A new report reveals the 10 most affordable suburbs in regional Australia, with a mining town in New South Wales ranking number one.
CoreLogic RP Data has reported that Broken Hill, on the New South Wales-South Australia border, is the most affordable regional suburb in Australia with a median house value of $160,583.
The finding is based on data current as of January this year that only included suburbs with 100 or more sales.
Other suburbs to make the list included Morwell in Victoria with a median value of $175,058, Cowra in New South Wales with a median value of $195,009 and Naracoorte in South Australia – the highest valued with a median figure of $211,858.
Jim Hickey is principal of LJ Hooker Broken Hill and a long-time resident of the area.
He explained that the housing market entered a significant slump during the global financial crisis (GFC) because of the region’s dependence on mining activity.
“It’s been very slow since the GFC struck,” Mr Hickey said. “The mining industry started to take a downturn at that stage and has continued to slip, although Broken Hill – because we don’t have iron ore – has held its own to a degree.”
The announcement of new mining projects, including Havilah Resources gold and copper mines, had contributed to a slight increase in buyer activity during the past six months, although prices are yet to reflect this according to Mr Hickey.
“The last six months has been a slight improvement, there’s a few more people in the marketplace buying. I wouldn’t say prices have risen, but the market is getting a little bit stronger. There have also been numerous other mining ventures starting in Broken Hill in recent months, which is helping the economy.”
Matthew Ward, a director at Aspect Buyer’s Agency and specialist in the region, said investors looking to cash in on affordable housing stock in Broken Hill need to buy with a long-term strategy in place.
“Capital values have come back over recent years, driven by the downturn in the mining sector, and a lot of other service industries are impacted by this. Investment with a long-term goal should see the benefits; good yields are achievable for the right properties,” Mr Ward said.
He recommends buyer’s target higher-quality housing stock in order to capitalise on what is a “renter’s market”.
“There is a mix of tenants; there is a proportion of government-assisted as well as private tenants. The market is a renters market, thus a flight to quality will always occur. Better-quality, well-located properties will always attract a better-quality tenant.
“Like all regional towns there are good areas and less-desirable areas, and sometimes a couple blocks or a particular side of the rail tracks can make a big difference.”
Mr Hickey explained that much of the housing stock in Broken Hill dated back to the early 20th century and predicted that investors could anticipate strong returns by buying near the median value.
“A lot of it is 1920s [stock] that has been redone, like miner’s cottage-style stuff. But most of them have been renovated over some period of time right up to the modern-day style of housing. Your best returns are on the stuff that is around $130,000 to $170,000, you can usually expect around 8 or 9 per cent on those,” he said.
The top 10 most affordable regional suburbs for houses listed by median price, according to CoreLogic RP Data are:
1. Broken Hill, NSW: $160,583
2. Morwell, Vic: $175,058
3. Stawell, Vic: $178,616
4. Moe, Vic: $188,775
5. Cowra, NSW: $195,711
6. Deniliquin, NSW: $197,711
7. Ararat, Vic: $200,954
8. South Grafton, NSW: $203,465
9. Maryborough, Vic: $206,304
10. Naracoorte, SA: $211,858