Why do properties in regional towns still go up in flat markets?

[TMNT]

Just curious, why do regional areas, when nothing good or bad is happening, they still go up at CPI levels or state averages,

obviously if the rest of the state is booming, these regionals will also go up,

but im looking at a particular regional, and prices have done not much in the entire region, but they are actually increasing like a few % per year

in a dormant town I assume the rents wont change much so why do the real estate prices go up?

 

[jrc]

i'd suggest you do more research. If prices seem to be continually rising then either something is going on or you're not comparing the same houses. Most towns are like the cities -prices don't rise steadily. They often stagnate too or drop a little

 

[The Fence]

Well no, rents do still go up along with prices.

Just like the cities, it's not all at the same time.

Regionals beat to a different drum but in delayed rhythm....sort of..

 

[WattleIdo]

This is a really good question. Can you expand a little on 'the drum beat' Fence?
Obviously not all regional areas increase in value. Mining has put prices up around here. This area has other industries as well. How would it get along without the mining though?

 

[TMNT]

This is a really good question. Can you expand a little on 'the drum beat' Fence?
Obviously not all regional areas increase in value. Mining has put prices up around here. This area has other industries as well. How would it get along without the mining though?

obviously without influences such as mining and assuming a flat economy,

what he is saying is that the regionals "generally " operate in the same manner as the metro cities, but later and to a lesser extent,

ie if the major city booms, then the regionals around it will go up, slower and not as aggressively, and the opposite the same

 

[WattleIdo]

How 'bout a bit more input on this one?
Especially from people who have bought regional - for better or worse - and people who are regional....

 

[topcropper]

How 'bout a bit more input on this one?
Especially from people who have bought regional - for better or worse - and people who are regional....

How about "Why wouldn't they go up"?

There is inflation in all living expenses, population increase, building cost increases. Then you have people leaving cities for a tree change. There are plenty of regional areas experiencing population growth. Just that people from the Big Smoke come out here and see a sleepy little town and think nothing much is happening, but the town might still be increasing in population.

The population of Tamworth increases by about from 500 to 800 every year. http://profile.id.com.au/tamworth/population-estimate
That mightn't seem much, but it's about the same percentage wise as anywhere else.


See ya's.

 

[TMNT]

How about "Why wouldn't they go up"?

There is inflation in all living expenses, population increase, building cost increases. Then you have people leaving cities for a tree change. There are plenty of regional areas experiencing population growth. Just that people from the Big Smoke come out here and see a sleepy little town and think nothing much is happening, but the town might still be increasing in population.

The population of Tamworth increases by about from 500 to 800 every year. http://profile.id.com.au/tamworth/population-estimate
That mightn't seem much, but it's about the same percentage wise as anywhere else.


See ya's.

true, but I am referring to a town with zero population growth,

does rent follow inflation though???

if demand for rentals is the same, if you increased the rent by3% then you'd be 3% more expensive then everyone elses,

obviously if everyone else raised their rent by 3% then that would be fine

then why dont landlords collude and raise their rent by 10%

 

[Richard Feynman]

true, but I am referring to a town with zero population growth,

does rent follow inflation though???

if demand for rentals is the same, if you increased the rent by3% then you'd be 3% more expensive then everyone elses,

obviously if everyone else raised their rent by 3% then that would be fine

then why dont landlords collude and raise their rent by 10%

On the rent thing, consider this:

Wages rise 3%.

Landlord increases rent 3% (which, lets be honest, is nothing, really -- $13.5/week increase on $450/week)

Scenario 1: Tenant thinks "Moving will be an expensive pain the the ****, I'll cop it. I got a pay rise this year anyway".

Scenario 2: Tenant thinks "**** this, I'll find somewhere else!" and moves out. Someone else who finds that place suits their needs better than their current abode who also got a pay rise that year takes it on at the new amount.

 

[Harro]

People gravitate around employment opportunities. As more land and home packages are opened up on the outskirts of major cities people take advantage of the new developments and with regular income can service their debt.
The flow on in regional areas has slowed considerably, due to the expansion of city boundaries, and employment opportunities are fairly limited.
Sure the mining boom has helped out in some regional areas, but overall many areas have stagnated for years.

 

[The Fence]

This is a really good question. Can you expand a little on 'the drum beat' Fence?
Obviously not all regional areas increase in value. Mining has put prices up around here. This area has other industries as well. How would it get along without the mining though?

Other folks have chimed in with good answers already, but I might add that our particular area, Liverpool Plains NSW, has always thrived off rural related industry with the one major regional city, Tamworth as it's hub and the smaller towns just expanding at ever so slow rates.

Mining will be a boost but not the be all and end all either.

Like a recent thread about Muswellbrook, it comes and goes but Muswellbrook will always be there.

 

[BayView]

How 'bout a bit more input on this one?
Especially from people who have bought regional - for better or worse - and people who are regional....

We've owned regionals - still own one.

I tried to buy a few along the way which I eventually didn't, so got to see a bit of what was happening in that area at that time.

And found that unless there is a new reason for infrastructure to improve and expand - suggesting population growth is imminent - the main reason for sudden growth is usually from investors seeking better rent returns.

A few FHB's too; but not many of those move out to regionals if there is not much work or if the commute is too far.

This will provide a short term spike of sorts until the buy price goes up to an extent that the rent returns look poor again.

The rents and values continue to go up of course due to cost of living increases and inflation - rents faster than the values most times - so you get this see-saw pattern with the values as the rent returns fluctuate.

I remember trying to buy in Tassie some years ago, and you could not buy anything for under the asking price - rent returns were great of course, and a few that I offered on went for above asking price. Mostly investors jumping in.

Nowadays; can they even give them away? I haven't watched Tassie for years.

Tassie is not exactly regional, although the places I was looking at probably would be considered that. But you get the idea.

 

[outbackjack]

Dont think all regional places are same as cities etc.


I brought a house in Nanango 7 years ago. It has remained flat, if not actually losing a bit. Rent has gone down as well.

BUT I did buy at a peak, its dropped ever since. I brought it to live in, but that never happened. I don't see it doublingin 3 years time...... Ie property doubles every ten years......

Also at around same time brought a unit in Mackay that I lived in for 12 months. Again brought at a peak,which didnt bother me at the time. Job was suppose to be contracted for 10 years, ended up being to just over a year thanks to GFC.
Mackay market never really recovered in IMHO since GFC, My agent said I would be lucky to get 50k less than I paid for it........

 

[WattleIdo]

Dont think all regional places are same as cities etc.

Nanango ...has remained flat, if not actually losing a bit. Rent has gone down as well.

Mackay market never really recovered in IMHO since GFC, My agent said I would be lucky to get 50k less than I paid for it........

So how do you choose who's going well and who's going backwards?
Do country towns only achieve CG at a particular point in the cycle i.e. after the capital cities have boomed and not many can afford them anymore?

Tamworth is growing.
Toowoomba is growing.
Orange is flat with vacancies. Bathurst the same.
Will all mining towns go backwards for a while now? Is now a good time to buy regional? Or do regionals stay flat for ages before they take off again?