A new report has suggested that regional Australia may well be the best area to buy a new property.
The 2021 PRD Stand Out Regions study is devised to celebrate the opportunities that can arise from investing away from the capital cities and into the more affordable parts of the country.
It ranks regional areas for their affordability, property market, level of development, economic strength and rental value indicators such as vacancy rates and yield.
“This is my one of my favourite reports, because it gives a lot of Australians an education in term so the best places to invest their money in property,” said Dr Diaswati Mardiasmo of PRD. “That's not always necessarily in the capital cities - there are other options out there. Australia is such a big country and many people don't know about the other regions unless we tell them, particularly from a property investment perspective.”
“They might know them from tourism, but from a property perspective and the investment potential, it really opens up that landscape. You might not have a million dollars, but you can build a portfolio if you open up and start looking at other places, particularly regional areas as alternatives. I love that it opens up people's thoughts.”
The report comes hot on the heels of news yesterday about the ‘rentvesting’ trend that is seeing Sydney property prices drive buyers into regional areas.
“Many people believe that to create their property portfolio and build up their wealth for their pension is by investing in the property next door,” said Dr Mardiasmo. “If they live in Sydney, they think they need to buy there, but they despair about it because it's so unaffordable.”
“If you were to open up your landscape and choose a property in Circular Head in Tasmania or Toowoomba in Queensland, you will be able to build a decent portfolio across the country because of the lower price point. You get more bang for your buck because of the higher rental yield and the lower vacancy rates. From a cash flow perspective, it really assists in wealth accumulation.”
The PRD Stand Out Regions Report identified Queensland as one of the best places to invest, with the Whitsundays, Mackay and Toowoomba named as the top three areas in Australia for real estate purchases.
When it comes to investing in regional Australia, it is a two-way street. An influx of investment buyers from major cities can create problems in the local market as prices rise to meet demand.
“It does have a localised impact,” said Dr Mardiasmo. “Once upon a time, Hobart was one of the most affordable capital cities in Australia, and then people caught onto it and inter-state investors got interested, it pushed up prices and first home buyers got priced out. That potential is there in regional areas.”
“However, at the same time, the places that we have identified also took in the development that is due to come in this year and next year. We're not talking from a property perspective, we're also talking in terms of infrastructure, mixed use development, residential development and other things that are coming in, so that it doesn't become an unsustainable choice. We don't just look at it from one side.”