Investors are so enthusiastic about the potential of regional properties that many are purchasing homes without even viewing them in person, as noted by both a real estate professional and an academic expert.
Throughout Australia, regional locations have experienced a remarkable surge in residential property values. Recent statistics from PropTrack reveal that prices have skyrocketed nearly 60 percent over the past five years, bringing the median price close to $700,000.
Although regional South Australia remains more affordable compared to other states, with a median price just under $500,000, this still indicates nearly a twofold increase in property prices within the same five-year period.
According to Andrew Beer, the dean of the School of Management at Adelaide University, this trend can be traced back to the COVID-19 pandemic.
"The pandemic prompted many individuals to leave bustling urban centers in favor of quieter regional areas, and this movement seems to have persisted," he explained.
While some buyers are seeking these homes for personal relocation, Professor Beer emphasized that a significant number are acquiring properties purely as investment opportunities.
"The influx of investors searching for rental properties has played a crucial role in escalating house prices in regional Australia, including places like Mount Gambier," he said. He pointed out that this is partly due to the higher return on investment available.
"For instance, you might invest in a million-dollar home in cities like Adelaide or Melbourne and only earn around $700 weekly in rent. In contrast, you could purchase a $500,000 property in Mount Gambier and bring in approximately $550 per week in rental income."
This shift has led to a notable transition from local investors dominating the market to a more national landscape, where buyers often make purchases online without ever setting foot on the property.
Intense Competition Among Buyers
As the interest in regional investment properties grows, first-time homebuyers are increasingly finding themselves at a disadvantage.
Brenna McKay, who previously lived in Mount Gambier, recently bought her first home with her partner as they returned to the area.
"We always saw one or two locals during open homes, but there were consistently investors on their phones," she recalled. "There were two houses we were seriously considering, but one was quickly bought by an investor. Competing against that is definitely challenging."
Though Ms. McKay and her partner eventually managed to enter the housing market, she expressed concern for those still searching.
"I can only imagine how tough it would be for someone trying to do it alone," she said. "This process takes time, and the amount required for a deposit is substantial."
A Change Brought About by COVID
Tahlia Gabrielli from Ray White Mount Gambier shared that the appealing affordability and investment potential of the Limestone Coast have attracted investors from across the nation.
"We've seen a mix of mom-and-pop investors, people buying properties through their superannuation funds, and a lot of out-of-town buyers from Sydney and Melbourne, alongside local residents," she noted.
Gabrielli highlighted that the trend of purchasing property without a physical inspection began during the pandemic era.
"People started relying on video walkthroughs or didn’t even view the properties in person—many made decisions based solely on online listings," she explained.
"This evolution has transformed the way real estate is perceived, bought, and sold."
While this surge in investment has been beneficial for sellers, Professor Beer cautioned that it does come with drawbacks.
"Many individuals are being pushed into temporary accommodations like caravan parks or even tents due to the lack of available housing," he remarked.
"In some cases, this situation hinders regional growth because there aren't enough workers to fill available jobs."
With rising interest rates now complicating the landscape further, Professor Beer urged the government to invest in infrastructure to boost housing supply and provide training to cultivate a skilled workforce for constructing new homes.
"Taking these two actions would significantly address the current challenges we’re facing," he concluded.
