Why it’s worth digging a little deeper for regional real estate gold
As prices falter in Australian capital cities, regional areas continue to offer good value, if you know where to look
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It could be argued that the 2022 real estate rollercoaster of the Australian property market has not been felt harder than in regional areas, with CoreLogic’s Regional Market Update reporting several areas that experienced the strongest growth now seeing the fastest declines.
The update, which examined 25 of Australia’s largest non-capital city regions, showed that house values in six of the most popular lifestyle markets had fallen by -6 percent or more, with NSW regions such as the Southern Highlands and Shoalhaven recording some of the greatest losses.
However, founder and director of Aus Property Professionals, Lloyd Edge says canny investors can still make money in regional areas if they know where to look, citing Gunnedah in NSW, Highton in Geelong and Sebastapol near Ballarat as areas tipped for growth.
He shares his regional property insights here with Kanebridge News.
What should investors look for in an investment in a regional area, given the post pandemic price drops so many areas have experienced?
I would recommend looking for a 5%+ rental yield, as the extra cashflow will improve your serviceability with lenders. I would also look for a location with multiple growth drivers, as well as Government spending on infrastructure, close to schools, hospitals and so on. A history of growth pre-pandemic is also important, as pretty much all locations experienced growth during the pandemic, but to ensure you’re buying a good long-term investment you need to look for a long history of growth in the area.
It’s also important to ensure you’re buying a property below the median house price in that area, and that you understand the demographic you’re buying for. For example, many regional areas are popular with young families who want to live in a house, therefore buying an apartment might not be the best choice of investment.
Are rental yields performing better in regional markets than capital cities right now?
Yes, in general rental yields in regional markets are performing better than in capital cities right now, especially those regional areas where the median house price is below $500,000. Of course, there are still capital cities like Darwin that are doing very well in terms of rental yields.
What about rental yields versus capital growth?
After the pandemic property boom, growth in many places has slowed down considerably, and rental yields are performing well in areas where the median house price is still below $500,000. However, this doesn’t mean that you should buy only for rental yields right now. It’s important to always look for a balance between rental yields and capital growth. A high rental yield will improve your serviceability with lenders and help you to keep growing your portfolio, however without capital growth you won’t be able to leverage the equity down the track to keep growing your portfolio and reach your financial goals.
Why would investors be advised to look beyond the usual regional suspects?
Once a location becomes popular with investors everyone rushes to buy there, causing prices to rise and putting a downwards pressure on rental yields. It’s therefore important to look beyond the usual regional suspects when choosing a place to invest. I would advise staying up to date with the current supply and demand data, so instead of following the trend and buying where everyone else is you can be aware of the next location that is set to see some growth.
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The nearly 10,000-square-foot home stands right at the entrance to the Amazon billionaire’s grand, $165 million estate.
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A home that’s right at the entrance to Jeff Bezos’s Beverly HIlls estate, which the billionaire purchased for $165 million in 2020, is now on the market asking $19.8 million.
Shaded by mature olive trees, the three-story modern mansion on Angelo Drive spans nearly 10,000 square feet, and includes five bedrooms, a bar and lounge, a home cinema, a pool with floating benches, and a 15-car garage.
The modern home centers around a striking wood staircase that extends through all three floors, creating an eye-shaped spiral.
Other design choices include a full-height black marble fireplace, herringbone wood flooring, grayscale marble backsplashes in the kitchen and bathroom, banks of floor-to-ceiling windows and a seating area in the middle of the pool.
There is also an outdoor kitchen and eating area poolside, and a living space with sliding doors that open directly onto the pool deck, for indoor/outdoor living.
The home was built in 2021 and designed by Gabbay Architects for the owner, who purchased the underlying property for $4.1 million in 2015, according to property records accessed through PropertyShark.
The seller, who runs a Beverly Hills-based plastic surgery practice, could not immediately be reached for comment.
The Benedict Canyon house came to market Friday with Tomer Fridman of Christie’s International Real Estate. He could not immediately be reached for comment.
The Bezos estate is also known as the Warner Estate, named after its first owner, Hollywood mogul Jack Warner of the Warner Bros.
After Warner, the 9-acre estate was owned by music executive and film producer David Geffen, followed by Bezos. The property includes a palatial Gregorian Revival mansion built in 1939 and designed by architect Florence Yoch to befit the status of one of the most powerful men in Hollywood.
At $19.8 million, the new listing offers quite a deal compared to other properties neighbouring Bezos. In Florida, the owner of a vacant lot next door to the Amazon founder’s estate on Indian Creek Island is asking $150 million for it.
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