Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Monday, 24 August 2015

Regional success story

When it comes to property investment I generally favour the largest capital city housing markets, which in Australia tend to have more diversified economies, the greatest population and employment growth, tighter supply, and less prime location land available for release. 

One of the regional success stories of the past half decade has been a town - or a "city" as you would say in Australia - that I went to visit this weekend.

With a population of around 162,000 it is the 16th largest city in Australia, and the largest inland city after the nation's capital, Canberra...

The city I am referring to, of course, is Toowoomba in Queensland, to the west of Brisbane.

Queensland is the one state in Australia which has a number of sizeable regional cities, and there are four others that are larger again than Toowoomba: Gold Coast, Sunshine Coast, Townsville, and arguably Cairns (depending upon where you draw the boundary). 

The Grattan Institute found in a 2014 study that Australia's capital cities have become vital to economic activity, driving most of the economy in every state .

For regional centres, Grattan found that it is their proximity to the CBD which largely drives their fortunes and thus their respective rates of economic growth. 

According to Grattan's research, regional centres stationed less than 150km from the CBD are growing at a considerably faster pace than those located further away.

This in turn suggests that the best placed regional centres over the long term might include cities such as Toowoomba which is positioned approximately 125km from Brisbane. 

Other centres which sit close to their respective capitals include Geelong (around 75km from Melbourne), Newcastle & the Hunter (Newcastle is located approximately 160km from Sydney), and Wollongong (85km to the south of Sydney). 

The end of the mining construction boom will lead to desperate times for some regional centres, but the unemployment rate in Toowoomba has remained relatively low thanks to its diversified economy, which includes defence, agriculture, food processing, energy resources, retail and construction.

There are some ongoing wages cuts disputes happening in the region, but overally the economy has held up relatively well.