Imagine we have two cities, one seaside, the other inland.

If you were to choose one of them to buy an investment property in, which would you choose?

I bet most of you would go for the seaside city by instinct. After all, over 85% of the Australian population live within 50 km of the coastline, and there are only a limited number of seaside cities.

However, are seaside cities your only option when it comes to investment?

I don’t think so. Data shows that many Australian inland cities are outperformers in the property market. Today we present 3 of them to you.

Outperforming Inland Cities in Australia

Orange, NSW

230km west of the NSW coastline and 250km to Sydney, Orange is an important regional centre in the Central Tablelands region. Its house median price has risen by 59% over the past 2 years (July 2020 – July 2022).

In contrast, Greater Sydney’s seaside SA3s achieved an average 49% 2-y growth, and the number of NSW regional seaside SA3s was 51%.

The SQM Research asking property prices tracker (below chart) shows that the asking house prices dropped slightly in June but stabilised soon, indicating that the market pressure remains high despite the interest hikes.

Ballarat, VIC    

Located 95km from the closest beach, Ballarat is the third largest city in Victoria. The house median price rose by 45% over the past 2 years (July 2020 – July 2022).

That number is compared with Greater Melbourne’s seaside SA3s’ average 2-y growth of 30% and is only slightly lower than the regional VIC seaside SA3s’ average growth of 48%.

The SQM Research asking property prices tracker (below chart) shows that the asking house prices only declined slightly over July, and are now bouncing – a pretty resilient market.

Toowoomba, QLD

150km from the coastline, Toowoomba is Australia’s second largest inland city. Its house median price has risen by 28% over the past 2 years (July 2020 – July 2022).

Although Toowoomba’s 2-y growth is not as strong as its seaside counterparts (regional QLD seaside SA3s achieved an average 2-y growth of 40%), the recent asking price trend has demonstrated the city’s high resilience against interest hikes: The SQM Research asking property prices tracker (below chart) shows that the price expectation has been rising despite the interest rate hikes during the past few months, only seeing a slight drop in August, indicating high market confidence.

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What makes them perform so well?

Besides being far from the sea, the three cities have many other common characteristics that make them stand out: a robust economy, affordability, and low inventory are among them.

1. Robust Local Economy

Regional economies have been thriving over the past few years. One of the most significant contributors is the heavy infrastructure investments.

The table below shows how many projects are either under construction or in the pipeline, as well as their value, as of September 2022 in the three cities.

The billions of worth of infrastructure projects and other government investments have created increasing job and business opportunities in these regional cities, leading to unemployment rates that are lower than Australia’s average for most of the time over the past decade (below chart).

2. Affordability

Besides job opportunities, affordability is an important factor that motivates people to move. The below table might give you an idea about how affordable these inland cities are relative to their seaside counterparts.

3. Declining Inventory

Price growth is determined by the relationship between demand and supply. Inventory, which reflects this relationship, is a key indicator of price growth: the lower inventory, the more likely price would grow.

Data shows that while the three cities’ house sale volumes have been stable, the number of for-sale listings on market has been trending down over the last few years (as seen in the 3 charts below). As a result, inventory declines, market pressure accumulates, and prices rise.

Trust the data and get rid of bias

Waterview and sea scarcity may add value to a property, but they are by no means necessary conditions for price growth. Many other factors, such as the overall economic performance of a location and property market demand & supply, play more important roles.

How do you understand those factors? By reading data.

Data is your best friend. They show you what’s really going on out there, helping you make smarter decisions without bias.

If you dig into the data, you’ll find that many other inland cities share similar characters as the three we’ve listed today, such as Wagga Wagga, Shepparton, Rockhampton, etc. They are all benefiting from heavy government investments in transport, renewable energies, healthcare, and other infrastructure projects; Their unemployment rates are at a historic low; Their housing markets, especially the rental markets, are tighter than ever. All signs indicate that more robust growth will come for our inland property markets.

Our belief in inland cities lies not only in the short-term data, but also in the country’s long-term vision. Australia’s population is currently highly concentrated in the major cities and coastal areas, which is commonly held as one of the leading causes of the country’s housing affordability crisis and many other problems. The federal and state governments are all working towards population regionalisation and decentralisation. The heavy infrastructure investments are part of the progress. This national policy trend, paired with peoples’ chase for lifestyle and affordability, has underpinned our inland cities’ thriving future.

InvestorKit is a data-driven buyer’s agency. We make our purchase decisions based on data, not bias. That is why we have purchased hundreds of outperforming inland-city properties for our clients that help them achieve their investment goals faster– Interested in our data analysis and buyer’s agent service?  Click here and request your 45-min FREE no-obligation consultation today!

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