Hi folks, Did a quick search on here; not much on Mount Gambier so I thought to start a thread on it. No specific questions other than the usual; - Any anecdotes from those invested in this market? - Any insights from those conducting due diligence? - Any readers currently living there or who have lived there and care to share thoughts on the regional city? 2nd biggest city in SA. Mind you, that isnt saying a lot as it is only about 28,000 population. Seems to have decent yields and a diversified economy with reasonably low vacancy rates. Suffers from that regional remoteness of being a good 4+ hours drive to a cap city, however.
My initial dd indicates days on the market to be quite high if a seller wants market price. Cheaper props are around pick avenue area. But cheap properties all over town that require work.
I know Mount Gambia quite well. Had relatives there growing up so would make the 6hr car trip from Melbourne regularly. Many trust homes, well build but generally poorly looked after. I am with DT. Too far away from any metro (Melbourne, Adelaide), not on the beach.
Well said but if yueld ever stacks up then mount G is a buy! We are well travelled and its a great town
Yes, it is a nice town and has a great feel to it (albeit I have not visited for many years). Gross yields would good, but prices are low, so holding costs as a proportion of the buy price (rates, insurance, maintenance) are high so net yield would be lower. I must say if I was looking to buy in SA, and had a restricted budget, I would target the outer suburbs of Adelaide where you can buy a house for a modestly higher price v Mount Gambia. If you are a Victorian (like me) one big advantage in buying across the boarder is a lower land tax rate, particularly if you have large holdings in Victoria and are in a high land tax bracket. But again, Adelaide gives you the same benefit in that respect. Plane fare to Adelaide is also not much different to a plane fare to Mount Gambia. Anyway, just some quick thoughts. Best wishes for your investments.
Thanks for your thoughts folks. Holding costs are higher than Victoria? Their hospital recently had to undergo a major review. I'm from Hamilton, and hospitals are pretty poor in the South West of Vic, Mount Gambier area. I see there are some pretty interesting infrastructure projects planned there. Ultra-fast internet for Mount Gambier The SA government does do some interesting things like their system of holding property for first home buyers so investors cannot snap them all up. Issue has been, area is so dependent on agriculture and manufacturing historically. So SA folk are generally older and poorer ( reference a recent article I read in the Guardian ).
Holding costs would be no higher in SA, but would be higher as a percentage of the purchase price. You could pick up some of the former trust homes in The Mount (is it still called ‘The Mount’) for $150k v a median in Melbourne ~$600k. Costs like rates, insurance, etc are not greatly different v Melbourne, so percentage wise, costs are higher (as percentage of purchase price). This is not an issue with Mount Gambia as such but is the case for most regional investment with high GROSS yields. There is no shortage of debate on PC about the pros and cons of buying in the major capital cities for growth v regional towns where capital growth is lower but yields certainly higher (but not as high as you think once all costs are accounted for). PS: Have fond memories of Hamilton. Bus from Melbourne to The Mount would always stop in Hamilton and we would get off to have lunch there. I must visit soon.
To give an example of this, insurance on a $1m property in Melbourne may be say $600 per year, whereas insurance on $150k MG property may be $400 per year. So costs as a proportion of buy price are much higher.
Yep. Even in metro areas we find this too though - both a 250pw rental and a 500pw rental will need a $1500 hws replacement some day.
Yes, a lot of fixed costs that don’t vary based on value. I purchased $150k regional and insurance was similar to >$1m property in Melbourne. If you do a call out on maintenance, pretty much same price. So, you really need to look through the higher yields on low value properties.
Putting aside bank interest, my rental property costs (that’s everything, maintenance, insurance, land tax, etc) are 38% of gross rental.
"Too small and too far away" from any metro area has no correlation to capital growth. Mildura is 4 and a half hours drive from Adelaide and 6 hours drive from Melbourne. However it has seen stronger capital growth than most capital cities including Sydney and Melbourne in the past 5 years. It has also outperformed Bendigo (< 2hr drive from Melbourne and recorded 38.8% growth in median house price) and Shepparton (22.9%). The fundamentals are looking good at first glance (a diversified economy with a youthful workforce). Household income distribution is on par with similar regional cities. I have been wondering for a while what was the issue that caused the house price to be stagnant... It turns out that the local government has been over promising and under delivering for over the past 20 years. They have not even achieved what they predicted as the worst case scenario in population growth. 10 years later, they have updated their population strategy to aim at 32000 by 2027 which is a more realistic goal but I reckon they are still going to struggle to achieve it. Another issue is the lack of major infrastructure projects. Over the last decade, the largest infrastructure project was the Mount Gambier Hospital ($27m) followed by the regional airport redevelopment ($9.2m). For a city with 27k population, this is nothing. There have been some positive changes recently including a ~20% reduction in median days on the market. But I don't think it's enough to guarantee a strong and sustained growth. I still believe this underdog will have its day, with all the fundamentals mentioned above. It just needs a bit more attention from all levels of government.
Are you able to share some feedback on the desirable pockets and areas to avoid in Mount Gambier?TIA.
