5 regions where property prices are tipped to keep growing

The property market has taken a hit from successive rate hikes, soaring inflation and weaker consumer confidence, but some regional markets are tipped to keep growing.

CoreLogic’s recently updated Mapping the Market tool showed 41.9 per cent of house and unit markets analysed in the June quarter had declined in value.

While Sydney and Melbourne markets were leading the downturn, CoreLogic economist Kaytlin Ezzy said interest rate hikes were having an impact on larger tracts of the housing market, including the more expensive areas of Brisbane, Canberra and Hobart.

Despite weakening property market conditions, InvestorKit founder and head of research Arjun Paliwal expected growth to continue in smaller, undersupplied markets.

Paliwal said the regional property boom was on track to continue for a little while longer yet.

“While our capital cities like Sydney and Melbourne will continue to decline due to being more sensitive to finance and monetary changes such as the interest rate hikes, many of Australia’s regional cities will continue to see strong performance until at least 2023 – and potentially even longer, with how undersupplied they are,” he said.

He said people were still moving to regional areas even as the nation recovered from the pandemic, with migration to regional areas rising by 16.6 per cent to reach a new five-year high in the March quarter.

“There are still plenty of regional areas with strong growth potential, due to common factors, including an undersupply in both properties for sale and rent, booming local job markets, a strong outlook of infrastructure development in the pipeline, accessible lifestyle, and affordability,” Paliwal said.

Here are Paliwal’s top five locations for regional property growth.

Tamworth, NSW

Over the past decade, Tamworth has experienced 53 per cent capital growth. This is much lower than major cities like Sydney, which Paliwal said indicated further opportunities for gains down the track.

Sales volumes were 30 per cent higher year-on-year, and sales days on market had fallen 54 per cent when compared with the same time last year.

However, the most promising sign for growth was how heavily undersupplied properties for sale were in comparison to pre-pandemic listing levels.

“When you combine low stock, faster selling and more buying, this indicates a rising price trend,” Paliwal said.

“Tamworth’s extremely low vacancy rate - sitting well below 1 per cent - will see rents rise, so we can expect Tamworth property to be on an upward trend.”

He said there were also a lot of major infrastructure projects underway in Tamworth, including energy projects, and there was extremely low unemployment in the region.

Bundaberg, Queensland

With family homes averaging between $580,000-$750,000, Paliwal said Bundaberg was affordably priced for a coastal region.

Paliwal said the main factors driving up Bundaberg's property prices were a combination of an affordable lifestyle market, low inventory levels, a market that hasn’t seen a lot of movement for a while, and near-zero vacancy rates, which was prompting renters to try and buy.

He expected this to result in rental price increases of $50-$100 over the next 12-24 months.

“While many are concerned about rising interest rates, the good news for investors is the increased rent prices will balance out the rising cash rate,” he said.

Barossa Valley, South Australia

Just an hour from Adelaide and well known for its wineries, Paliwal said the Barossa Valley offered more living space and affordability than any other capital city could provide for the same distance.

“The current rental vacancy of Barossa Valley is extremely close to zero per cent, with agents seeing 10-plus applications for rentals within a short period of being on the market,” Paliwal said.

He said the region’s property market had underperformed over its 10-year averages but was catching up.

He also said there was a lot of development and infrastructure being built in the region, including a hotel and wind farm.

Toowoomba, Queensland

Paliwal said Toowoomba had great potential for investors due to its strong and diverse infrastructure pipeline, including a rail project and various energy projects, which would improve the region’s liveability.

“Toowoomba offers its own CBD experience and is within commuting distance to Brisbane, yet offers greater affordability for buyers,” Paliwal said.

He also said properties were selling 51 per cent faster than the same time last year.

“It is now one of the fastest-selling regions in the country.”

He said the vacancy rates in Toowoomba were extremely low, with data suggesting it would see $50-$100 rental increases over the 12 months ahead.

“So, when you combine affordability, a diverse and strong infrastructure pipeline, rising rents to combat interest rates and also a strength in the local job market, it provides a very positive outlook for investors.”

Albury-Wodonga, Victoria

Albury-Wodonga was the final spot on Paliwal’s list.

He said the region had boomed massively over the past 10 years, which could be considered a red flag for investors.

However, he said the region still remained affordable, with house prices ranging from $480,000 to $600,000, on the higher end, despite doubling over the past decade.

Albury-Wodonga was also seeing extremely tight rental conditions, and had a strong and diverse job market.

Arjun said the strong infrastructure pipeline in the region also made it an attractive investment.