.5% .

Un­like many other coun­try ar­eas, Bal­larat has con­tin­ued to see pos­i­tive growth for ev­ery year from 2002 to 2016, in­di­cat­ing that the mar­ket is strong and sta­ble. About $211.7 mil­lion in new de­vel­op­ments is start­ing this year.


Bendigo, about 150km from Mel­bourne, with a pop­u­la­tion of about 92,888, is the fourth largest city in the state.

House, unit and land prices have grown 6.8%, 5.1% and 8.7% a year re­spec­tively for the 15 years to 2016.

In the two years to 2016, an­nual growth rates for va­cant land have been par­tic­u­larly strong at 11.8% (2014-15) and 13.1% (2015-16), due mainly to an in­crease in de­mand for land sub­di­vi­sion. This year will see about $55.8 mil­lion of res­i­den­tial de­vel­op­ment, $55.8 mil­lion of in­fra­struc­ture in­vest­ment, in­clud­ing the Bendigo air­port re­de­vel­op­ment (stage 2), and com­mer­cial and in­dus­trial de­vel­op­ment val­ued at $36.3 mil­lion.


Shep­par­ton, about 188km from Mel­bourne, has a pop­u­la­tion of about 67,072. It’s host to over 6100 busi­nesses and 30,000 lo­cal em­ploy­ment op­por­tu­ni­ties. House, unit and va­cant land prices have in­creased 5%, 3.2% and 5.6% a year re­spec­tively in the 15 years to 2016. Rental yields com­pare favourably with Mel­bourne’s 3.2% for houses and 4.3% for units. New de­vel­op­ment worth $226.2 mil­lion is ex­pected this year, most in in­fra­struc­ture and fo­cused on a re­build of the Shep­par­ton hos­pi­tal.

Yields of 4%-plus since 2009 have been a draw­card for as­tute in­vestors

Sunny out­look... Queens­land’s Fraser Coast will get a $69 mil­lion boost from in­fra­struc­ture.

Solid growth... Wagga Wagga will ben­e­fit from projects worth $330 mil­lion.

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