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The Boom Before The Boom

Image for the article - The Boom Before The Boom

Many people believe the Regional property market boom was just a COVID thing.

Is that so? Did regional property markets perform so poorly that only the exodus-from-big-cities trend during COVID could boost them?

This blog will look back into the years before COVID and find the answer.

COVID did give regional property markets a boost.

Yes, COVID and all the factors that occurred during that time, particularly the WFH trend, greatly influenced regional Australia’s time to shine. The regional property boom was especially impressive in NSW, VIC, and TAS (chart below).

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However, thinking regional cities weren’t booming prior would be ignorant.

The two best COVID performers, regional NSW and regional VIC, are examples.

Regional NSW

The below chart shows three regional NSW cities and Greater Sydney’s annual growth rates in the past 10 years.

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Everyone knows that Greater Sydney’s property market boomed from 2013 to 2017 (as shown in the chart), but few know that before 2020, many regions, including the three mentioned in the chart, had a period when they achieved close-to-10% annual growth, which could be deemed as a boom.

 • Orange’s growth (green line) picked up strength in 2016 and maintained a steady and above-average pace while many other cities, including Sydney, were having a bad time. Its median house price rose by 27% over the 3 years from the end of 2016 to the end of 2019.

 • Port Stephens (blue line) had been thriving from 2013 to 2018 before the brief break in 2019, having grown by 48% in the 5 years.

 • Kiama-Shellharbour (purple line) boomed at the same time as Sydney did, with its median house price rising by 59% in 4 years (2013 – 2017).

If the regions’ pre-COVID booms are not convincing enough that they did well before COVID, let’s check the four regions’ overall growth before and after COVID (below table).

Image of 6445efd1e03a079159940f71 Screenshot%202023 04 24%20at%2012.43.30%20pm

 • Port Stephens and Kiama – Shellharbour grew more than Sydney before the COVID boom.

 • Although most of Orange’s growth happened over the COVID boom, the robust momentum wasn’t from nowhere, considering its consistent healthy growth before COVID.

Regional VIC

Victoria’s last decade was similar to NSW’s. The below chart shows three regional VIC cities and Greater Melbourne’s annual growth rates in the past 10 years.

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 • Ballarat’s (green line) property market improved significantly from 2013 to 2015 and has been growing at an increasing pace from 2016 on, totalling a 38% value increase in 4 years from 2016 to 2020.

 • Geelong (blue line) followed Melbourne and experienced a boom from 2014 to 2018, achieving 39% growth in 4 years.

 • Shepparton’s (purple line) property market started strengthening in 2017, and the COVID boom was just an extension of a boom that had already begun. Its median house price has risen by 63% in the 5 years since 2017.

 

Easily Neglected Regions’ Booms

The NSW and VIC examples show that regional have had booming times before COVID, but why were they unknown to many?

They are smaller. Sydney and Melbourne host not only 40% of Australia’s population and 1/3 of the country’s house stock, but also the country’s economic powerhouses. Their property market moves’ influences are much more extensive than regional cities’ – Of course they’re always talked about; On the contrary, regional cities have much smaller and much more localised property markets, which wouldn’t influence 99% of the country’s population, booming or slumping.

And they’re not as dramatic. The chart below shows Sydney, Melbourne, and their correspondent regions’ house value growth trends over the past two decades: While Sydney and Melbourne’s trendlines have multiple distinct ups and downs, the regional trendlines are much smoother.

Image of 6445f0605078044848b17252 20Y%20House%20Value

Steady growth isn’t eye-catching enough for news headlines. That’s why most of us ordinary public only heard about Sydney’s booms and price downfalls but didn’t know much about regional property growth until their price surged like crazy during COVID.

 

Rely on Data, not Headlines

Did all property investors miss out on the regional booms before COVID?

No, data-driven investors didn’t. Examples include InvestorKit’s purchases in Bendigo in 2019 which grew 60% in average in 3 years (2019-22). How did InvestorKit help our client achieve that? By reading data, instead of news headlines.

In InvestorKit, our research team identifies markets with high or increasing pressure for our clients by regularly reviewing economic, demographic, and property market indicators across the country, including but not limited to: Unemployment rate, job vacancies, income growth, population growth, internal migration trends, financial fundamentals, infrastructure pipeline, relative affordability, long-term and short-term growth, established and incoming stock level, rental vacancy rate, etc. Besides market review for clients, we also release whitepapers monthly sharing our data-driven approach to help the public better understand Australia’s property markets, eg. Australia’s Housing Fundamentals Analysis, Australia’s Housing Supply Crunch, Overvalued or Undervalued Analysis, etc.

Would Like to buy your next investment property with a data-driven helper by your side? Talk to us today by clicking here and requesting your 45-min FREE no-obligation consultation!

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