Australia is a country with a very sizeable land mass and it’s usually only the big profile cities which get mentioned in property market commentary. Today Simon Presley, from Propertyology, identifies some regional markets that are well worth investigating for good returns.
Kevin: Well, Australia is a big country, and if you look around the country, you’ll notice that a lot of the focus for property investors is on the cap city markets, mainly because most people choose to live in those capital city markets. But look outside those, and there are some really interesting regional markets. Even if you drill down further, there are some really interesting smaller regional markets.
That’s the focus of this conversation that I’m about to have with Simon Pressley from Propertyology.
Simon, I notice that amongst other areas, you did have a look at Tasmania. Hi. How are you?
Simon: I’m very well, Kevin, and you?
Kevin: Good, mate. So Tassie is one of those markets that you’ve looked on, you’ve given to us as a very good example?
Simon: Yes. We picked the local government authority of West Coast – which is North West Tasmania, Kevin – just to highlight one of literally dozens of examples to property investors of locations right throughout Australia where they have a small population base but are very, very affordable typical property price point that have actually performed, in a lot of cases, a lot better than high-profile cities.
Kevin: Is there a typical population size that you look at, Simon?
Simon: No, not really. West Coast, for example, the whole region has only got a population of 4500 people, which is small, really. I guess the most prominent town within West Coast is Strahan, which is quite a sleepy, popular tourist attraction. It’s very, very scenic, and its industry is really cottage tourism with a little bit of agriculture around it. But a typical three-bedroom house in Strahan today, Kevin, would cost around about $130,000.
Kevin: What sort of return would you get for that?
Simon: How does 11% rental yield sound for you?
Kevin: Oh, that sounds pretty good to me. No worries with vacancy? There are still plenty of people wanting them?
Simon: Yes, that’s the risk with these things, I suppose. When you have a small population base and the property does become vacant, I guess that increases the chances of a prolonged period of vacancy, and then that’s probably a bit similar to a commercial property investing where a typical vacancy rate is 15% or 16%.
That is a risk, but that’s also balanced by the holding costs. The properties themselves are so affordable, the holding costs are so much smaller than in these bigger-profile cities.
Kevin: What are some of the other examples you have around Australia where the small fish can be a lot sweeter?
Simon: So to put some context around the thing, West Coast that we’ve just been talking about, it’s had a total return of 20.5%. That’s average annual capital growth and rental return over the last 15 years.
Let’s look at some other parts of Australia. Barcaldine in Central Queensland has got a typical property of about $152,000 for a three-bedroom house. The population in Barcaldine is only 3500 people, but yet it’s had a total return of around 20% over the last 15 years.
Further south in Victoria, there’s a little regional town called [3:14 inaudible], which is really dairy country, not far from the Great Ocean Road. $162,000 for a typical three-bedroom house and an 18.2% total return.
There are dozens of these all around the country.
Kevin: How do we find these locations, apart from doing the hard work ourselves? Do you make them available on your website?
Simon: We haven’t published a report as such. We have put the one about West Coast, which is titled “Small Fish are Often the Sweetest,” up on the Propertyology website to get a bit of a rundown of it. The intention is just to really stretch the property investor’s imagination about what’s really available out there.
Kevin: Yes. If you’d like to know a little bit more and you’d like to contact Simon Pressley and his team, you can do that through Propertyology.com.au. There’s lots of great information there, and you can contact the boys directly.
Simon, thanks for your time.
Simon: My pleasure, Kevin.