While they may not appear attractive investment opportunities right now, one property advice firm believes Australia’s affordable regional markets should definitely be on the radar of all property investors.
As Australia’s ageing population grows, investment advice providers and market analysts Propertyology believe a flood of Baby Boomers looking for an affordable tree or sea-change could result in a hug boost for 40 regional markets across Australia.
As a result of not having compulsory superannuation throughout their entire working lives, Propertyology believes housing affordability may pose a serious issue for many of the Baby Boomer generation as they approach retirement.
“Baby boomers didn't have their employer contributing towards superannuation until the back end of their working years. So, one way or another, around 90 per cent of this generation will have some reliance on a government-funded pension," Propertyology market analyst Simon Pressley said.
“Don’t be surprised if tens, and possibly hundreds, of thousands end up organising a removal truck and relocating to one of the many beautiful parts of regional Australia in search of a sea- or tree-change,” Pressley said.
Given the fact that a sizeable portion of Australia’s population is classified as Baby Boomers, Pressley said the regional areas identified by Propertyology could see significant benefits if even a small section made the decision to move.
“When Australia’s baby boomer population equates to 4.45 million people, even if only a small portion did relocate, it will create significant extra demand for housing in the regions," he said.
“Whether coastal or rural, we believe that the regional cities that will be in highest demand by baby-boomer re-locators will offer a combination of quality lifestyle, good health care, and availability of freestanding houses for less than $400,000.”
Among the regional areas identified by Propertyology include Coffs Harbour, Port Macquarie
, Armidale, Orange
, Tamworth, Dubbo and Wagga Wagga in NSW, as well as Cairns, Townsville
, Hervey Bay and Toowoomba in Queensland.
and Burnie are the pick of Tasmania’s regional options, while Bendigo
and Ballarat are the best prospects in regional Victoria.
In Western Australia, Albany, Bunbury and Geraldton are the regional locations to keep an eye on, along with Port Lincoln
in South Australia and Alice Springs and Katherine in the Northern Territory.
While Pressley said a migration of Baby Boomers would benefit regional markets, he also said there are areas outside the capital city that are already well positioned , especially as Australia’s relationship with Asia continues to grow.
"The advantages of investing in regional Australia include a smaller capital outlay to get in to the market, higher rental yields, lower holding costs, and diversification within a portfolio.
"When analysed on an average annual capital growth rate over the past 15 years, many regional cities have actually outperformed capital cities. And, with industries like agriculture, tourism, and advanced manufacturing very well-positioned to prosper from the Asian Century, it shouldn’t be difficult at all to understand that the investment fundamentals are very sound.”
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