VIC Have you thought about investing in Regional Victoria?

Regional Victoria is offering some of the most attractive investment property options in all of Australia at present. Exceptional rental yields of 6%+, and hence positive cash flow investments. Relatively cheap entry points at $400k-$450k, offering tremendous capital growth potential. In our recommended locations populations are more than doubling in the next 20-30 years, driving huge demand for new housing. We recommend Geelong, Ballarat, Bendigo and Benalla as some of the strongest investment locations. Have you looked into these locations?

 

John

I am certain that Bendigo, Ballarat and Geelong are growth towns. All of these exceed 100,000 people each and are their growth potential has been exemplified and proven in the other threads.

But Benalla? What are the growth factors for it? It's not a big town with only 9000 people. It is also the furthest away from Melbourne compared to the above 3 towns. If Benalla qualify as a potential town for growth, what about other towns in this region? E.g. Wangaratta, Shepparton, Wodonga etc. Any of these 3 are bigger in population than Benalla.

And what's your view of the towns in the "West"? I asked about Ararat recently. I know that towns in this western region suffered the most economically and demographically in Vic the last few decades. Do you think this decline will continue?

 

Hi John,
I can certainly attest to your comments. I purchased in Geelong in early 2018 and have seen a rental yield of 6.1% and capital growth of 8%+. I've recently had my property revalued and there is a circa 94k equity increase. Dependant on my finance reassessment ability, I'll be looking to invest again.
I really the future prospects of Geelong and the fact it's 15 minutes from the Vic west coast.
There's a number of CBD infrastructure works underway inc new high rise towers and plenty of tower cranes erected. It would be terrific to have an electrified rail service / fast train to Geelong but I feel that card gets played at every election and never comes to fruition.
Also interesting to note, I've heard that Greenfield developers through Mount Duneed/Armstrong Creek are slowing the release of land allotments to increase prices.

 

I am interested to know what qualified Benalla as a growth regional? We were scouting Geelong end of last year and felt the Geelong train had passed so took our money elsewhere. Other considerations we did make were Shepperton and Warragul which are much bigger regional centers than Benalla.

Having been to Arrarat with work quite a few times last year, employers in the region are struggling to compete with the prison to hold down staff and there is a mass exodus of people leaving the area to bigger cities. Therefore industry is struggling but there is good yields to be had in the area. There is no foreseeable infrastructure planned for the area, only positive I see is the possibility of the prison expanding creating higher paid jobs.

 

Tread carefully... if tenants cannot live in your regional property and commute to a major employment centre within a reasonable commute time, it means that people living in the area can only afford to pay for the property what local wages can pay them. Much better if occupants can live there and if desired commute to a high paying job in a major employment centre (eg Melbourne).

 

I would suggest Phillip Island for coastal/regional or Wangaratta in north-eastern Victoria. Bass Coast has experienced the 5th highest growth in the past 3 years in all of Australia at 38.3% (2016 to 2019). Bass Coast also had the 13th highest internal migration between 2017-2018.

This is as well as Wangaratta which has been recommended as a property hot spot recently. Wangaratta's median house price has already risen 14% in the past year. Wangaratta is really a rarity with high growth and affordable house prices. It was mentioned as the best value for money and top area in Victoria based on affordability. Wangaratta had achieved a gross rental yield of 7.6 per cent and was a stand out for REIV. Still a really strong market. REIV says investors receive on average a 5.4 per cent return on a three-bedroom house in Wangaratta (One of the best returns in Victoria).

Property market research firm Propertyology also recommends Wangaratta as a future property hotspot in Victoria. Wangaratta is a top area benefiting from internal migration too which supports property prices. More so it was stated that Wangaratta is gaining from a strong local economy and the ripple effect. Effie Zahos finance journalist of Money Magazine also said "Wangaratta's three year growth forecasts are ranging from about 15-20%; so they’re expecting good things to come out of that.

Since February 2019 multiple articles have been published specifically mentioning Wangaratta (north-eastern Victoria) and Bass Coast/Phillip Island as growth hot spots for 2019 and beyond. Regional Victoria has been the strongest market in the nation for a while now. Bass Coast and Wangaratta have experienced over 200% growth over the past decade which really shows its long term prospects.

You should read these below

The 53 housing hotspots property researcher believes will skyrocket

Victoria’s top performing cheapie suburbs

The Regional Areas Popular for Interstate Migration

Regional Victoria remains stand-out market, but sales activity drops: Hotspotting's Terry Ryder

Best place to invest: Report names Warrnambool among best for investors in state

Over 100 markets with 200% growth revealed in new analysis - Smart Property Investment

Regional ‘cheapies’ best bets for investors

Experts Are Predicting A Property Market Boom In Australia's Most Unlikely Suburbs

Real estate hotspots continue to emerge in regional Victoria: Hotspotting's Terry Ryder

Regional Victorian leads the nation in house price growth: Hotspotting's Terry Ryder

 

Build in Wodonga in 2014 new H&L package in White Box Rise, think it was a company linked to ibuildnew who built it for us.

Rental yield is very good but CG has been non existent. Heaps of land releases and new builds plus loads of existing established stock available for $100K less.

Another plus was the depreciation which had helped the positive CF.

Wodonga median has increased pretty well over this time but this has been driven by growth in existing stock not new builds.

 

There are also lots of smaller centres not too far from Geelong which I think will do well over the next few years. Places like Winchelsea,Colac, Mortlake and all along the coast of course. Geelong is always called regional but just another Melbourne suburb in many ways IMO.

 

I'm thinking either Ballarat or Bendigo.

 

Just be careful you don’t pay a premium for a new property and end up with years of no CG. See Wodonga example above.

 

Is 400k budget is good for Ballarat?

 

Any one else feels like water shortages can be a serious risk when it comes to investing in regional areas?

 

It’s not really about your budget...it’s about what you get for your money and the best chance to generate some capital growth.

If you pay $400k for something worth $375k then you are behind.

If you pay $400k for a new H&L package but existing property can be purchased at $300k you are likely to spend a longtime waiting for CG.

Just do some research, look at recent sales and comparable properties to find what you think is a fair price for the properties you are interested in.

 

I have been through that many years before. Lessons learned, if no CG and only slightly CF+, even with all the goodies of tax advantages and negative gearing, you still don't end up having enough money in your pocket long-term. A reality facing a lot of regional IPs. Of course there are gems which is both good CG and CF, but far and few in comparison.