Signs of life in regional Australia

“The areas closer to the capital cities are taking their lead from what is happening in the capital cities but the regional markets, a lot of them are being impacted by the strengths in the mining sectors,” Mr Kusher states.

The property researcher was quick to remind investors that the falls in the mining areas have fallen significantly further than areas near the city previously.

Will Adani impact property?

While mining has had a positive impact on regional areas of late, Mr Kusher believes investors need more information before investing next to the mine.

“There’s not really clarity in terms of how many jobs it’s going to create and how quickly it’s going to get up. I think for people in that region it is certainly positive but I would be cautious jumping into an area just because Adani has been announced. I think you need to a lot more research,” Mr Kusher explains.

Mining in the Pilbara

One of Australia’s largest mining sectors, the Pilbara in Western Australia is showing signs of growth although it is coming from a very low base.

“The Pilbara is an area we have seen quite strong growth in. Keep in mind values in that regions are extremely low given how far they have fallen. Again, it shows up as quite strong growth but I don’t think it is indicative of what we are going to see going forward,” Mr Kusher continues.

The researcher explains that investors seeking yield have an opportunity as rental prices remain strong.

“You still have pretty good rental returns in somewhere like the Pilbara, which potentially people are coming and looking at because interest rates are so low and the rental yields are still so strong,” Mr Kusher stated.

Tips for investors

Regional areas prices steady

The index data up to August showed many of the regions have continued to decline in value.

“The regions have continued to decline in value, but there have been some signs for example Geelong and Newcastle have shown some moderate increase in value,” he said.

“I think as the capital city markets improve that will flow out to the regional areas particularly those regional areas around Sydney and Melbourne, Mr Kusher argues.

Renters

Investors seeking strong yields can find pockets that are providing strong yields.

“There is some reasonably strong rental growth in quite a few areas. If you look at Richmond-Tweed there’s a 4 per cent increase in house rents, with Townsville showing significant growth of 4.8 per cent,” Mr Kusher explains.

The property guru also highlights that some areas where property values are falling, yields can still increase.

“Somewhere like Geelong it really highlights while values may be falling there is a lot of demand for housing in Geelong,” Mr Kusher concludes.