One of the best ways to be sure that a property market will be a good performer long-term is to confirm that it’s under-pinned by a strong local economy.
I believe property markets are local in nature and that the strength or otherwise of property markets depends largely on events in their local economies.
So we at Hotspotting are always interested in the economic activity that’s happening in the background, in assessing property markets.
- Is the local economy strong and diversified?
- Is the local economy creating jobs?
- Is the population growing?
- Is there investment in infrastructure happening and/or in planning?
If the answer to all those questions is yes, then there’s a good possibility that the local market you’re looking at will produce growth in its property prices.
Now, when it comes to considering economies, at Hotspotting we’re always interested in the State of the States report published four times a year by CommSec.
This very insightful quarterly report examines the eight state and territory economies using eight different metrics, including unemployment, population growth, housing finance and construction work – and ranks the eight states and territories according to the strength of their economies.
And, in the report published in January 2023, the State of the States report found that the strongest economy in the nation is Queensland.
Queensland ranked No.1 on population growth and on employment, and it ranked No.1 in the nation overall.
Now, none of this is terribly surprising, because Queensland is the leading state by a huge margin on population growth – and it has been for the past three years.
It’s also a state where there is a high level of business investment and where a lot of money is being poured into new infrastructure, not just in Brisbane or the Gold Coast or the Sunshine Coast but right throughout the key areas of Regional Queensland.
And then, of course, there is the additional factor of the 2032 Olympics – the impact of which is already being felt.
So when it comes to considering, as investors, where to focus your attention, Queensland deserves to be top of mind.
It’s certainly not the only place you might consider – because there are other worthy candidates across Australia – but Queensland right now ticks a lot of boxes for property investors.
The other big factors which make Regional Queensland top of mind are affordability and high rental yields.
Regional Queensland has a significant number of large regional cities with growth economies and big infrastructure spends – but which also offer attractively affordable house prices and higher yields to compensate for rising interest rates.
From Townsville and Cairns in the Far North, through Central Queensland centres like Rockhampton and Gladstone, and out west of Brisbane to Toowoomba and the Darling Downs, Regional Queensland offers a lot of worthy possibilities for property investors.
When you can buy good residential properties for well below $500,000 and get yields above 6% in regional cities with growth dynamics, that’s good investing in the current climate.