This article is from the Australian Property Journal archive
CITY dwellers continuing to look for more affordable lifestyle locations to call home has seen regional Queensland locations emerge as the most ideal for investors looking for affordability, cash flow, and capital growth potential, while a part of country music hub Tamworth topped the lot.
According to Hotspotting director Terry Ryder, regional areas, and especially Queensland, are increasingly becoming locations of choice for educated investors looking for cash flow and capital growth.
“Cash flow has become increasingly important over the past two years, given the much higher mortgage repayments in play,” Ryder said.
“But strong rental yields should never be the solitary reason to invest in any location or dwelling.
“Rather, it is imperative that investors seek out areas that also offer capital growth prospects, often due to their booming local economies across a diverse range of industries.”
According to the Hotspotting National Top 10 Positive Cashflow Hotspots, West Tamworth, in the NSW New England region, is benefiting from the emerging renewable energy industry in the region, with some $10 billion worth of projects underway.
“However, Tamworth has a diverse economy more generally with the top industries being healthcare, retail, education and training, manufacturing, and construction,” Ryder said.
“Its affordable property prices also mean it presents solid opportunities for investors who are seeking capital growth potential but also strong cash flow.”
West Tamworth has a median house price of $340,000 with annual growth of 6%, a current rental yield of 6% and a low vacancy rate of 1.7%.
“There is no question that Tamworth is benefitting from the exodus to affordable lifestyle trend that has been under way for a number of years already,” Ryder said.
“As properties in our capital cities become more expensive, we will continue to see former city dwellers seeking out more affordable lifestyles in places that also offer many of the facilities they have come to expect.”
Regional QLD options
Regional Queensland locations Gladstone’s Glen Eden, Bundaberg North and Rockhampton’s Berserker were next in line.
Tim Graham, Hotspotting general manager, said the strong showing of regional Queensland in the top 10 was testament to affordability, but also a variety of significant major infrastructure projects under way.
“Some areas, such as Gladstone, had previously been overly-reliant on the resources sector, which had a positive or negative impact on its property market depending on the strength or weakness of the mining industry at the time,” Graham said.
“However, today, its economy has a range of smaller projects that are spread more evenly across a range of sectors, which creates a more stable residential property market.
Glen Eden has a median house price of $400,000 with annual growth of 3%, a rental yield of 6% and vacancy rate of 1.2%.
Gladstone’s population is forecast to increase by more than 60% from 2021 to 2041, as major projects get underway. Among them are Fortescue’s PEM50 green hydrogen production plant, and Australian Gas Infrastructure Group’s renewable hydrogen blending facility Hydrogen Park.
“Rockhampton also has not been resting on its laurels and has billions of dollars of major infrastructure projects under way, including transport, defence, resources and energy. Plus, its CBD has undergone a revitalisation project as well.”
Investors can expects rental yields of 8.0% in Berserker, which has a median house price of $290,000 with 9% annual growth. Its vacancy rate is just 1.0%.
Bundaberg is benefiting from a variety of billion-dollar plus projects in the region, including the $1.2 billion new hospital as well as the $2 billion South Beach Heads residential development in Elliott Heads.
Bundaberg North is seeing annual house price growth of 17%, with a current median of $405,000. Rental yield is 6.5% and vacancy rate is 0.6%.
Elizabeth Downs in North Adelaide, which has seen price growth of 22% to a still-affordable $375,000, is being supercharged by billions of dollars being spent on technology, equipment and infrastructure at the RAAF base in Edinburgh. Rental yields are 6.3% and the vacancy is an eye-watering 0.3%.
There is also the $250 Playford Alive Town Centre Development and the $175 million Playford Health Hub projects.
WA locations make the list
Also making the list was southern Perth’s Kwinana, which has produced 20% annual price growth to $390,000 and is also the second-fastest growing LGA in Western Australia.
Fast-growing key port towns Geraldton and Bunbury were on the list, with Geraldton remaining a major mining centre while Bunbury is home to major infrastructure projects including the $278 billion Bunbury Hospital and the $800 million Greenbushes lithium mine expansion.
In the units segment, gentrifying inner north east Brisbane suburb Bowen Hills and Cairns suburb Yorkeys Knob were the standouts.
Bowen Hills is currently undergoing a transformation from industrial suburb to a popular inner city locale for young people, with a median age of just 30 and a high number of tertiary educated people.
Meanwhile, Yorkeys Knob – where renters account for 50% of residents – is being helped by Cairns’ move away from heavy reliance on tourism to a more even mix of healthcare, education, defence and agriculture.
