October 10, 2018

Best regional QLD areas for property investment

Thinking of investing in the regional Queensland property market?

You'd be forgiven for being cautious, given the travails of mining towns in the state, where headlines as recently as 2016 screamed: 'Property investors lose 50pc in QLD mining towns' and worse.

Fast forward two and a bit years and there is optimism in the tropical air, as headlines speak for themselves: 'Regional QLD property markets back in business with buyers'. Back in business indeed, with a host of regional centres recording a surge in demand.

But where exactly are the best regional investment areas and why are they performing?

Is regional Queensland booming?

To be clear, not all regional centres and towns in the Sunshine state are booming - but there are signs of recovery, especially in coal mining towns which are reviving as the coal price climbs. But this is only half the story - Queensland is the number one destination for inter-state migrants, with the subtropical climate and laid back lifestyle proving to be strong drawcards. Queensland's population has also grown steadily recently, but is projected to climb steeply in the future to reach 7.21 million by 2036.

Like other regional property markets across Australia, the unaffordability of metro markets has driven buyers and investors to relocate to or invest in Queensland. How can one argue when the median house price in Bundaberg is just $296,000, and $270,000 in Rockhampton? Here, the 'ripple effect' is also at play, where proximity of areas - like the Sunshine coast, north of Brisbane - offer many or all the amenities of a capital city, and piggyback off this proximity.

Best regions in Regional South East Queensland to invest in property

Queensland’s Sunshine Coast and South East Queensland are currently the standout regions for regional property investment, with both areas proving attractive for Sydney and Melbourne investors.

Overall the Sunshine Coast has recorded growth in dwelling values of 5.3 per cent to March this year, with the suburbs of Buddina, Forest Glen, and Noosa Heads all posting gains of 13 per cent or more last year.

Mining towns in regional Queensland are back on the property investors' radar after many posted double digit gains over the past year. This includes Moranbah in Central Queensland, which has advanced 22 per cent over the year, while the median house value in the Isaac region had increased by 12 per cent to February 2018. Unemployment is also down across much of this mining rich region, which is a positive sign.

Other areas to watch are Bundaberg and Fraser Coast, which are both developing into thriving regional hubs with diverse local economies and centres of employment. The port is due to be redeveloped as part of the Bundaberg State Development Area (SDA) and tourism to the nearby Great Barrier Reef is also increasing.

What should buyers and investors be wary of in Queensland?

Like any property market, you need to look at the underlying fundamentals before investing. This includes data and metrics on jobs growth, population growth, consumer confidence and supply and demand in the area. If you are thinking of investing in a Queensland mining town, you'll also need to look at macro-economic factors, like the price of commodities such as coal.

In addition to this, you'll need to identify your property investment strategy - capital growth or cash flow - and buy accordingly. As a general rule of thumb, cities tend to offer better prospects for capital growth while regional centres and towns are more about cash flow.

How can we expect the regional property market to change in the next year?

Prospects look good for regional markets across Queensland, which now look to be firmly in recovery mode. CoreLogic's Home Value Index has regional markets outperforming the combined capital cities, with a total return of 7.9 per cent - while metro regions record returns of 4.1 per cent.

According to professional services firm Deloitte, Queensland’s economy is set for an annual growth of 3.1 per cent until 2021. Compared to a national average of 2.7 per cent, this bodes well for the Sunshine state over the medium term.

How to identify an area with high growth potential

Identifying regional property hotspots with high growth potential takes time and know-how. When it comes time to doing your research, these factors and metrics are worth keeping an eye on:

  • Large government investments in local infrastructure or services - they are likely to improve access to the area and/or provide long term employment - which in turn stimulate the local property market. It's also a good idea to look for unemployment figures under 4 per cent. 
  • Lots of renovation activities in a suburb - this is normally a sure sign that the area is on the up, as are a buzzing foodie and cafe scenes. 
  • Days on market - a metric which tracks the number of days it takes to sell a property. Shorter timeframes are indicative of a 'hot' market. However, you do need to know the local market before this becomes meaningful as rural listings would have very different benchmarks to metro locations.
  • High auction clearance rates and sellers choosing this method over private listings often indicate high demand for property in a location, and the potential of high growth in the near future.
  • Rising rental yields - another metric to track. They indicate that demand for rental accomodation is growing due to local population growth. 
  • Property demand exceeding supply - it's usually indicative of a 'hot' market.

How much is your regional Queensland property worth?

Like to know how much a property is worth?

Use our OpenEstimates tool to get an algorithm generated value of any residential property. By telling us a little bit about the property, and comparing it with 3 recently sold properties, our tool crunches all the data and provides you with an estimate for your property.

Craig Gibson