Many Australians distinguish regional area property markets as having high risks. However, in an interview with Smart Property Investment, Simon Pressley said that “in five years from now, the best performing markets in Australia will be in the regional areas, and investing in them will come at no greater risk.”
Propertyology’s, Mr Pressley said that, “fundamentally, all markets carry a certain level of risk, but regional markets have moved, and continue to move, in the right direction over past cycles.
“The best performing markets will be throughout regional Australia — there will be some that will perform exceptionally well.”
The Rise Regional Property
Areas with a diversified economic base, known as “regional hubs”, will rise in the near future.
“There are a number of regional cities that actually play the role of a mini capital city and they service the smaller towns that might have a population of 5,000 to 10,000. There could be half a dozen or a dozen within a region.
“They’ve got all the essential infrastructure that a capital city has got, a diverse economy. It’s just a smaller scale of it, and literally, there would be 30 of those locations. They’re in every state.”
In contrast to capital cities, “regional hubs” offer affordable housing, “which balances the level of supply and demand”.
Pressley said properties in regional Australia do not frequently surpass $500,000, and can go as low as $200,000.
The Influence from Asia
Australia’s reputation as “Asia’s food bowl”, the emerging food industry, has also contributed to the redevelopment of regional areas; with more people, infrastructure, and jobs.
“When choosing a place to invest in”, Pressley said, “consider where the most in-demand products are processed and manufactured because this is where economic growth drivers are most active.
“That doesn’t mean that people should rush in and buy farms, but thinking about what that term means — what food are we talking about and where are the jobs? Where are the factories that are processing this food? Where are the abattoirs?
“There’s no farms in capital cities. We’ve heard a lot recently about free trade agreements, the TPP, and the enormous boost this is going to give the Australian economy. Is that going to benefit capital cities, you think? We think not.
“There’s also universities that are expanding in parts of regional Australia, which create jobs.”
According to Mr Presley, this economic surge also enhances tourism in regional areas. There are now more direct flights to major cities like Sydney, Melbourne, and Brisbane by regional airlines, as a result of regional airports being built or renovated.
The Effect on Capital Cities
Despite regional Australia’s predicted bright future, Mr Pressley said he does not believe it will completely overshadow that of the capital cities.
Although Sydney and Melbourne’s markets have experienced consecutive months of price decline, they are expected to flatten instead of totally crashing.
“Their economies are too strong,” said Pressley.
“But the supply is significant and there comes a point in time when those who can afford to buy have all done so. I think that’s where we’re at in the two biggest markets.”
Mr Pressley explained that market growth reoccurs every seven to twelve years. While Sydney and Melbourne’s markets may remain flat for a while, their strong economies should prevent any substantial declines.
He also predicts that Brisbane will not experience too much change, as it has seen a ten per cent dwelling price growth in ten years. He believes Canberra and Adelaide will also not experience excessive change, and Hobart will continue to grow. Whilst Perth has declined by six per cent over the past decade.
This article was based on Bianca Dabu’s article “Regional markets will outperform capital cities in 5 years, says expert” (Published: 06/04/2018) from Smart Property Investment