There’s long been an understanding in property circles that when things get a little challenging for our markets, the first areas in the firing line are always lifestyle locations.
Havens for holidaymakers who decide to invest in their favourite family vay-cay spots, are generally the initial ones to come crashing down in the domino price topple that can occur off the back of a significant slowdown.
We saw this come to pass immediately after the 2008 GFC, when coastal and country real estate markets took a serious tumble in values.
But as house prices continue to stall across our major cities right now, and first home buyers seek affordable commuter alternatives to the big ticket, inner urban property markets, some our larger regional towns are once gaining ground with punters as prices buck the downward trends.
Regional markets “the new black”
Improved infrastructure, particularly around public transport and major road networks, has seen a resurgence in the popularity of key lifestyle locations around Australia of late.
A recent McGrath Report revealed that an increasing number of property buyers want to be by the seaside right now, with Australia’s leading regional hubs listed as the Sunshine and Gold Coasts, as well as Geelong and Newcastle.
McGrath executive chairman John McGrath said, “Massive infrastructure investment across Australia is also boosting employment in regional centres.”
The report identified Geelong as the best preforming regional city, with an increase in median house prices for the Victorian coastal town of 9.8 per cent in the past 12 months.
So why are these satellite cities suddenly swarming with renewed buyer interest? Well, simply put, the increased demand means housing markets are on the rise, yet still remain relatively affordable; Geelong’s median house price of $505,000 is $200,000 cheaper than Melbourne’s for instance.
Of course not all of these burgeoning satellite cities are going to enjoy the same good fortune. As always, investors would do well to proceed with caution and consider some key fundamentals if considering acquiring an asset in a regional commuter centre.
To begin with, there seems to be a magical arc of around 90 minutes that people are prepared to travel within from major capital cities. McGrath says any further beyond this travel time and you’ll start to lose market appeal.
While affordability is obviously the primary driver of this metropolitan exodus of sorts, it still comes down to location, location, location for most buyers and tenants alike. They must have the means to access a multi-dimensional labour market, and the facilities and amenity that delivers their idea lifestyle.
Many of these regional centres now offer that quintessential escape from growing city living stressors, traffic congestion and the ever rising cost of inner urban living, with access to “inner city” infrastructure such as large retail shopping outlets and leisure facilities.
And when you consider the price tags can be far less than half price compared to their major CBD counterparts, it’s easy to see why more people do like to be beside the seaside…