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Regional Australia is proving to be an attractive hive of activity for real estate agents looking for growth and new markets, but as with all new growth areas, agents should proceed with caution.
So far this year, networks large and small have told REB that regional parts of Australia are where they’re eyeing new offices and client bases. Most recently, Laing+Simmons announced it is investing in regional areas on the east coast, including in NSW’s Hunter region.
In fact, award categories recognising regional professionals are among some of the most populated in this year’s upcoming REB Awards, and the REB Women in Real Estate Awards last month.
This activity lines up with predictions from the likes of McGrath who said regional property markets are “the new black” in its 2019 Property Report. This was on the basis of improved infrastructure like rail links and the NBN, particularly in hubs along the east coast. Job and cultural centres are forming off the back of these federal government investments, and in many cases, these areas are in the infancy of their capital growth potential.
What the numbers say
Broadly, key metrics — like values and vacancy rates — have indicated significant potential in parts of regional Australia. However, data indicates ongoing fluctuations to be wary of, which is to be expected of emerging or growing markets.
For example, take the vacancy rate report produced by REINSW for the popular Hunter and Illawarra regions of NSW. It was released this month and spans four weeks over April and May.
Newcastle in the Hunter region saw a rise in vacancies of 0.3 of a percentage point to 1.7 per cent, after a substantial fall of 0.7 of a percentage point between March and April. Further, vacancy rates in other areas of the region increased by 0.1 of a percentage point in April to 1.9 per cent this month.
For the Illawarra region, on the whole it experienced a 0.5 of a percentage point increase in rental vacancies, from 2.6 per cent in April to 3.1 per cent in May. Wollongong and other areas also saw sharp increases of 0.6 of a percentage point to 3.3 per cent and 0.8 of a percentage point to 2.9 per cent, respectively, between April and May.
Also, looking at values across June produced by CoreLogic, they slipped in regional areas by 0.4 of a percentage point, compared to the capital city markets which fell by 0.1 of a percentage point.
In addition, according to CoreLogic and other leading research houses and economists, the price dives in capital city markets are set to hit their floor and are on track for a slow recovery at the end of this year and leading into next year, sparking the attention of new entrants to the market, such as first home buyers.
Ultimately, the growth proposition in regional parts of Australia remains solid, particularly those set to benefit from ongoing federal government investment. However, it’s important to realise the fluctuations at play, and the looming competition that is recovering capital city markets.
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