While much is being said about Sydney Melbourne declines, I'm yet to see dips in any decent regional or lower priced areas. I've started looking for my next investment and prefer affordable range housing in reasonable areas to get CF neutral and longer term growth prospects. I understand Perth is showing good opportunities but I know nothing about it. Anyone seeing this property decline impacting east coast regionals as yet? Most towns seem to be steady near the highs of 6 months ago. TL DR - post a bargain east coast regionals.
Most regionals did not have the spectacular growth that Sydney and Melbourne enjoyed for years before their recent downturn. One reason for their downturn is that they well and truly overshot their long term growth trends. So regional prices will probably remain fairly steady. Marg
Regionals are hard to gauge at the moment. There's a time lag between Sydney and NSW regionals. Regionals are normally still going up when Sydney has started to fall. They got some benefit from the Sydney boom until APRA changed the rules. Most regionals didn't get a chance to boom so there's probably no reason for a bust either. If you can work out where that leaves them in the cycle let me know. Willy
Probably in the same place as others that didn’t boom - despite frequent predictions Brisbane values failed to increase dramatically. Marg
@MK101 Define regional? Some see Wollongong as de facto Sydney other call it regional. Coastal markets march to a different drum than inland regionals. Each inland regional marches to a different drum than others based on local economies that can be more or less influenced by the industries located there. Universities, Army/Naval bases, Mines, Manufacturing/Logistics and health/hospitals along with tourism and agrigulture can all combine so some regionals have tight rentals, growth prospects and great value, whereas others have already peaked or may be softening. It is case by case, I think people say they are hard to gauge because you are putting some very different products into 1 bucket and trying to make sweeping statements about them as an aggregate. You don't buy property in 17 regional towns at once so you shouldn't research "combined regionals" you should research each town and end up with 1 you are happy with based on the evidence and how it lines up with your goals. Then buy 1 property in that town. If you are happy with the outcome, then decide what to do for property number 2. Etc.
I agree to a point, but to say that all regionals beat to a different drum ignores the ripple effect that clearly exists. Willy
Yes I get your point @BuyersAgent but I was really looking for the spill over trend of the capitals declining, seeing if anyone is seeing anything yet. I did a review of a few coastal towns and some inland towns to see if prices have slipped anywhere but not yet. I left off Newcastle, Wollongong, Geelong as now psuedo/attached to major cities and pretty pricey. As others have pointed out, the regionals didn't get the run up so have less to retreat. If I had to average it out, most ive looked at are up about 40% over 5 years and holding near their peak from late 2018. Anyone seeing declines?
Ripple effect has always held strong for the most part. This was recently verified by @tomlemke who noted that Newcastle is largely 10-15% off peak... it seems like a 6-12 month lag.
I remember my first regional purchase 20 years ago. There was nothing going on in the area to suggest that values should rise yet it's value more than doubled in the first 4 years because Sydney had boomed, the ripple flowed out and it just "looked cheap". After such a strong period of growth there were still no recognisable drivers there that explained why prices went up. Apart from it being "it's turn". Now look at a place like Toowoomba. Massive infrastructure projects, very diverse economy, new jobs and industry, basically a model example of a regional city on the move. When will prices in Toowoomba go up? Not until Brisbane goes up and makes "room" for growth in Toowoomba and then the ripple will flow out. Willy
Cheers guys, I think the ripple effect is what I was trying to encapsulate, are we seeing "negative ripple" as yet?
Newcastle, as for Sydney & Melbourne & probably other 'regionals' is not equally impacted. Some areas holding up better than others.
Of course, same as Sydney. Some suburbs only down 10% while others down 25%. Could you share you experience of where is holding up better and why?
and that depends very much "where" in Newcastle - the expensive suburbs (ie, Merewether) overshot and have pulled back - cheaper suburbs (ie Cardiff) have simply remained steady
I'd also be careful of some regionals that are suffering from lack of water. I know Orange is now on less than 3% dam capacity
[QUOTE="Shane Oliver, post: 697682, member: 19447] Could you share you experience of where is holding up better and why?[/QUOTE] APRA stepped in "mid ripple" if you like. So the areas closest to Sydney that got the benefit of the boom have fallen but areas further out didn't get the full benefit of the price rise so seem to holding up ok because they are still affordable in comparison. That's my theory anyway. Willy
I agree there is a ripple effect, and that it can be observed. I just don't agree that it flows into all regional areas at the same time or in the same way. Yes... when Sydney is running everyone wants to buy in Sydney for its powerful CG. And Yes... when Sydney stops there is quite a bit of money looking for alternatives. This alone is enough to create some degree of ripple. My point is that some areas will "Ripple" better than others in each cycle and after each Sydney run. The current financial restricutions that stopped Sydney are preventing lots of investors from borrowing (some just reduced but many stopped in their tracks) so the ripple as a whole seems somewhat muted currently. I think if finance opens up a little post election we may see that change. There are areas that lag on growth for a long time and then slingshot due to being too cheap for too long, but I would suggest there are probably reasons/indicators for the growth - you just didn't know them at the time. It is one the nicest things about Jan Somers books (the original Australian property investor matriarch) that she is so honest about how she "got lucky" several times with growth runs she wasn't entirely expecting. As an average I would say this isn't far off. I have seen a few that are flat, a few that are down 3-5% and a few down 7% but nothing like Sydney. One or two even kept growing although at a snails pace. As per above the finance restrictions and sentiment have hit most of the east coast but those with locally strong fundamentals are still looking good for a 2nd phase of growth once the sentiment resets, finance gets a little easier and people get on with life again.
