Now more than ever before, the issue that drives the decision-making of most real estate consumers is affordability.
Over the past 12-18 months when some markets across Australia have been struggling, the ones that have remained buoyant have been the ones where home buyers and investors can find properties at attainable prices – with rising interest rates making this even more of an imperative.
It’s not a coincidence that the capital cities which have remained busy and competitive recently are the cheapest ones – Perth, Adelaide and Darwin.
Equally, the cities where markets have dropped the most through this period are the most expensive ones – Sydney, Canberra and Melbourne.
Regional Australia – generally speaking – has performed better than capital city Australia because there are much more affordable options for buyers of all kinds outside of the big cities.
With technology allowing more people to work remotely, more people have opted out of the big, congested, expensive cities and moved to smaller cities and to regional areas.
This has been happening for the past decade and has become more visible in the past three years or so.
Now, following massive price growth in 2020 and 2021 in particular, some of these regional locations – such as Byron Bay, the Sunshine Coast, the Mornington Peninsula and the Southern Highlands – have become so expensive that they’re no longer attracting large numbers of new residents.
The trend has been The Exodus to Affordable Lifestyle and some of these places, while still offering a great lifestyle, are no longer affordable to most buyers.
So those markets are no longer pumping but regional locations that still offer lifestyle at reasonably attainable prices continue to have busy markets.
Investors increasingly want to target locations where you can buy relatively cheaply, because the cheaper areas have the higher yields, and high yields are important to offset higher interest rates.
The key objective is to find cheaper areas that offer above-average rental yields BUT ALSO have the credentials for good capital growth.
The good news is that is achievable.
There’s a myth among many real estate consumers that you can have good capital growth or you can have high rental yields, but you can’t have both. You have to choose.
I believe this is untrue. You can have the best of both worlds by choosing your locations intelligently.
That’s where are Cheapies Bundle comes in. Three times a year we publish two national reports called the Cheapies with Prospects – a capital city edition and a regional edition.
Each has five locations where prices are affordable for most buyers, rental yields are above average and there are good prospects for capital growth.