Looking for the best places to buy an investment property in regional NSW?
Then you need to read this article, which covers the latest data and expert insights covering the regional NSW property market. We will look at how this market performed in 2021, and how it’s predicted to perform in 2022.
Let’s start with an overview of how the regional property market in NSW fared over 2021.
What did the regional NSW property market look like in 2021?
The defining trend of 2020/2021 has been the ‘flight from the cities’, as people decamped en masse to regional towns and smaller cities across NSW. This is not a new phenomenon, but Covid has accelerated the trend.
Regional locations had two major draw cards for buyers: affordable property and a largely virus-free, congestion-free lifestyle. The shift to remote working for white collar workers also facilitated this trend, with restrictions forcing employers into allowing their staff to log on from home.
According to CoreLogic data, dwelling values rose by +27.9 per cent for regional NSW in the 12 months to October.
Where did everyone head to? Initially the Central Coast, the Southern Highlands, Wollongong, Shoalhaven, and the Blue Mountains—which are all within striking distance of Sydney. Other locations which have proved popular with sea and tree changers include Byron Bay as well as regional centres like Bathurst, Mudgee, Orange, and Dubbo.
To quantify this, let’s look at property data from CoreLogic’s recent Housing Market Update (October 2021). It records a rise in dwelling values of +27.9 per cent for regional NSW in the 12 months to October, with sales volumes up +30.6 per cent over the same timeframe. Both these figures are higher than Sydney recorded for this period.
Property analysts SQM Research characterise the price gains recorded in many regional locations as, “the largest one-year gains ever recorded. These price rises are not normal. They are abnormal and could represent a one in 10-to-30-year event.” Individual locations with stellar performance over the year, include Forster (+30.8 per cent) and Grafton (+42.7 per cent).
Regional NSW property market predictions 2022
Most experts believe markets overall will continue to grow in the new year, albeit at a slower rate.
NAB is predicting, “a sharp slowing in 2022 as the impact of lower interest rates fades and affordability constraints begin to bind.” They believe performance will vary by location, with some regional centre’s set to continue to post, “strong outcomes” in the year ahead. CBA has a similar outlook for 2022 with, “dwelling price growth forecast to moderate over the first half of 2022.”
QBE’s Australian Housing Outlook (2021–2024) predicts regional NSW price growth, “is likely to underperform against Sydney as the general exodus from metropolitan areas following the pandemic outbreak slows.” They forecast the regional centre of Newcastle to grow by +6.9 per cent, and Wollongong by +7.5 per cent respectively over 2022.
Let’s now look at the data and track where the fastest growing regional towns in NSW are, which is a strong indicator they could continue to perform in 2022.
What are the best NSW regional towns to invest in 2022?
Hotspotting's Terry Ryder, who has covered the residential property sector for 35+ years, has identified a number of regional NSW suburbs with excellent growth potential for 2022.
If you are looking at the Central Coast he recommends:
- Blue Haven, which has grown +13.7 per cent over the past year, with a median house price of $560,000.
- Gwandalan, which has grown +17.5 per cent over the past year, with a median house price of $550,000.
- Toukley, which has grown +13 per cent over the past year, with a median house price of $575,000.
If you’re looking at real estate in the Hunter Valley he recommends:
- Singleton Heights, with a median house price of $420,000, which has grown +6.3 per cent over the past year. It has a 10 year average annual growth of +1.9 per cent, a vacancy rate of 0.9 percent, and a median rental yield of +5 per cent.
Domain’s House Price Report (September 2021) also details the fastest growing regional towns in NSW, including:
- Ballina (Northern NSW), with a median house price of $900,000, which has grown +32.4 per cent over the past year and +67 per cent over the last 5 years.
- Byron (Northern NSW), with a median house price of $1,550,000, has grown +34.8 per cent over the last year and +112 per cent over the last 5 years.
- Bellingen (Mid North Coast), with a median house price of $779,500, has grown +38.0 per cent over the last year and +70.8 per cent over the last 5 years.
Let’s now look at some other regional NSW property hotspots.
Other regional NSW investment property hotspots
You should also research and monitor the following locations, which Hotspotting included in their best suburbs in regional NSW to invest in for 2022.
| Suburb | Median house price | 1 year growth | Median rental yield |
| Cessnock | $395,000 | 8.2% | 4.7% |
| Dubbo | $400,000 | 8.1% | 4.7% |
| Goulburn | $450,000 | 7.1% | 4.2% |
| Tolland (Wagga Wagga) | $290,000 | 17.9% | 5.3% |
| Warners Bay (Lake Macquarie) | $725,000 | 12.4% | 3.4% |
Looking ahead to 2022 and beyond…
Regional markets tend to lag capital cities, but this trend has been upended by Covid and the ‘flight from the cities’. How long this will continue remains to be seen, as no one can predict how the pandemic unfolds in 2022 and beyond.
QBE believes, “prolonged or further lockdowns in metropolitan Sydney would sustain the short-term demand in coastal communities.” There’s also no certainty around remote working and if this is just a temporary phenomenon or a permanent shift in the way people will operate in the future.
The likelihood of interest rate rises and financial conditions imposed by government regulators and institutions are also important considerations to keep in mind.
