In a recent blog about property cycles, I explained in depth how there is always an opportunity regardless of what the broader Australian property market may be doing.
Right now, there is confusion due to incorrect media reporting about the Australian real estate market. If you ask the average Joe what’s happening in the market right now, you’ll likely receive the answer that property prices are crashing.
Yes, there are markets right now experiencing a downturn in home values, predominantly led by the markets with higher median values, such as Sydney, which experienced a 7.6% drop in values and Melbourne, with 4.9% between May and September 2022.
However, there are markets in Australia which are still bearing fruit for property investors.
As I’ve been saying for over a decade now, if you purchase on the back of solid fundamentals such as population growth, infrastructure, employment and public/private investment, you’ll tend to achieve much better results than if you take a stab in the dark on locations.
The Area Revealed
In today’s blog, I’ll be taking you through the data on a particular area that has defied the overall decline in property values and why house prices are still rising.
The area I am talking about is Toowoomba.
Toowoomba house prices have increased almost 4% in the last quarter; annualised would equate to nearly 15%. Sales listings also fell over the same quarter by 2.6%, and the area is experiencing high market pressures in relation to supply and demand.
In addition, vacancy rates are at crisis levels at just 0.4%, and as a result, rental prices have increased by a staggering 11.1% in the last twelve months and 36% over the past decade.
Let’s take a look at what’s behind these incredible numbers.
Population Growth
Firstly, property economics #101 – supply VS demand.
When it comes to regional cities, Toowoomba is leading the way in regard to population growth.
In fact, over the past decade, the Toowoomba population has grown by over 20%, and it’s expected to continue. An increase in population shifts the equilibrium of supply VS demand. Right now, the property market in Toowoomba has far more purchasers than sellers, resulting in upwards pressure on prices.
The same principle applies to the rental market. The increased rental yields in the region are proving attractive for investors, with the average property in the region achieving close to $80.00 a week more than this time last year.
A Homerun for First Home Buyers
Toowoomba has also seen a rapid rise in the volume of first-home buyers flocking to the city, chasing larger land lots at more affordable prices.
Many developers in the area are reporting that 95% of sales enquiries are coming from Australians looking at building their first home.
This is another factor in the tight rental market as the supply of new housing ordinarily destined for the rental pool is being absorbed by the owner-occupier contingent.
The Driving Force Behind the Population Growth! Infrastructure!
Right now, Toowoomba is amid an Infrastructure boom, creating thousands of jobs and reasons for people to live and stay in Toowoomba. Some projects creating a job boom for the area include the Toowoomba Inland Rail, a $1.3 billion hospital, the world’s most extensive medicinal cannabis facilities, and Toowoomba airport, just to name a few.
These projects are adding billions of dollars to the local economy and creating thousands of jobs in the area.
Should Everyone Be Buying Property in Toowoomba?
By no means am I suggesting that everyone reading this should go and purchase a property in Toowomba? Toowoomba is just one of many areas that Wealthology has researched and is actively acquiring for our clients.
Ultimately, property is the vehicle to help you reach your financial goals. Planning and strategising your financial future is key to determining the type of property to purchase.
Toowoomba may be a suitable option for many, but there are many clients of mine right now that I would not advise buying in this location as it does not fit their wealth strategy.
Book a call with me directly, and we can work out where the best market in Australia is for you and your goals today.
