Property market update: Why all roads lead to Belmont
Around a third of Australians live in regional areas of Australia. So what factors influence prices in these areas and which areas are doing well and which ones are struggling?
Regional areas are diverse and range from commuter hubs such as Geelong and the Central Coast to large self-contained cities like Newcastle.
They also cover areas that are merging into extensions of capital cities in the way the Gold Coast is becoming part of Brisbane and more isolated areas that rely on local industry to sustain their economies.
House prices in regional areas are often less directly influenced by finance conditions than capital cities.
Local economic factors often play a far bigger role – for example, a new mine or new hospital can lead to a strong pick up in rental demand and pricing.
Even relatively small businesses can make a big difference.
Here, we look at what’s driving movement in three key regional markets.
Most popular streets for buyers are mostly in Belmont
Where are the most popular streets in regional Australia? For buyers, they are almost all in the Geelong suburb of Belmont.
Geelong continues to be one of the strongest markets in Australia, despite growth now slowing. Longer term, Geelong’s links to Melbourne will play to its strengths.
The announcement of a fast rail project in this year’s budget would reduce commuting times to half an hour. It would be quicker to get to Melbourne CBD from Geelong than it would be to get to many parts of Melbourne.
Why is Belmont so popular? The first is that it is an inner suburb of Geelong – we have seen these suburbs rank highly in terms of views per listing on realestate.com.au for some time now.
It is close to the train line into Melbourne CBD and is relatively affordable.
The housing stock would appeal to many younger buyers – a mix of older period homes in need of renovation, as well as renovated and newly built homes.
Movement in Mackay, the second strongest market in Australia
Mackay is the 7th biggest town in Queensland and is close to the biggest coal reserve in Australia.
It is heavily reliant on sugar cane farming and of course, mining. If you bought a house in Mackay 10 years ago, it is likely that it is worth less now than then.
House prices have dropped 15% over the past 10 years.
We are however starting to see some movement in this market. Prices rose by 2.4% over the past 12 months, the second strongest growth in Australia after Launceston. Weekly rent is up 9% over the past 12 months.
What’s driving the movement? With everyone eating less sugar than they used to, it is unlikely to be sugar cane farming.
Employment growth is currently being driven by a boost in mining.
The most recent new mine announcement was in May – the Hillalong Coal Project will employ around 400 people during construction and a further 400 in operation.
For a town the size of Mackay, this is a big boost in employment and will continue the strong rental demand in Mackay.
For house buyers in Mackay, the most popular suburbs on realestate.com.au are Erakala, Richmond and Farleigh. For renters, it is West Mackay, South Mackay and North Mackay.
Time to keep a close eye on Townsville?
It has been a very tough 10 years in Townsville. House prices are 20% down from where they were in 2009.
Even over the past 12 months, things aren’t much better with prices down 2.2%.
There is however some better news coming through in rental data. Rental rates are up 5% over the past 12 months – not exactly powering ahead but still positive.
What is very positive, however, is the potential for further rental increases.
Views per rental listing on realestate.com.au are extremely high. So much so that Townsville is ranked 7th most in demand nationally, just recently joining high demand areas such as Hobart, Adelaide and Melbourne.
Generally, a return of rental demand is a precursor to price growth.
This is likely driven by a combination of two things. The first is that rental demand tends to be higher when there is jobs growth and hence population movement to an area.
This creates higher demand for housing as people move from renting to buying.
The second is that property investors generally flow into areas that are seeing high rental growth – partly due to the ease in getting a tenant but also higher yields.
Most recently we have seen this in many mining towns around Australia where rental growth began over 18 months ago and we are now seeing the strongest price growth in Australia.
The suburbs seeing the highest views per rental listing in Townsville are new home locations, Burdell, Mount Low and Mount Louisa.
These are quite different to the high demand suburbs for buyers – Castle Hill, North Ward and Belgian Gardens.