Regional vs. City Growth

Hotspotting

We’re constantly asked at Hotspotting whether it’s better to invest in the regions or the capital cities – and whether you get higher capital growth in the outer-ring suburbs of our cities or the so-called prime inner-city locations.

Now, there’s no definitive answer to questions like that, because there are so many different scenarios to consider – and, at the end of the day, it comes down to the performance of individual local markets and you simply cannot generalise.

But, based on the evidence of where the highest capital growth has occurred in the past four years, I would have to say the best performers have been found in regional areas and the outer-ring precincts of capital cities – NOT including Sydney or Melbourne.

PropTrack, which is Hotspotting’s preferred source of property data, has analysed capital growth since March 2020 – which is when the Covid lockdowns started to happen.It shows that home prices have increased 40% in the four years since.

But the growth in the combined regional areas has been 54%, compared with 35% in the combined capital cities.

So there’s your first answer: based on this evidence, the regions have out-performed the cities overall.

When you divide Australia into the 15 major jurisdictions (eight capital cities and seven state or territory regional areas), the top two areas are regional and six of the top nine are regional precincts.

Regional Queensland ranks No.1, with home values up 66.5%, followed by Regional South Australia, up 66.2%.

The next on the list are Adelaide in third place, Brisbane fourth and Perth fifth.

Then, in order, come Regional WA, Regional Tasmania, Regional NSW, Regional Victoria and, in 10th place, the ACT.

You’ll note that those are the top 10 on the list of 15 jurisdictions, and Sydney and Melbourne haven’t featured yet.

Sydney ranks 12th out of the 15 and Melbourne ranks 14th – or second last.

So there’s a fairly emphatic answer: the regions have undoubtedly out-performed the cities – and the best performers among the cities don’t include the two biggest ones.

Adelaide home prices increased 64% and Brisbane 63%, to be the strongest capital cities on capital growth over four years, compared with 35% in Sydney and just 17% in Melbourne.

When PropTrack looked at the individual locations within the regions and the cities, the Top 10 list of locations for capital growth in the past four years comprised regional centres and the outer ring areas of capital cities.

The Wide Bay region of Queensland was the top individual area on price performance, with values up 80% in four years.

This notable growth region includes regional centres like Hervey Bay, Bundaberg, Gympie and Kingaroy – all places which have featured in recent years in our Hotspots reports.

Next was Ipswich City, in the outer south-west of Greater Brisbane, followed by the Outer North of Greater Adelaide – both up by more than 75%.

At Hotspotting, we have strongly advocated Ipswich and northern Adelaide LGAs like Salisbury, Playford and Gawler in the past several years.

Fourth on the list was the Gold Coast, which rose 74% in the four years.

It’s notable that 9 of the 10 locations on the national top 10 list are in Queensland and South Australia.

And here’s a final thought.

What I’ve just described is what’s happened in the past four years.

Thre’s no guarantee the same will happen in the next four years.

As we often tell people, the past does NOT inform the future.

But it’s worth noting that, based on the metrics we use at Hotspotting, we do expect Brisbane, Regional Queensland and Adelaide to be among the best performers on price in the next year or so.