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Best regional NSW areas for property investment 2021

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As property price growth slows in Sydney, this has increased demand for real estate in regional areas of NSW.

This correction is reflected in our recent consumer sentiment report, which records confidence down in the slowing Sydney market and people in regional areas, like Newcastle and Wollongong, being more positive about the state of the local property market.

The data is also very clear on this trend with CoreLogic listing Australian dwelling values falling -0.4% to May 2018, the eighth straight month-on-month fall. In contrast regional values are up 2.4 per cent overall.

Hotspotting's Terry Ryder makes a valid point that the national figure is misleading as Sydney is actually dragging down the overall average - and that five of the eight capital cities are actually growing.

While this is true, regional markets are starting to grab investors attention, and rightly so. Let's take a look at this trend and what regional markets you should be watching in NSW.

Why are some regional areas booming?

best regional investment areas

Regional property is booming across Australia due to a number of factors, specifically:

  • The unaffordability of urban markets has driven buyers and investors to regional centres which offer better value for money with more attractive growth opportunities over the medium term.
  • Investment in local industry and infrastructure has transformed the local economies of many regional towns and cities. This has made them more accessible with more resilient, diversified local economies and jobs.
  • Lifestyle factors also play a part in attracting people to live and invest in regional Australia - where a slower pace of life and larger backyards all come with a cheaper price tag.
  • The 'ripple effect' is also at play, where proximity to a capital city helps the regional centre to piggyback off the larger metro's economic clout.

"Investment in local industry and infrastructure has transformed the local economies of many regional towns and cities"

Read more: Plot twist! Which areas are thriving in Australia's cooling market and how are they doing it?

Best regions in NSW to invest in property

You can take your pick of the best regional centres in NSW to invest in property, as many centres have recorded high levels of activity in 2018.

Property investment analysts Hotspotting highlights the Hunter Valley, Tamworth, Wagga Wagga and Lake Macquarie as locations where activity has been high over the last 18 months. Other NSW regional centres that have performed strongly over the last year include Bathurst, Cooma, Orange, Mudgee and Singleton, as well as Yass and Goulburn.

Hotspotting also advises investors to look at Newcastle, where a host of suburbs have recorded median house price growth of 20% or more over the past year. Newcastle suburbs with high growth potential include Wickham and Lambton, as well as nearby Lake Macquarie.

If you are a property investor, you'll be glad to see that rental returns in Newcastle are higher than Sydney, with many locations in and around the city at 4%. According to the QBE Australian Housing Outlook 2016–2019 Newcastle's median house prices are expected to rise by a cumulative 12 per cent by June 2019, or around 4 per cent per annum.

Queanbeyan, just outside Canberra, is also projected to benefit from the ripple effect, where it's proximity to the capital is expected to drive demand from buyers looking for more affordable property. The median house price there is currently $527,500, while units are selling for a median price of $300,000.

Best regions in NSW to invest in houses

AreaMedian sale priceMedian price change (<1 year)Median rentMedian gross yield

Best regions in NSW to invest in units

AreaMedian sale priceMedian price change (<1 year)Median rentMedian gross yield
Hunter Valley (Pokolbin)$280k12.00%N/AN/A

Read more: What is rentvesting & what's so good about it?

Fastest growing regional areas NSW

NSW regional areas

Some of the fastest growing regional areas across NSW include Port Kembla, which was a standout performer posting year on year growth of 21.3 per cent. The suburb of Windale in Newcastle also had median price growth of 22.1 per cent over the last year.

Wollongong had a stellar 2017 - posting 13.9 per cent growth - but value for money in the Gong has slipped in 2018 with buyers finding better prospects in neighbouring Shoalhaven and Shellharbour. Shoalhaven posted gains of 19.5 per cent over the same timeframe. Falls Creek, near Jervis Bay, and Denhams Beach have also both become popular with buyers, and have recorded double digit growth in 2017/18.

Fastest growing regional NSW areas for houses

AreaMedian sale priceMedian price change (<1 year)Median rentMedian gross yield
Shoalhaven (Nowra)$458k14.50%$370pw4.20%
Port Kembla$672k13.27%$450pw3.50%

Fastest growing regional NSW areas for units

AreaMedian sale priceMedian price change (<1 year)Median rentMedian gross yield
Port Kembla$530k25.89%$320pw3.10%

Read more: Fastest growing regional areas for property investment in 2018

What should buyers and investors be wary of in NSW?

Like in any property market you need to research the local or regional NSW property market thoroughly before making a call. The first step is to get the latest property data and identify what the overall trend is for the area. You also need to be clear what your overall investment strategy is and if you want capital growth or cash flow.

Cities tend to offer better prospects for capital growth while regional centres are more likely to give you positive cash flow. To get an idea of the an area's state of play, look at local economic indicators like jobs growth, population growth, consumer confidence, and supply and demand for property.

How can we expect the NSW regional property market to change in the next year?

best place to invest in Australia

As much as we'd like to make an all encompassing prediction for regional property, this is not possible. The Australian property market is as diverse as it is geographically dispersed.  It's obvious we are in a new phase of the property cycle in NSW, where Sydney is likely to record moderate to zero growth, and even see prices fall in some postcodes. Regional markets in NSW with the right mix of growth indicators are likely to continue to outperform the big capital cities into 2019.

"Regional markets in NSW with the right mix of growth indicators are likely to continue to outperform the big capital cities into 2019"

Read more: How do you know if a suburb is booming? It comes down to these 5 indicators

How to identify an area with high growth potential

If you are looking to invest in regional property you need to know what signs point to an area or town poised for high growth. Any one or combination of these factors could indicate a location is set to boom:

  • Major infrastructure projects can be game changers for regional areas, where jobs are often scarce and the local economy is often dependent on a single enterprise. Here anything new or upgraded, like transport links, local governments or any development will boost lifestyles and the local economy.
  • Real estate agents are advising their clients to sell via auction, rather than listing for sale. This is normally a sign that there is significant demand for properties in an area,  and where competition for properties will tend to drive prices up.
  • House prices tend to rise when a low number of properties are listed for sale, accompanied by high demand
  • Suburbs where the rental yield is rising is normally indicative of strong demand for accommodation from tenants in an area
  • Areas where the local population is rising fast normally have a strong local economy, which often goes hand in hand with rising property prices
  • Obvious signs of gentrification, such as an increase in local service businesses - like shops, cafes and restaurants opening, and high levels of renovations to local properties
best place to buy investment property

Read more: 10 most affordable suburbs in Melbourne for property investment

How much is your regional NSW property worth today?

Need an estimate of the value of a property? Our OpenEstimates tool is unique as it lets you compare it to three recent local sales using photos of similar properties to assess its condition and features. You then get a unique property estimation based on your comparisons. This can help you make an informed decision.