Investing in regional NSW: why now is the time you should consider taking a chance on the coast and country hotspots

Sydney may always attract the lion’s share of the nation’s investment funds, but it’s the regional towns of NSW which, largely due to COVID-19, are now roaring into life.

With so many people rethinking the need to live in the cities, working remotely and looking for a more relaxed, healthier and often more affordable lifestyle, a major move out is underway – and with it, sharply rising regional both rents and prices. 

“It’s always a good idea to invest in the right regions,” said Simon Pressley, head of property market research, investors and buyers’ agency Propertyology.

“So many of them now have good infrastructure, like healthcare and retail centres, diverse economies and some of the NSW regions have had the best-performing property markets in Australia, like Byron Bay and Orange. 

“Investing and moving into those areas has been a major trend underway for the past five years, and COVID-19 has really accelerated that trend.” 

The figures plainly show the attraction for investors.

House prices in Byron Bay, for instance, leapt 26 per cent over 2020 to a median of $1.15 million, on Domain Group figures, those in Parkes in the Central West jumped 24.1 per cent to a still incredibly affordable $335,000 and Kiama rose 20 per cent to $1.02 million.

Other perennial lifestyle favourites Orange saw a price hike of 15.1 per cent to a median of $495,000 and Mudgee, in the Mid-Western Region, 10.6 per cent to $470,000. 

Rents, too, are increasing fast in many of those sea change and tree change destinations.

The top NSW mover over last year was Yass Valley in the south-west, where weekly rents climbed by a staggering 51.4 per cent to $530 a week, largely as a result of the migration of so many Canberrans, with house prices rising 11.2 per cent to $665,000.

Then there was Richmond Valley in the Northern Rivers, with a 14.3 per cent rise in rents to $400 (while prices climbed 7.8 per cent), Eurobodalla on the south coast, up 12.8 per cent in rent to $485 (and prices up 9.5 per cent to $590,000) and the Bega Valley, with rents up 12.8 per cent to $450, and prices 7.7 per cent up to $595,000.

“The regional areas are now really outperforming the capital cities and experiencing some huge growth,” said Dr Nicola Powell, Domain senior research analyst.

“As people from the cities move into some of these areas, on their city salaries, they’re helping push up prices and rents even more.”

Many investors are now leveraging the equity in their homes in the capital cities to explore opportunities in the NSW regions.

Mortgage brokers FinVu director Gerard Hansen said he has several clients actively researching these areas to decide where best to place their finances.

“Then they tend to buy a place and set them up for rentals or for Airbnb, with some of the banks now accepting Airbnb rents as an acceptable income,” he said.

“Usually, the yield is pretty similar to that of the capital city, like around 2.5 per cent, but they’re investing for other reasons.”

“That may be for capital growth or many are thinking that, down the track, maybe in one year or two or five, they might eventually transition to live there, especially if they can work remotely.”