Look beyond Sydney for NSW real estate in 2020: Hotspotting's Terry Ryder

EXPERT OBSERVER

Most talking heads, when asked to predict the coming year in real estate, look at the recent past and extrapolate that to the near future. So most commentators have been predicting the recent past. And therefore 2020 is all about Sydney and Melbourne.

More thoughtful forecasters have suggested the growth spurt in the biggest cities in late 2019 will not translate into another price boom in 2020. Some, including Westpac, expect relatively moderate growth in Melbourne and Sydney, with Brisbane leading on price escalation.

Very few ever discuss regional markets – which is unfortunate, because that’s where investors will find some of the best options for 2020, if it occurs to them to look beyond the big cities.

In NSW, I would suggest the best possibilities will be found outside of Sydney. And those who undertake research beyond absorbing headlines and sound bites will be surprised to find the best performers recently have been regional.

When Sydney was going through its post-boom correction in 2018 and the first half of 2019, regional areas of NSW were a notable contrast. Locations throughout the state continued to show growth in sales activity and prices.

The regions outside of Sydney have many examples of win-win-win situation provided by regional centres: affordable buy-in prices, much better rental yields than the big cities and good prospects for steady growth.

Many of these have long-term growth rates (the average annual increase in median house prices over 10 years) of 6% , 7% or more.

Regional centres with those kinds of strong long-term growth rates include Orange, Dubbo, Goulburn, Bowral, Mitttagong, Wyong, Terrigal and many others.

Goulburn near Canberra and Wyong on the Central Coast both have long-term capital growth rates of 7% per year while Bowral in the Southern Highlands averages close to 8% per year, which is competitive with anywhere in Australia.

Many locations throughout Regional NSW have recorded double-digit growth in their median house prices over the past 12 months.

These growth markets are spread widely across the state. Kingscliff in the north near the Queensland border, has risen 12% in the past year and now has a median house price above $1 million. Nearby Tweed Heads has grown its median house price 11% to $790,000.

In the far south of the state, Lake Albert (which is part of the Wagga Wagga market) has risen 13% to $400,000. Another sector of the Wagga market, Tatton, has grown 14% to $556,000, while central Wagga Wagga increased 9%.

Suffolk Park, which is part of the high-profile Byron Bay market, has increased 12% to reach $1.17 million.

Jindabyne in the Snowy River region has delivered a 14% rise in its median house price to reach $715,000, while Gulgong in the Mid Western Region is up 14% to $330,000. Gloucester in the Mid Coast region has increased 17% to $315,000.

Other locations in Regional NSW to record annual growth in the 7% to 10% range include Bathurst, Broken Hill, Cooma, Cootamundra, Cowra, Griffith, Maclean, Merimbula, Mudgee, Singleton, Tumut and Kempsey.

This strong price performance has occurred at a time when the Sydney market has generally been struggling for growth (prior to the revival in prices which occurred in latter part of 2019).

It provides compelling evidence that investors can find good investments with appealing prospects for long-term growth in regional areas.

TERRY RYDER is the founder of hotspotting.com.au
ryder@hotspotting.com.au
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