The surge in regional house prices is drawing attention, with many investors purchasing properties without even seeing them first-hand. This trend has been highlighted by both real estate professionals and academic experts.
In Australia, there has been a remarkable increase in residential property values in regional areas. Recent statistics from PropTrack reveal that over the past five years, these prices have skyrocketed by nearly 60%, bringing the median price to about $700,000.
While regional South Australia maintains a lower price point compared to other states, with a median value just under $500,000, this still indicates an almost twofold increase in property prices within the same five-year timeframe.
According to Andrew Beer, who leads the School of Management at Adelaide University, this phenomenon began during the COVID-19 pandemic. "The trend saw people leaving metropolitan areas to settle in regional locations, and this movement has persisted," he explained.
Notably, while some individuals are seeking to relocate permanently, many others are targeting these properties purely for investment purposes. Professor Beer emphasized that investor interest in rental properties has played a significant role in escalating house prices across regional Australia, including places like Mount Gambier. The potential for higher returns on investment is a key motivator here.
For instance, an investor might purchase a million-dollar home in cities like Adelaide or Melbourne and expect a rental income of around $700 per week. In contrast, a $500,000 property in Mount Gambier could yield a rental income of approximately $550 weekly. "There’s been a marked transition from relying solely on local investors to a more national market, with many buyers opting to purchase properties online without having seen them in person," he noted.
This growing demand for regional properties as investment opportunities is creating intense competition, which is making it increasingly difficult for first-time homebuyers to enter the market.
Brenna McKay, a former resident of Mount Gambier, shared her experience of recently buying her first home with her partner as they returned to the regional city. "Previously, we would see one or two familiar local faces at open houses, but now there's always a presence of investors on the phone," she remarked.
"We were seriously considering two houses, yet one was quickly acquired by an investor. Competing against that can be quite challenging," she added. Although McKay and her partner successfully made their purchase, she expressed sympathy for those still navigating the housing market. "I can only imagine how tough it must be for someone trying to do this alone. Securing a deposit has become a major hurdle and doesn’t happen overnight."
Tahlia Gabrielli from Ray White Mount Gambier explained that the allure of affordable properties in the Limestone Coast has attracted investors nationwide. "We’re seeing not just local buyers, but also ‘mum and dad’ investors, individuals purchasing properties through their superannuation funds, and many out-of-town buyers from major markets like Sydney and Melbourne."
Gabrielli pointed out that the practice of buying properties sight unseen started to gain traction during the pandemic. "People became accustomed to utilizing video walkthroughs, or even purchasing simply based on online listings," she noted. "This shift has transformed the landscape of how real estate is perceived, bought, and sold."
While this investment boom benefits sellers, Professor Beer warns of its adverse effects as well. "Many individuals are finding themselves forced into alternative living situations, such as caravan parks or even tents, while searching for temporary housing solutions," he observed. He further explained that this situation can hinder the growth of these regions since they lack sufficient workers to fill available job positions.
With interest rates on the rise, Professor Beer emphasized the necessity for government intervention—specifically, investing in infrastructure to enhance housing supply and providing training to develop a skilled workforce capable of constructing additional homes. "Implementing these two measures could significantly alleviate the challenges we're currently facing," he concluded.
