Poor retirement planning and insufficient superannuation has baby boomers targeting the affordability of regional property markets, creating a boom of a different kind – but will this create opportunities for savvy investors?
According to a recent study conducted by national property market researcher Propertyology, millions of baby boomers are expected to flock to regional Australia over the next 20 years, as their poor retirement savings and superannuation balances means affordability of housing will be a major priority.
“Baby boomers didn't have their employer contributing towards superannuation until the back end of their working years, so one way or another, around 90 per cent of this generation will have some reliance on a government-funded pension,” Propertyology market analyst Simon Pressley said.
“Don’t be surprised if tens, and possibly hundreds, of thousands end up organising a removal truck and relocating to one of the many beautiful parts of regional Australia in search of a sea- or tree-change.”
Mr Pressley said the potential for a mass baby boomer migration over the next two decades means regional property investment remains a sound strategy.
“When Australia’s baby boomer population equates to 4.45 million people, even if only a small portion did relocate, it will create significant extra demand for housing in the regions,” he said.
“Whether coastal or rural, we believe that the regional cities that will be in highest demand by baby-boomer re-locators will offer a combination of quality lifestyle, good health care, and availability of freestanding houses for less than $400,000.”
Propertyology identified 22 regional locations that are likely to experience strong demand from baby boomers.
In NSW, Coffs Harbour, Port Macquarie, Armidale, Orange, Tamworth, Dubbo and Wagga Wagga were identified as likely to attract demand.
In Queensland, Cairns, Townsville, Hervey Bay and Toowoomba are gaining attention.
In Tasmania, Launceston, Devonport and Burnie are tipped to boom.
In WA, Albany, Bunbury and Geraldton are attracting interest.
SA’s Port Lincoln is also gaining attention.
In Victoria, Bendigo and Ballarat are on the radar.
Lastly, NT’s Alice Springs and Katherine have been tipped to expect growing demand.
Mr Pressley said it makes sense for property investors to consider regional Australia because of the number of strong fundamentals at play.
“The advantages of investing in regional Australia include a smaller capital outlay to get in to the market, higher rental yields, lower holding costs, and diversification within a portfolio,” he said.
“When analysed on an average annual capital growth rate over the past 15 years, many regional cities have actually outperformed capital cities.
“And, with industries like agriculture, tourism, and advanced manufacturing very well-positioned to prosper from the Asian Century, it shouldn’t be difficult at all to understand that the investment fundamentals are very sound.”