Best regional VIC areas for property investment

Like Sydney, the Melbourne property market has slowed, and Victoria has seen many regional areas record stronger growth over the course of 2017/18.  

Despite the fact that Melbourne property prices are still relatively affordable, investors are increasingly looking to regional areas for better returns and more attractive growth opportunities.

Many of Victoria’s regional hubs and towns are now more accessible to Melbourne - thanks to better transport links - and have benefitted from the so-called ripple effect. This is when areas adjacent to a capital become desirable and sought after as buyers either look for a more relaxed lifestyle and/or more affordable property.

Before we look at specific regional areas that are performing, let’s examine the factors behind the current surge in demand for regional property.

Why are some regional areas booming?

Victoria property market

A range of factors are driving the current phase of growth for regional property markets, including:

  • Value for money - perhaps the single most important driver pushing people out of metro markets in the search for affordable property, where their dollar would buy them a lot more than a comparable home in a city.
  • Infrastructure investment - it has the ability to kickstart and develop regional centres - making them more accessible - and give the local economy a solid foundation for growth. This helps to attract industry and commercial development, which in turn stimulates the local property market.  
  • Quality of life - another big drawcard for people looking for a slower pace of life that regional cities and towns offer. Downsizers and retirees, in particular, can also become a demographic factor, as they leave the city for a quieter life in a regional centre.
  • Promiximity to major cities - regional centres close to major urban areas can benefit from the ‘ripple effect’, as proximity helps piggyback off the larger metro’s economic boom, and drive property prices in adjacent areas up.

Best regions in Victoria to invest in property

The best regional areas in Victoria to invest in property are increasingly vibrant small cities and large towns such as Ballarat, Bendigo, the Greater Geelong area and Wodonga. CoreLogic identified these areas as markets which have benefited from a ripple effect, with buyers looking for an alternative to the more expensive suburbs of Melbourne, without sacrificing much in terms of lifestyle and amenities.

The Greater Geelong area is particularly well placed for growth as their diverse local economy can count on jobs in the retail, transport, educational, healthcare and public service sectors. Government agencies that have relocated there include WorkSafe Victoria , the National Disability Insurance Agency (NDIA) and the Transport Accident Commission (TAC).

"The best regional areas in Victoria to invest in property are increasingly vibrant small cities and large towns such as Ballarat, Bendigo the Greater Geelong area and Wodonga"

Best regions in Victoria to invest in houses

Area Median sale price Median price change (<1 year) Median rent Median gross yield
Point Lonsdale $818k 13.54% $410pw 2.60%
Ballarat $443k 10.06% $300pw 3.50%
Wodonga $340k 3.66% $320pw 4.90%

Best regions in Victoria to invest in units

Area Median sale price Median price change (<1 year) Median rent Median gross yield
Wodonga $228k 13.75% $230pw 5.30%
Ballarat $255k 3.03% $220pw 4.50%

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

Fastest growing regional areas Victoria

houses for sale VIC

Looking for the fastest growing regional markets in Victoria? Let's take a look at some numbers and what areas are currently performing.  

Geelong and its suburbs are definitely a hotspot in 2018, as they've been the state's top performing regional area with 11 per cent growth over the 2017-18 financial year. The standout postcode in Victoria was the Geelong suburb of Corio, with recorded growth of 25 per cent over the same timeframe.

The Mornington Peninsula is another top performer, with its median property value up to $679,000 - a rise of 7.3 per cent over the year. The strong performance in these areas was due to their relative affordability, boosted by an increase in activity from first home buyers.

Fastest growing regional VIC areas for houses

Area Median sale price Median price change (<1 year) Median rent Median gross yield
Hastings $505k 19.95% $350pw 3.60%
Geelong $728k 7.14% $420pw 3.00%

Fastest growing regional VIC areas for units

Area Median sale price Median price change (<1 year) Median rent Median gross yield
Hastings $398k 27.61% $310pw 4.00%
Torquay $657k 23.96% $393pw 3.10%
Somerville $443k 19.59% $340pw 4.00%

What should buyers and investors be wary of in Victoria?

Like anywhere else, property markets in Victoria are diverse and need to be researched at the local level.

If you're a buyer or investor, you should be wary of any market that is dependent on a single income stream. Many people have gotten their fingers burnt during the recent mining boom, where regional towns in Western Australia and Queensland were touted as a sound investment.

And while capital cities tend to offer better prospects for capital growth over the long term, regional centres are more likely to produce positive cash flow - it really depends on your circumstances and long term investment strategy.

"If you are buyer or investor you should be wary of any market which is dependent on a single income stream"

rural properties for sale VIC

How will the regional property market in Victoria change in the next year?

If you're looking to regional Victoria for property investment in the year ahead, be prepared for more muted performance. Though the regional markets highlighted here are likely to outperform Melbourne into 2019, analysts believe last year’s performance is unsustainable and unlikely to be repeated.

As an indicator, CoreLogic recorded combined regional areas advancing 6.6 per cent to July 2018, which is stellar performance pegged against combined capital growth of just 0.8 per cent. This scenario is likely to prevail as we move into 2019.   

Ultimately, local economic factors like prospects for jobs growth, together with local supply and demand will determine how a market performs.

How to identify a regional area with high growth potential

There is often no single obvious headline metric that screams, 'Buy here' - it is more likely to be a combination of factors that together often indicate that a postcode could soon be ready to boom. These include:

  • Gentrification: an area that sees a rapid uptick in renovation activity - as well as a proliferation of local shops, cafes and restaurants - is usually also experiencing high demand for property.
  • Major infrastructure projects like new ports, roads and rail links can transform regional towns and cities, and provide a much needed injection into the local economy. Government investment in amenities like a new hospital, army/navy base or educational institution can also kickstart the local property market and increase demand for rental accomodation.
  • A vibrant local property market where many properties are listed for auction is a sure sign that demand in a particular area is strong enough to prefer this method of sale, rather than private listings. This competition tends to drive prices up.
  • It is also worth tracking the time properties spend on the market. If this metric is narrowing over time, then this is typically an good indication of strong demand for housing in the area.
  • A rising rental yield is another metric to look for, as it indicates strong and/or increasing demand for accommodation in the local area.

How much is your regional Victorian property worth today?

Need an estimate of the value of your property, and want to make an informed decision?

Why not use our OpenEstimates tool to get a unique property estimation, using photos of three recent local sales and the latest property market data.

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