2020, as we all know, was a hard year but just as new growth is springing up from the site of last year’s bushfires, opportunities have come from the seismic shifts of the COVID-19 pandemic.
Regional Australia has been the biggest winner. An REA Insights report has found two main trends that have driven strong demand throughout the regions.
The resurgence of the mining sector
Australia is enjoying a mining sector boom as a result of the pandemic. The reasons vary, but the overall effect is the same. For regions which benefit economically from the boom, demand is stronger than ever.
China is deploying a range of economic stimuli to get their economy moving again. As a result, Chinese demand for raw materials is up, and Australia is a major supplier of those minerals.
Brazil, which is the world’s second largest producer of iron ore, has been hard hit by COVID-19. Production is down, and it is no longer meeting demand. Iron ore prices have soared in response to the shortage, and Australian producers of iron ore are benefiting.
Gold, which has traditionally been used as a hedge against economic volaility, has also been a strong performer.
Port Hedland, the highest tonnage port in Australia, is the stand out winner here. It exports a substantial amount of Australia’s iron ore, along with manganese, lithium, natural gas and other exports. As a result, it receives more enquiries from first home buyers than any other regional town in WA, and is the second most enquired area for investors.
Not all minerals are surging, though. Regions which are dependent on coal are not enjoying the same flow on effects. If you are looking to buy in a mining region, do some homework first to make sure its economic base is sound.
Higher demand for regional living
Even before 2020, there was a swing towards Australia’s regions. Regional cities within commuting distance of Melbourne, Sydney and Brisbane have been the main beneficiaries. Buyers want somewhere affordable, where they can live but still keep jobs in the nation’s more populous capitals.
Over the past five years, for example, Geelong’s population increased by a huge 14%. Bendigo, Ballarat and satellite cities around Sydney and Brisbane such as Illawarra and the Gold Coast have also seen strong growth.
With the advent of COVID-19, many businesses have shifted to remote working arrangements. This breaks the nexus between home and work: people in many industries can now work from anywhere in the country.
Unsurprisingly, this has led to a huge increase in regional searches. REA Insights reports that “regional search has grown stronger than capital city search” in every single state during 2020. In Victoria, which experienced the longest lockdowns, capital city search barely budged while regional jumped a staggering 60%.
Beachside areas are also booming, perhaps driven by a desire for a different lifestyle or just holiday homes for people who can’t travel overseas. Port Lincoln, Devonport and Margaret River are among the winners here. The New South Wales coast, all the way from the Mid North to Queensland, has also experienced unprecedented demand.
The longer term forecast
Both mining regions and lifestyle areas seem poised to continue enjoying strong growth. Cities adjacent to capitals continue to boom, but it’s the farther flung areas which have really benefited from the shift in dynamics due to COVID-19.
If you’re interested in buying in regional Australia, it’s worth doing some research on recent trends. Strong capital growth may continue for the foreseeable future, making now a great time to get into the market. Talk to an expert first if you’re unsure.