15 regional growth suburbs in NSW for smart property investment in 2017 and 2018

Property management

You can’t get away from the fact that Sydney has become an unaffordable market for many people, not just first time buyers.

And while the apartment market appears to have levelled off in 2017, continued demand continues to drive prices up, albeit at a slower rate. Some analysts see 2017 as a transition market, where some localities will remain strong and others will soften.

QBE’s Australian Housing Outlook 2016 – 2019 report notes that the supply of housing in Sydney is now at a level proportionate with population growth, which implies price growth will soften in 2017 and into 2018.

There has also been less overseas investor demand as lenders have tightened criteria, and NSW has imposed a surcharge on stamp duty, as well as a 0.75% land tax surcharge for foreign buyers.

The good news for the rest of the state is that the Sydney market is pushing buyers to invest in fringe and commuter towns or regional areas of NSW. This explains why many of the fastest growing regional towns and suburbs in the country are now in NSW.

Buying investment properties in a regional property hotspot

Looking to invest in a regional town or suburb? Then you need to be careful not to allow your heart to rule your head.

Images of a rural idyll often tempt people to make a poor investment decision. So to be financially safe, it is often best to look to areas with a diverse local economy that can withstand upheavals such as a major local employer shutting up shop. There needs to be a good mix of local employers that can supply tenants for your property.

You also need to remember the basics and look for an investment property that will give a good rental return while offering attractive capital growth.

Property prices and the housing market in NSW (2016 – 2017)

If you look at New South Wales as a whole, 2016 was a very strong year for land values and the NSW housing market, mostly driven by three factors: a robust local economy; increased overseas migration; and low interstate outflow.

These factors, together with historically low interest rates have caused dwelling deficiencies to increase further.

Regional NSW towns for property investment (2017 – 2018)

So, what can we expect for 2017, 2018 and beyond? And where should you be looking to invest to make the most of the fastest growing suburbs and regional towns in NSW?

Look to these 15 regional growth suburbs in NSW for the most attractive property investment opportunities in 2017/2018.

1. Regional growth suburbs: Wyong + Gosford

Central Coast land values are posting some impressive gains as they look to make up for lost time, and even match or surpass the growth Sydney has experienced.

Suburbs posting impressive land value rises in 2016 include Wyong (+12.7 per cent) and Gosford (+10.2 per cent), while Umina and Ettalong have joined Pearl Beach as lifestyle locations which Sydneysiders are willing to pay top dollar for.

2. Regional growth suburb: Newcastle

Newcastle was once Sydney’s distant, rather gritty, industrial cousin – not nearly as pretty or desirable. That has all changed, thanks in part to urban renewal projects in the area and a property market that is significantly more affordable than anything further south.

It is now one of the fastest growing regional towns in NSW. Consequently more Sydneysiders are voting with their feet and making Newcastle home, driving demand that is likely to continue for the foreseeable future.

When you look at the numbers you can see why: in 2016 Newcastle’s median house price was just under a half of Sydney’s. According to QBE’s Australian Housing Outlook 2016 – 2019 report median house prices for Newcastle are forecast to continue rising by around 4 per cent per annum, and are projected to reach $550,000 by June 2019.

newcastle property investment

3. Regional growth suburb: Wollongong

Like Newcastle, ‘the Gong’ has good infrastructure, proximity to Sydney and a high quality of life. It is looking to education and tourism to drive future growth in the local economy, so Wollongong property investment should be well placed to benefit from this combination of factors.

The Wollongong region saw a sharp rise in median house prices, with price growth of 18.4% in 2014/15 and 13% in 2015/16. Its relative a?ordability is an obvious drawcard, with median house price there (June 2016), estimated to be 63% of Sydney’s, making Wollongong an attractive option for Sydneysiders looking for a slower paced lifestyle.

4. Regional growth suburb: Stanwell Park

In terms of specific areas to watch, Stanwell Park just outside Wollongong is a standout with prices growing 59.9% (January 2016 – January 2017). It is commutable from Sydney and also offers access to the Royal National Park and an adjacent coastline that is increasingly popular with local tourists.

5. Regional growth suburbs: NSW South Coast

Parts of the South Coast are also experiencing soaring prices, especially if locations are close to popular lifestyle attractions such as stand out beaches or areas of natural beauty.

CoreLogic identified two standouts, Falls Creek, which is close to Jervis Bay and its pristine white beaches, where prices rose by +55.4 per cent; and Denhams Beach (Batemans Bay) which saw growth of +48.78 per cent (January 2016 – January 2017).

6. Regional growth suburb: Goulburn

Independent property valuation and advisory group Herron Todd White thinks investors should also consider Goulburn, a regional economic centre which offers affordability and solid rental returns. This is largely due to a diversified local economy that has high levels of employment.

Melbourne suburbs

7. Regional growth suburb: Broulee

If you are looking for solid rental yield on an investment property then look no further than Broulee, just south of Batemans Bay. With a gross rental yield of +14.49 per cent, this is one of the most attractive returns on offer in the state. It also has experienced impressive double digit growth of +16.18 per cent for houses.

8. Regional growth suburb: Shoalhaven

Another South Coast hotspot to look out for, Shoalhaven certainly has the numbers to make investors sit up and take note. This includes +17.7 per cent rise over the year to June 2017, and a 6.9 per cent rise in the past quarter.

9. Regional growth suburb: Nowra

If you are looking for growth south of the Illawarra, Nowra and its surrounds have experienced sustained growth. Median house sale prices rose from $301,500 in January 2016 to $383,000 in October 2016.

10. Regional growth suburbs: Lithgow, Bathurst and Orange

With a thriving foodie scene and local tourism on the up, Lithgow, Bathurst and Orange are also attracting investor interest. Local infrastructure improvements, including a road network that makes interstate connections easier, have also put this region firmly on the property map.

11. Regional growth suburb: Lismore

Yes, there is a flood risk in Lismore, but crucially not for the whole town. Herron Todd White believes there are opportunities to purchase older houses for less than $300k and undertake a cost effective renovation to ensure there is interest from tenants.

12. Regional growth suburb: Leppington

Don’t worry if you haven’t heard of Leppington, not many people have. But you may well have read about Badgerys Creek a little further north, as the site of Sydney’s proposed second airport. Here land is being rezoned for residential development, and Leppington is far enough away to be affected by aircraft noise.

13. Regional growth suburbs: Wagga Wagga

Land values in Wagga Wagga have been driven by first-home buyers looking for affordable property. With a median house price of $320,000 it is not difficult to see why, with significant investment in local services and the military presence in the area expanding, prospects look positive for future growth here.

14. Regional growth suburbs: Kyogle

Sleepy Kyogle may not have the same kudos as coastal Byron Bay, but it has displayed steady growth over the last five years with median house sales price increasing by +15.8 per cent. Not spectacular, but stable growth with the prospect of more to come on the back of more affordability-driven buyers.

15. Regional growth suburbs: Baulkham Hills

If you must buy in or near Sydney then Baulkham Hills certainly deserves a look. With a number of new train stations planned or under construction in the area, it looks to be a suburb that will be more accessible and more commuter-friendly in the near future. This type of development has never hurt a suburb.

Managing your investment property

Who will take care of the day-to-day management of your property? Do your research. Some property management companies will charge more than others – just make sure you find out what’s included in any proposed fees. Choose an experienced property manager who will look after your interests and your investment will pay off in the long run.

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