Predicting the suburbs that will see the strongest property price growth over the next decade is a difficult task, but past buyer behaviour can offer a few clues about the areas that could be earmarked for urban rejuvenation.
Price growth data from realestate.com.au shows the areas that were popular with first-home buyers 10 years ago have become some of the best performers. Sydney’s inner west and Melbourne’s inner north are just two examples of areas that have done particularly well over this time period.
Since the beginning of the year, we have seen a surge in first-home buyer enquiry on realestate.com.au off the back of a suite of government incentives such as the 5% deposit scheme as well as record-low interest rates. Most recently, the federal government announced the HomeBuilder scheme, and while not specifically designed for first-home buyers, the program has been particularly popular with them.
In addition, the states and territories offer first-home buyer incentives in the form of grants and stamp duty exemptions, with New South Wales this week announcing that stamp duty will be temporarily scrapped for first-home buyers purchasing newly built properties worth up to $800,000 and heavily discounted for homes priced up to $1 million.
First-home buyer search activity from a decade ago could help predict the areas set for urban rejuvenation. Picture: realestate.com.au/buy
We can see from enquiry data on realestate.com.au that certain suburbs within capital cities are particularly popular with first-home buyers, including the many house and land development areas on the outskirts of the CBDs, as well as inner and middle ring suburbs such as Seven Hills in Sydney and Footscray in Melbourne.
On the other hand, regional areas are also doing well and an influx of young first-home buyers has the potential to radically change these locales.
These are the regional areas that have seen the strongest enquiry on realestate.com.au over the past 12 months.
Orange, NSW
Over the past year, the city of Orange in the Central Tablelands region of New South Wales, was the most in-demand town for regional first-home buyers in that state – and in fact, one of the most popular in all of New South Wales. Orange has seen more first-home buyer activity than the popular outer Sydney suburbs of Quakers Hill, Marsden Park and Kellyville – fairly impressive for a town with only loose economic ties to Sydney.
The driving factor behind demand for housing in Orange is mining, which represents one quarter of the local economy. The Cadia Valley Operations is one of the biggest gold mining operations in Australia, and with gold being a hot commodity, Australia is set to become one of the biggest producers in the world.
Beyond mining, first-home buyer demand in Orange is driven by factors similar to other established regional towns in Australia such as tourism, healthcare, manufacturing and education.
The NSW regional town of Orange is one of the most sought-after areas for first-home buyers in the state. Picture:realestate.com.au/buy
Shepparton, VIC
Regional Victoria has been one of the bright spots for property price growth over the past three years, with areas such as Geelong, Ballarat and Bendigo seeing some of the highest rates of price growth in Australia.
While these areas have become more expensive as a result, they are still relatively affordable compared to Melbourne suburbs. It is therefore surprising to see Shepparton, in northern Victoria, topping the list of most sought-after regional towns for first-home buyers in Victoria.
Property in Shepparton is particularly affordable with a median house price of around $280,000 – far cheaper than regional areas within commuting distance to Melbourne. While affordability is a factor for many buyers in regional locales, it is likely that improved employment prospects in Shepparton are also a drawcard for first-home buyers.
Southern Gold Coast, QLD
The Southern Gold Coast stretching to Byron Bay has seen particularly strong rental demand over the past three years and while we can’t exactly tell who is renting right now in that region, the demand is likely driven by younger people. This could be further backed by high levels of first-home buyer enquiry as more renters become interested in converting to first-home buyers in the current climate.
The Gold Coast lifestyle is a big drawcard for first-home buyers. Picture: Getty
Lifestyle is likely the biggest driver of demand in this part of Australia, but the Gold Coast is also a major employment centre. Longer term, the Gold Coast will have a land shortage, which will support prices. For now, however, the region is priced at a level that many first-home buyers can afford.
Margaret River, WA
The Western Australian economy is, so far, looking relatively COVID-19-proof due to record level iron ore production and prices, as well as high demand for gold. This is boosting property prices in many mining towns, which are now showing strong growth with Karratha showing the highest level of first-home buyer enquiry.
However, property prices in mining towns are notoriously variable because they are driven by the resources cycle.
A longer term demographic shift appears to be happening in Western Australia’s south-west, which appears to be having a mini population boom. Prices are increasing in many towns and first-home buyers are particularly active in one location – not surprisingly, beautiful Margaret River.
The beautiful coastal town of Margaret River is popular among first-home buyers. Picture: realestate.com.au/buy
Mount Gambier, SA
Mount Gambier is currently the most in-demand location by first-home buyers in regional South Australia. Not surprisingly, perhaps, given that it is South Australia’s second biggest city. The city is a service centre for much of the region but is also a popular tourist destination and has a sizeable forestry and mining sector.
Right now, however, Mount Gambier is being impacted by the hard border closure between Victoria and South Australia due to the coronavirus pandemic, which is likely to impact property search activity for the remainder of the year.
Glenorchy, Tasmania
Property in Hobart was once affordable but is now expensive. However, there are still suburbs within reach for first-home buyers with Glenorchy, north of the capital, showing up as a popular place for this buyer group.
Technically regional, Glenorchy is so close to Hobart that it could almost be considered part of the city.
The post The regional areas set for urban rejuvenation following strong first-home buyer demand appeared first on realestate.com.au.