Looking to spot the fastest growing regional areas for property investment in 2022?
2021 will go down in the record books as the year of the ‘flight from the cities,’ which drove property prices in regional areas to rise faster than values in capital cities. CoreLogic’s Hedonic Home Value Index (December 2021) records regional value up +23.2 per cent over the year, which is more than the combined capital cities grew +20.3 per cent.
This has been driven in part by the pandemic, and also by people seeking more affordable property and a slower pace of life. Regional locations within striking distance of capital cities have been particularly in-demand, as have lifestyle locations that enable a tree, hill, or sea change.
Let’s look at each state and identify which suburbs and regional centres you should be putting on your regional property investment shortlist.
Fastest growing areas: Regional NSW
Regional property in NSW advanced +26.9 per cent over 2021, according to CoreLogic’s Hedonic Home Value Index (December 2021). SQM Research's Boom and Bust Report 2022 describes this as a, “one in 10-to-30-year event,” highlighting Forster which grew +30.8 per cent and Grafton which grew +42.7 per cent over the year.
Most analysts are predicting prices to moderate in 2022, with QBE forecasting regional NSW to lag Sydney as the ‘flight from the cities” slows and possibly even reverses. Despite this, many regional markets in NSW are expected to post significant gains over the year ahead. In terms of locations to watch, property analyst Hotspotting identified the following regional NSW locations for 2022:
- Blue Haven, with a median house price of $560,000, which recorded a compound growth rate of +13.7 per cent over 2021.
- Gwandalan, with a median house price of $550,000, which recorded a compound growth rate of +17.5 per cent over 2021.
- Toukley, with a median house price of $575,000, which recorded a compound growth rate of +13 per cent over 2021.
- Tolland (Wagga Wagga), which has a median house price of $290,000, which recorded a compound growth rate of +17.9 per cent over 2021.
Fastest growing areas: Regional Victoria
CoreLogic’s Hedonic Home Value Index (December 2021) recorded a rise of +24 per cent over the year for the regional market in Victoria. The focus of growth has been on the Mornington Peninsula, as well as regional towns like Geelong and Ballarat.
In terms of locations to watch in 2022, Canstar’s Rising Stars Report, powered by property analysts Hotspotting, identified the following based on rising sales over 2021:
- Corio (Geelong), with a median price of $410,000, which recorded a compound growth rate of +13.5 per cent over 2021.
- St Albans Park (Geelong), with a median price of $495,000, which recorded a compound growth rate of +16.4 per cent over the past year.
- Belmont (Geelong) with a median price of $645,000, which recorded a compound growth rate of +15.6 per cent over 2021.
- Flora Hill (Bendigo), with a median price of $415,000, which recorded a compound growth rate of +10.4 per cent growth over 2021.
- Kyneton (Macedon Ranges Shire), with a median house price of $695,000, which recorded a compound growth rate of +14.6 per cent growth over 2021.
QBE’s Australian Housing Outlook (2021–2024) believes regional centres will continue their strong performance over the medium term, with affordability and lifestyle the main drawcards. They forecast median house prices in:
- Ballarat to grow +17 per cent by June 2024.
- Geelong to grow + 18 per cent June 2024.
- Bendigo to grow + 17 per cent by June 2024.
Fastest growing areas: Regional Queensland
Regional markets in Queensland were no exception to the general trend, advancing +22.3 per cent over 2021. This was led by locations like the Gold Coast and Sunshine Coast, while other regional centres like Townsville and Cairns did not enjoy the same growth over 2021.
SQM Research reports that Gold Coast property prices rose +12 per cent in the year to November 2021, with demand for homes on the Sunshine Coast driving prices up by +17 per cent over the same timeframe. Rents in these two locations also rose sharply over the year, with house rents on the Gold Coast rising +27 percent.
Weekly rent on the Sunshine Coast rose +28 per cent over the same timeframe. SQM Research is positive on these areas for 2022, albeit at lower growth rates of +7 per cent to +12 per cent respectively.
In terms of specific locations to research and monitor, real estate appraiser’s PropTrack like south east Queensland based on the affordability, lifestyle, and the investment inflow of the 2032 Olympics. They highlight Buderim (Sunshine Coast), Helensvale (Gold Coast), Coomera (Gold Coast), and Hope Island (Gold Coast).
Hotspotting like the following locations in regional Queensland:
- Bundaberg East, with a median house price of $290,000, which recorded a compound growth rate of +19.8 per cent over 2021.
- Burleigh Waters (Gold Coast), with a median house price of $985,000, which recorded a compound growth rate of +15.7 per cent over 2021.
- Dundowran Beach in Hervey Bay, with a median house price of $660,000, which recorded a compound growth rate of +16.8 per cent over 2021.
- Gympie, with a median house price of $325,000, which recorded a compound growth rate of +19.8 per cent over 2021.
Fastest growing areas: Regional South Australia
In terms of performance, South Australia's regional market has lagged behind other states, rising +14.6 per cent over 2021. According to CoreLogic data, only regional WA performed worse.
Hotspotting believes the following locations deserve further research if you are thinking of investing in South Australia:
- Encounter Bay, with a median house price of $435,000, which recorded a compound growth rate of +15.6 per cent over 2021.
- Mount Gambier, with a median house price of $280,000, which recorded a compound growth rate of +6.9 per cent over 2021.
- Murray Bridge, with a median house price of $245,000, which recorded a compound growth rate of +9.3 per cent over 2021.
Fastest growing areas: Regional Western Australia
After many years in the doldrums in the wake of the mining boom, markets in Perth and Western Australia are showing signs of life. Perth went up by +12.7 per cent over 2021 and regional values have grown +13.6 per cent over the year.
This is largely due to a recovery in the mining and resource industry, which is having a ripple effect across mining towns north of Perth. There is also a smaller exodus from the city to more affordable lifestyle locations at play here, though not to the extent experienced in Victoria and NSW. This is largely due to WA being largely free of any restrictions or major outbreaks of the Coronavirus.
If regional Western Australia is on your radar, then you will want to research Hotspotting’s recommendations where to invest. They do warn against mining towns for property investment purposes, citing their, “boom-bust history and volatility.” Rather focus on these towns:
- Broome, with a median house price of $480,000, which recorded a compound growth rate of +10.9 per cent over 2021.
- Carey Park (Bunbury), with a median house price is $240,000, which recorded a compound growth rate of +17.6 per cent over 2021.
- Falcon (Mandurah), with a median house price of $375,000, which recorded a compound growth rate of +14.4 per cent over 2021.
- Geographe (Busselton), with a median house price of $490,000, which recorded a compound growth rate of +8.1 per cent over 2021.
- Halls Head (Mandurah), with a median house price is $440,000, which recorded a compound growth rate of +11.4 per cent over 2021.
Fastest growing areas: Regional Tasmania
Corelogic’s Home Value Index reports that property values in regional Tasmania rose +27.1 per cent over 2021. This represents the highest growth achieved countrywide. It is also higher than Hobart’s growth rate of +26.8 per cent.
Hotspotting likes the following Hobart suburbs based on sales volume, quarterly price growth, vacancy rates, rental growth, and infrastructure spending:
- Claremont, with a median house price of $440,000, which recorded a compound growth rate of +70 per cent over the past five years.
- Geilston Bay, with a median house price of $570,000, which recorded a compound growth rate of +38 per cent over the past three years.
- Lenah Valley, with a median house price close to $700,000, which recorded a compound growth rate of +65 per cent over the past five years.
In terms of regional Tasmanian locations to watch, they tip the following locations:
- Mowbray (Launceston), with a median house price of $315,000, which recorded a compound growth rate of +18.9 per cent over 2021.
- Park Grove (Burnie) with a median house price of $390,000, which recorded a compound growth rate of +15.7 per cent over 2021.
- Old Beach (Brighton) which has a median house price of $545,000 , which recorded a compound growth rate of +15.9 per cent over 2021.
Identifying a regional property hotspot
Now you know where some of the best places to invest in property are, you also need to know what signs to look for. What magic ingredients make a regional town or suburb ripe for investment? The secret is to find an area with a whole range of positive factors, specifically:
- High population growth, which stimulates demand for property and drives prices up
- A robust, thriving and diverse local economy that is not reliant on one sector or employer
- Anywhere with major infrastructure projects - such as new transport hub, hospital or factory - that will create jobs and boost the local economy
- Suburbs where the rental yield is rising, as this indicates there is strong demand for rental accommodation in the area.
- Areas where the growth in median household income is higher than inflation. This demographic has money to spend and the area is very likely to gentrify.
- Low supply but plenty of demand from purchasers, capital growth will be strong
It is also about timing. Buy into a regional property hotspot at the right time and you could greatly increase your ROI in a much shorter time frame.
Looking ahead to 2022 and beyond
Crystal ball gazing and forecasting the future is notoriously difficult, so we are going to leave it to the experts to do so.
QBE believes the uncertainty that the pandemic has caused is unlikely to continue, “given
the unique and complex nature of COVID-19.” They do, however, believe that the flight from the cities will reverse over time and, “broadly return to the long-term trend,” which is for people to move to cities for jobs, education and social reasons.
SQM Research’s Boom and Bust Report 2022 agrees with this view, providing lockdowns are a thing of the past. This will stimulate demand for city living and could mean demand for regional living wanes over time.
Only time will tell what actually transpires. The pandemic has undoubtedly shifted the concept of work-life balance for many, and a quieter pace of life in a regional location is undeniably more attractive for realising that goal.
