Best regional NSW areas for property investment 2020

By Craig Gibson

Sydney’s property market woke up in the middle of 2019 after a year and a half in the doldrums, but what about the best regional NSW areas for property investment in 2020?

Regional markets may not record the same breathtaking highs and lows as urban postcodes, but they can they can still tick over very nicely thank you. In fact. in 2018/2019 many regional areas in NSW outperformed the Sydney market, where buyers practically deserted the market and property values fell drastically. 

This was down to a number of factors, but the unaffordability of urban markets was the primary reason buyers and investors went looking elsewhere for cheap real estate - and they found this in regional areas and cities like Hobart. 

 
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Regional property = affordability and lifestyle

regional NSW towns
With increasingly diversified local economies and great lifestyle factors, regional areas are fast becoming great investment opportunities.

Why? Better value for money was reason number one, but many regional towns and cities now have diversified local economies and jobs, not to mention the lifestyle factors, with a slower pace of life and larger backyards all proving popular with homeowners and investors alike. 

With this in mind, let's look at which regional markets in regional NSW offer the potential for solid growth in 2020.

Best regions in NSW to invest in property 2020

Domain’s Commercial Real Estate arm recorded the top 10 most searched areas in Australia for rural properties, with NSW locations all but two of the spots. These include regional centres of Yass, Goulburn, Bathurst, Cooma, Orange, Dubbo, Mudgee and Singleton

All these locations are not only more affordable when compared to Sydney, but also offer the possibility of living on a small holding or rural style property. Yass and Goulburn are also in the Sydney to Canberra Growth Corridor, have a good range of shops and facilities with easy access to both those cities as well as the coast. 

"Domain's Commercial Real Estate arm recorded the top 10 most searched areas in Australia for rural properties and all but two are NSW locations."

The median house price in Goulburn is $415,000 and rent out for $360 per week while units sell for a median of $319,000 and rent for $260 per week. In Yass the median house price is a little more at $484,500 and rent out for $395 per week, while units rent for $320 per week. 

Move to the Central West and the regional centres of Dubbo and Orange offer the same criteria of affordability and robust local economies that are not necessarily dependent on natural resources - with tourism the main driver of growth in both areas. 

Median property prices in Dubbo are currently $365,000 for houses that rent out for $350 per week, and $261,250 for units that rent out for $250 per week. Median property prices in Orange are a little more, with the houses at $420,000 - which rent out for $380 per week and units medians are currently $272,500 and rent out for $270 per week. 

Area Median house price 12 month growth rate 5 year compound growth rate Median rental yield
Goulburn 2580 $415,000 -3.10% 6.0% 4.5%
Yass 2582 $484,500 4.70% 3.5% 4.2%
Dubbo 2830 $365,000 1.99% 2.7% 5.0%
Orange 2800 $420,000 6.65% 4.0% 4.7%

Fastest growing regional areas NSW

If you are looking for the current crop of postcodes that are the fastest growing regional areas in NSW then start your research with Maitland. Realestate.com.au records that this town recorded a compound growth rate of 7.4% for houses and 5.0% for units over the past five years. The median house price here is $400,000. 

Port Macquarie, on the NSW North Coast, has seen a similarly impressive compound growth rate over the same timeframe, with houses advancing 5.0% and units 4.6%. The median house price here is $560,000 while units are at $380,000.

Wagga Wagga is also worth a look, where the median property prices for houses is $440,000, and where they have seen a compound growth rate of 4.7% over the last five years. Houses rent out for $340 per week and have a rental yield of 4.0% over a year.

Area Median house price 12 month growth rate 5 year compound growth rate Median rental yield
Maitland 2320 $400,000 3.18% 7.4% 4.6%
Port Macquarie 2444 $560,000 -2.91% 5.0% 4.2%
Wagga Wagga 2650 $440,000 8.86% 4.7% 4.0%

What should buyers and investors be wary of in NSW?

If you are thinking of investing in a regional town or centre remember that they are more likely to offer positive cash flow over the long term, while metro locations tend to give you better prospects for capital growth. 

Like anywhere, you need to research the local market and ensure there are sufficient economic drivers - jobs and investment - in the area to sustain growth in the medium to long term. 

"A regional town or centre is more likely to offer positive cash flow over the medium to long term"

How can we expect the NSW regional property market to change in 2020?

Wollongong real estate
QBE forecasts Wollongong to experience modest price growth through to 2021/2022.

QBE’s 2019–2022 Australian Housing Outlook forecasts that most regional markets will have modest growth prospects in the year ahead, improving over the medium term. 

They believe Newcastle will record annual average price growth of 3% for a median house price of $630,000 by June 2022. They also think Wollongong will experience modest price growth over through to 2021/22, with the median house price to rise by 6% to $685,000 by June 2022. 

This is fairly typical for regional cities markets, which tend to lag capital cities, but the upside is that they are less volatile - which may suit your investment objectives or lifestyle choice. 

5 signs an area has high growth potential

Looking for the secret behind identifying regional areas with high growth potential? These 5 signs often alert investors that an area is on the cusp of a growth spurt:

  1. The local population is rising fast, which often goes hand in hand with rising property prices
  2. A low number of properties are listed for sale, accompanied by high demand from buyers
  3. Suburbs where the rental yield is rising is normally an indication of strong demand for rental property in an area
  4. Properties are selling via auction, and not being listed for sale
  5. Government is funding major projects in the area, including hospitals and upgrades to transport infrastructure
 
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