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Is rural Australia the next investment property boom zone?

May 31, 2011

With many property investors taking advantage of the threat of rising interest rates and other financial factors keeping first homebuyers out of the market, Australia’s rural areas are emerging as an investment hot spot.

With rental yields on the rise as vacancy rates drop to record lows nationwide, and a wide range of gearing options and investment loans available, property investors are looking to opportunities far from the madding crowd.

The mining boom has no doubt contributed to the increased investment activity in rural areas, but other factors such as government-planned infrastructure and spending have also boosted regional economies.

Mudgee in NSW has benefited from the mining boom and offers employment opportunities for those seeking a tree change. Property prices are rising quickly from their previous holding point of the late $100,000s.

The Avon Valley in Western Australia is also an area of growing interest to potential investors. Mortgage broker Leanne Clune reported that investors currently make up 40 percent of her home loan enquiries, a figure that has doubled since May last year.

In the Northern Territory, Darwin’s rental yields are the strongest of all capital cities according to RP Data figures. Furthermore, figures from SQM research reveal that in March, 1,075 houses and 643 units went on the market in the Top End’s capital, creating an environment ripe for investors.

Loan Market’s Leanne Clune has this advice to offer:

Which regional areas are attracting the greatest interest from potential property investors?
“Bakers Hill, York, Northam and Toodyay are attracting interest from property investors.”

Any suggestions on which areas represent good value for money with great return potential?
“All areas are good value for money at the moment, and are significantly down in price from last year.”

What factors are driving investment dollars in this direction?
“Lifestyle factors including people wanting to move and have a semi-rural lifestyle. Also, the prices are significantly lower than the capital city Perth and the rental returns are very good.

What sort of house prices are available in various regional areas?
"You can still purchase three bedroom homes in Northam (WA) for under $200,000 with a rental return of between $200 and $250 per week depending upon location and condition. Smart Property Investment’s top rural investment towns".

South Australia: Ceduna
Median house prices: $272, 5000
Apartment: n/a

New South Wales: The Hunter region
Median house price: $380,000
Apartment: $349,000

Western Australia: Bunbury
Median house price: $369,000
Apartment: $349,000

Queensland: Gladstone:
Median house price: $429,000
Apartment: $349,000

Victoria:
Median house price: $237,000
Units: $237,000.

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