NSW regional towns that boomed most in the past year

Rents in regional NSW towns have surged by up to 26 per cent in the past year, and the regional rental market’s growth is outpacing Sydney’s.

Some of the biggest rent increases were in smaller towns with ongoing infrastructure development or established industry. Areas adjacent to regional hubs also rose strongly.

Overall, the median weekly asking rent for a house in regional NSW rose 8.3 per cent in the year to June, reaching an all-time high of $650, Domain’s latest Rent Report shows.

In Sydney, the median asking rent rose 7.6 per cent over the year, reaching $850, also an all-time high.

The steepest hike in regional NSW was in the local government area of Temora, about 400 kilometres south-west of Sydney, where the median asking rent shot up 26.3 per cent to $480.

Liverpool Plains, on the north-western slopes near Tamworth, was next, up 23.1 per cent to $480. Leeton, a Riverina town known for its rice production, was third, up 22 per cent to $500.

Dr Nicola Powell, Domain’s chief residential economist, said the data suggested an ongoing exodus from cities to the regions.

Strong rental price growth in areas such as Tweed, south of the Gold Coast – up 14.7 per cent to $975 – and Wingecarribee in the Southern Highlands – up 13.6 per cent to $795 – was probably being driven by poor affordability in urban areas, Powell said.

“Many of them are being driven out of places like Sydney, and even the Gold Coast, by affordability pressures. It is poignant.”

Powell said demand for regional rentals was also probably being fuelled by the “try before you buy” phenomenon.

“The rental market is often a stepping stone: when people are considering a move to the regions, they will often rent first to experience the location, experience the lifestyle and decide whether they want to buy there.”

Terry Rawnsley, director of planning and infrastructure economics at KPMG, said the three interest-rate rises so far this year had begun to impact the rental market.

“We’ve probably got landlords trying to claw back some of what they’ve lost due to rate rises. We also know that the rental market’s still extremely tight in terms of vacancies, so poor old renters are having to swallow those price hikes as best they can.”

While the full impact of the government’s recent changes to negative gearing and capital gains tax, aimed at supporting owner-occupiers, is probably still to come, Rawnsley said the changes could have already begun to affect rental supply.

“Certainly, people are looking to sell their properties and exit the investor market, and there is perhaps less demand from investors looking to buy, with owner-occupiers filling the void. That could soon put a squeeze on the supply of rentals.”

Issues with supply are often more difficult to resolve in regional areas, Rawnsley said, placing further upward pressure on regional asking rents.

“In some of those smaller towns, there’s no established building industry. These communities just aren’t able to roll out heaps of houses very quickly.”

In the Liverpool Plains area, a mini-coalmining boom and a freshly renovated hospital have lured out-of-area renters with the promise of high-paying work, Robertson Real Estate Gunnedah director Lauren Robertson said.

“There are plenty of job opportunities here, and a lot of people are making a lot of money. You can be a young person earning $90,000 to $100,000 driving a truck, or a doctor earning good money at the improved hospital.”

Robertson said big-city investors had discovered Plains-area towns such as Gunnedah in recent years, sucking up much of the stock that could have otherwise been bought by locals.

“Buyer’s agents [for investors] have been offering prices above asking, and a lot of our first-home buyers are missing out and being forced to rent.”

Meanwhile, in Temora, a pro-development local council is supporting several large infrastructure projects, including a complete rebuild of the hospital, as well as residential building.

“With a lot of councils, you get stuck in paperwork if you want to do anything, but ours is proactive, and I think that is the main driver of the development here,” Miller & James agent Jess Stewart said.

The hospital project had created broader momentum in Temora, Stewart said, adding that few shops were vacant.

“People in town feel confident, particularly with Wagga [Wagga] growing exponentially to the south.”

The town of 4000 has also become an unlikely hub for empty-nesters.

“Parents who have one adult child in Sydney and one in Melbourne often pick us,” Stewart said.

“They say it’s because we’re halfway between the two cities, which we almost are. But I like to think it’s because of the people and the lifestyle here, too.”