One of the really important things about long term property investing is to take a long term view of the market rather than jumping on the bandwagon of what’s hot.
Over the past couple of years we have seen a substantial shift towards regional investing and a massive increase in property values in “lifestyle locations”. This was driven by Covid, work from home options and the shift in thinking that these two significant changes brought to our lives and our world.
The greatest example of this was in Byron Shire on the NSW North Coast where the “pandemic seachange” drove a 44% increase in housing prices at its peak. This was unheard of and was a real sign of the times.
Today things have settled down and places like the Richmond-Tweed region, which the Byron Shire is within, have seen an 18.6% decrease in property values and an average of 76 days on the market.
One distinct differentiation that we need to make here is to note the differences within regional investing. This could take the form of investing in a country town or a lifestyle location, or a regional hub.
We see investing in country towns or lifestyle locations as higher risk than investing in a “regional hub”. The latter is an area that is benefiting from infrastructure investment, employment opportunities and population growth. They have universities, hospitals, airports and major shopping centres.
Examples of regional hubs are:
- Geelong (hub to Melbourne)
- Newcastle (hub to Sydney)
- Toowoomba (hub to Brisbane)
When you look at rental vacancy rates in these areas, in January 2023 they were 2.3%, 1.2% and 0.6% respectively for the three cities listed above. For investors, anything under 3% is considered excellent as vacancies will be minimal and rents will be high on quality properties.
Don’t be confused by headlines saying that the love affair with regional properties is over or that the charm has been lost from the regions. Rather than being scared of regional investing, we encourage you to find the right region to invest in to achieve your investing goals.
We’re looking for the “here to stay” option rather than the flash in the pan.