Another day, another forecaster tipping explosive growth in regional property markets.
Hostpotting.com.au founder Terry Ryder last month told investors to abandon Sydney and Melbourne and invest in regional areas with plenty of infrastructure.
And now it’s the turn of Select Residential Property (SRP) to talk up our regional markets.
The research company has published a list of 20 regional suburbs where prices are set to increase more than 20 per cent over the next three years, and a small town near Byron Bay is leading the charge.
SRP research director Jeremy Sheppard said the list is focused exclusively on holiday destinations, so that Aussies don’t make rash decisions during the upcoming holiday season.
But holiday appeal isn’t the only thing going for them, with most laying claim to strong economies and large populations, too.
“Investors go away on holiday around this time of year, and they get lured into buying in a location which may not have good capital growth prospects,” Mr Sheppard told The New Daily.
“At the time they go there, during summer holidays, their eyes are wide open, they love the place, and they make an emotional purchase, rather than a numerical one.”
East Ballina tops the list. It’s a coastal suburb 30km south of Byron Bay, with a population of 26,381.
SRP is tipping prices there to lift 27.8 per cent over the next three years – thanks to its beautiful beaches and undersupplied housing market.
The rest of the list is mostly made up of suburbs from NSW and Victoria – though Tasmania and Queensland have snuck in three suburbs between them.
Median house prices range from $297,000 in the regional hub of Mildura, on the Murray River, to $980,000 in North Avocoa, on the Central Coast.
How did they come up with the list?
The research company analysed 17 different data points to determine whether a suburb had an under or oversupply of housing, and naturally forecast greater growth for suburbs where demand exceeded supply.
Everything from auction clearance rates to average vendor discounts and days on market were fed into the firm’s proprietary algorithm, which then gave each suburb a score out of 100.
The more demand outstripped supply, the higher the score and greater the price growth.
Even the number of open for inspections can provide insight into a suburb’s growth potential, Mr Sheppard said, with agents more inclined to encourage private inspections in cooler markets.
But while other investors also keep an eye on population and job statistics, Mr Sheppard says these data sets can be misleading.
“Jobs growth is important, but it’s not tremendously accurate at a suburb level. Typically jobs data is for a much larger area … and if jobs are driving demand for real estate, then it should show up in things like fast selling times and low discounting,” he said.
“And when you drill down to a local government area, population growth is misleading – because the largest population growth you can get for a suburb is when it’s a greenfield site, and that just represents supply, which is the enemy of capital growth.”