Population growth generally indicates higher demand for housing and, therefore, higher price growth. However, Propertyology analysis of regional housing markets has shown that this is not always the case, particularly with regional markets with smaller populations.
The study found that many small towns have seen increases in median house prices as robust as those recorded in capitals over a period of 20 years. In fact, higher returns on investment have been reported among those whose population is less than 50,000 compared to some capitals.
For example, Alice Springs in the Northern Territory recorded average capital growth of 6.1%. This growth over two decades is greater than Darwin's average 5.7% gain on the value of houses during the same period. Alice Spring has 26,500 residents, which is less than 20% of Darwin's.
Another example is Bellingen, a small town of 13,000 people in New South Wales. Over the past two decades, Bellingen has recorded average growth of 7.6%, more than 7% in Sydney.
"These facts are just a few examples to highlight the glaring inaccuracies with people's perceptions of Australian sites with a small population – lifestyle, real estate opportunities, risks," said Simon Pressley, head of research at Propertyology.
Stability in the regions
There is a common misconception that regional locations are somewhat riskier than capitals, Pressley said. However, the study found that regional cities, particularly those with diversified economies, often have a higher history of real estate price gains than capitals.
For example, Esperance in Western Australia has seen price increases in 17 of the past 20 calendar years, while Perth has only grown in 14 years.
"As investors in big cities struggle with tempting mortgages and massive holes in their annual cash flow, a myriad of small locations provide investors with money in their pockets every year with capital growth, "said Pressley.
Among the capitals, Perth and Sydney recorded the largest number of annual declines over the 20-year period, at six and five years, respectively. The table below shows the cities with the least number of annual crises recorded during the period:
Region / regional city
Population
Number of years in decline
Average capital growth
Alice Springs (NT)
26 500
2
6.1%
Barossa (SA)
24.800
3
6.0%
Warwick (QA)
12 300
2
5.6%
Launceston (TAS)
67 500
3
7.5%
Kyabram (VIC)
7 300
1
5.1%
Strathbogie (VIC)
10 700
2
7.4%
Wangaratta (VIC)
29 000
3
6.2%
Espérance (WA)
14 300
3
4.8%
Dubbo (NSW)
53 000
3
6.3%
Goulburn (NSW)
30 000
2
8.1%
Lismore (NSW)
44 000
3
6.5%
Orange
42 000
1
6.4%
Wagga Wagga
64 900
1
5.9%
Pressley said locations with more affordable housing actually reduce the risk of real estate investment.
"Locations with a significantly more affordable purchase price mean that real estate investors need smaller deposits," he said, "It means buyers can enter real estate markets earlier and expand. their wallets faster. "
The growing number of Australians moving to regional locations is also a good indication of the direction of markets outside the capital.
"With the eight Australian capitals included, there are 185 individual cities which have a population of 10,000 or more. Any investor who focuses on his hometown gives himself a one in 185 chance of making the best decision", said Pressley.
A recent guide to Your Investment Property describes the top five considerations that property investors should have before entering a regional market. Read the guide here.
Top suburbs:
willliamstown
,
sth toowoomba
,
Wallend
,
Mortdale
,
Campsie
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