The perceived wisdom in real estate is to buy in markets that you know well. There’s logic to that approach but an equivalent downside that could lead to many a lost opportunity.
For some time now, Richardson & Wrench has been expanding its network outside the Sydney metropolitan region and strengthening our base in Queensland. The reasons for this strategy are based on numbers and history. This is not the first cycle in which Sydney housing prices have led to a migration to other states and regions and where the population grows so too the demand for services such as real estate.
The most recent data contained in CoreLogic’s Regional Report to the December Quarter highlights the stellar performance of the Illawarra, which had the largest annual growth in prices for both units and houses, at 14.8 per cent and 15.2 per cent respectively.
There was growth also in the Hunter Region where R&W has recently opened two new offices, less than 10 per cent but showing steady growth and importantly affordability – the missing factor in much of the Sydney metropolitan market.
At Lithgow, just over the Blue Mountains, the median house price of $288,810 represents a lift of 10 per cent in the past 12 months with average rental yields of 6.8 per cent.
On the Sunshine Coast, house prices have risen steadily at around 4-5 per cent annually over the past five years, not the kind of boom time prices that have become familiar in Sydney but indicative of stability and momentum. Noosa, which is sensitive to capital city pricing in Sydney, Melbourne and Brisbane, has experienced a 7.9 per cent increase in house prices in the year to December 2016 and while units have shown less spectacular growth, yields are running at a healthy 5.4 per cent.
Clearly there are many people who’ve rejected the notion of buying in their own backyard and are benefiting from venturing into unfamiliar territory. Of course it’s essential to do your research first but an astute investor, tree changer or sea changer should be looking to apply the same criteria that we follow in our expansion strategy.
Foremost is the economic base of the regional town or area that you are contemplating. If it’s a one trick town, as many resource-dependent locations are, there’s a high level of risk. For those who get the timing right, buying early and selling at the peak, there are gains to be had but it can be a heart-stopping ride and it is more speculation that investment.
Diverse economies, as you find in the Illawarra and Hunter region, mitigate the risk. Agriculture, viticulture, manufacturing, tourism, education and increasingly infrastructure will drive further population growth and economic prosperity.
But you don’t have to leave your hometown to find opportunity in the unfamiliar. Most people are by nature creatures of habit, preferring to live, work and socialise in the areas where they grew up. The reality is that cities change and suburbs that were once affordable when parents bought 20 or 30 years ago are now beyond reach of their offspring.
The prime time for taking risk is when you’re young and there are a growing number of millennials and Generation Y who are discovering their sense of adventure in their property choices; breaking out of the mould and exploring areas outside their comfort zone.
Those who’ve never ventured west of the Iron Cove Bridge would do well to take a weekend day trip to explore suburbs that are abuzz with activity and optimism. Once considered fringe, these areas are not only about to take off with the completion of new infrastructure and prospect of much more to come, they offer a lifestyle that many hanker for.
Café culture is hardly the sole preserve of the inner-city and if you’re looking for diversity in dining-out, the best and most authentic experiences lie many kilometres west of the CBD.
It’s too easy to take headlines at face value. Affordable housing does still exist; you just need to open your eyes and know where to look.