Housing growth in regional centres

While real estate markets in some Australian capitals, notably Sydney, Brisbane and Melbourne, are in the doldrums, many regional areas are experiencing growth. Is this an area you can take advantage of as a mortgage broker?

According to the Housing Industry Affordability Report for the March quarter 2006, prices have risen by an average of 6.2 per cent in regional Australia while holding relatively steady in the capitals.

Naturally, the largest real estate growth seen in regional Australia is predominantly in the sea change areas along the east coast of Australia. These centres include the popular areas of the north coast of New South Wales including Coffs Harbour and Byron Bay and along the Gold Coast in southern Queensland. Other popular spots include the areas around Port Macquarie on the NSW Mid North Coast and the Shoalhaven on the NSW South Coast.

But it isn’t just the coastal areas that are experiencing strong demand for real estate. Many large inland cities are also going through a period of strong growth. This can be explained partly by people looking for a cheaper alternative away from the main centres of Sydney and Melbourne and the desire for a change to a quieter rural lifestyle. Another aspect of this growth is the strong demand for workers in the booming resources industry. According to the latest census, some of the growth areas in regional Australia included Maitland, Queanbeyan, Geelong, Albury-Wodonga, Bendigo and Ballarat. Many of these areas have strong mining industries.

Cheaper house prices in regional centres are obviously a major consideration for people making the exodus from the expensive capitals to regional centres. For example, in Narromine, western NSW Dubbo Raine and Horne Real Estate Director Kim Hamilton says that houses can be picked up for around $100,000. And what’s more, they can be rented out for around $150 per week . This provides a golden opportunity for someone who can’t afford $500,000 in Sydney or for an investor looking for a profitable alternative to a city or suburban rental property.

Mildura is another regional area that is thriving. Sand mining and the wine industry are keeping the residents of the town working and therefore house prices are averaging $188,000 with average rents at around $220 per week.

Dr Shane Oliver, AMP’s Chief Economist believes capital cities are overvalued by around 25 per cent and that most of the recent growth has been seen in regional areas. And this is likely to continue into the foreseeable future.

What to look for in a growing regional centre
While many regional centres are booming, other areas are experiencing downturns. Here are some things to look out for in regional areas that could indicate strong real estate growth:

• booming local industries such as mining or tourism
• attractive area for those seeking a sea change or rural lifestyle change
• investment by larger retailers and other manufacturers
• university campuses attracting younger people (and increase demand for rental properties)
• high level of demand for rental properties
• thriving central business district
• new housing and industrial developments

improving infrastructure including road and rail links.

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