When it comes to buying property in Australia, purchasing in our major capital cities is the default. This is typically because of the perceived value CBD real estate has in comparison to regional markets.
However, regional Australian property buyers are reaping the rewards of significantly higher levels of capital growth compared to their city counterparts. Recent housing market data shows that the regional Australia property market collectively increased by 6.9% in value across 2020. More than triple the rate of CBD properties combined.
Also interesting to look at growth in Australia’s ‘secondary’ cities, places like Newcastle, Geelong and the Gold Coast. These places are experiencing comparative if not higher capital growth to their capital city equivalents.
This trend becomes even clearer when looking at 10-year annualised growth rate data (the average compounding growth rate)
So, why are secondary cities, as well as the regional Australia property market, performing so well? COVID-19 may be responsible but it is not the only reason.
COVID-19 driving regional Australia property prices up</strong></p>
<p>The COVID-19 pandemic is radically shifting the way we work, and we’ve quickly adapted to working from home. During the pandemic, as we were forced to stay at home, personal <a href="https://www.9news.com.au/national/australia-coronavirus-households-businesses-amass-200-billion-savings-during-pandemic/1a7acc26-19e7-4cb5-a97d-312216430726">savings have hit an all-time high</a>. We came to realise that our homes truly are our castles, and they were in need of a <a href="https://www.realestate.com.au/news/covid19-renovation-boom-how-much-aussies-are-spending-to-give-their-houses-a-facelift-during-the-pandemic/">face lift</a>.</p>
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<p><strong>Across the country, people are opting for a </strong><a href="https://www.realestate.com.au/news/buyers-look-to-new-tree-and-seachange-destinations-in-the-regions/"><strong>tree change</strong></a><strong>. </strong></p>
<p>Because we’ve been homebound for so long, returning to wasting precious time fighting city traffic has become less appealing. People are now choosing a more relaxed lifestyle, slower pace and better real estate buying power in favour of city life.</p>
<p>What’s more, regional Australia property buyers are finding comparable convenience and lifestyle features to cities like Melbourne and Sydney. For instance, take a look at how many of <a href="https://www.delicious.com.au/eat-out/cafes/gallery/best-coffee-in-australia-17-must-try-cafes/6r32ax1e">Australia’s best cafes</a> are actually in places outside of Melbourne and Sydney CBD.</p>
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<p><strong>The future of regional Australia property</strong></p>
<p>Another major driver of capital growth in the regional Australian property market is population growth. Of all of Australia’s sub-markets, the Gold Coast and Sunshine Coast receive the most amount of internal migration. When numbers of people departing a region is subtracted from arrivals from other parts of the country the Gold Coast and Sunshine Coast came out on top for the go-to, non-capital city destination for the past three years.</p>
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<p>Urban squeeze, the growth of regional cities in proximity to capital cities, and people realising the benefits of a tree change make regional Australian property more desirable than ever. Indeed, <a href="https://organichomeloans.com.au/home-loans-for-property-investors">real estate investors</a> are well advised to consider buying properties in a sub-market. As the data shows, when it comes to annual growth in comparison to capital cities, regional Australia property is on a run. And there appears to be even greater growth on the horizon.</p>
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<p>The Australian Government is in the process of planning for a future that will see Australia’s population rise, by an additional 19 million people by the year 2056.</p>
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<p><strong>Future-proofing</strong></p>
<p>Obviously, more needs to be done to further enhance regional Australia as an attractive destination. The <a href="http://www.regionalaustralia.org.au/home/wp-content/uploads/2019/08/RAI_2019_RegionalPopulationGrowthReport_WebFinal.pdf">Regional Australia Institute</a> (RAI) proposes that the Federal Government undertakes key measures to avoid a future dominated by megacities and all of their associated <a href="https://time.com/5882848/cities-future-urban-planning-development-covid19-pandemic/">problems</a>. </p>
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<p>Namely, the RAI recommends that an investment in regional areas as centres of infrastructure spending is undertaken to enhance liveability. What this means for regional Australian property buyers is continued capital growth as demand in these sub-markets is future-proofed. What’s more, future Government spending in regional Australia will improve educational opportunities and stimulate job growth.</p>
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<p><strong>Final thoughts</strong></p>
<p>As Australia enters the third decade of the 21st century, we are realising that a rebalancing of priorities is needed. No longer does life in the big capital cities appear as the only option. People who want a good job alongside the modern conveniences that life in a city affords are making the shift to regional Australia. Indeed, regional Australian property values are on a march with much more to come. The only question is: what is holding you back from realising the benefits in capital growth and lifestyle that buying regional Australian property presents?</p>
<p>This is a golden opportunity for investors. If you are seriously considering purchasing an investment property or even entertaining the thought, <a href="https://organichomeloans.com.au/contact-us">speak to us</a> at Organic Home Loans. We specialise in helping property investors secure the right home loan sooner.</p>
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