There’s potential for rent roll growth in the regional areas as the line between city and country living begins to blur. 

In a recent speech, outgoing National Farmers Federation President Fiona Simson forecast the demise of the city/country divide. She mentioned how farmers now rely on progressive thinking in order to survive, and how the ‘latte sipper’ impression of people who live near the city is redundant because you can order a quality coffee in plenty of country towns. 

The pandemic saw a rush to the regions because families found themselves able to purchase bigger houses for less money, often being able to hold down a metropolitan salary by working remotely. This has reduced the ‘culture gap’ between city folk and their country friends and contributed to the gentrifying of many regional towns. 

With this in mind, as cities feel the squeeze, it’s easy to see why developers in areas outside of capital cities have an excellent opportunity to introduce medium-density living solutions. 

What is medium-density housing?

Medium-density housing is usually a middle-sized ‘cluster’ of smaller homes, units and townhouses which sits between neighbourhoods with single family homes and high-rise apartments.

Picture a group of townhouses or a ‘campus’ of three-storey unit blocks with a gym and pool in the centre. Residents in medium-density housing usually have one or two private parking spaces and a body corporate overseeing building management.

The common scenario these days is an older home on a larger block being knocked down to make way for several units or townhouses. The benefit of medium-density housing for developers is the lower land purchase cost; you make more money if you put multiple homes on a single piece of land. For buyers, the trade-off of going without a backyard is affordability, security and less pressure to mow lawns. Residents usually find themselves living closer to central community hubs like schools and shopping districts. 

Is medium-density housing a solution for regional areas?

Property investing experts are quick to point out regional areas dominate cities in terms of capital growth. The Herald Sun names Greater Geelong, Moorabool and Baw Baw as hotspots for the state of Victoria, as are Ballarat, Bendigo and Bass Coast. 

Unemployment in regional Victoria is at record lows and these areas are seeing skyrocketing rents and yields thanks to housing availability shortages. All this makes medium-density housing seem like a no-brainer as a way to take the stress off the demand for more homes in capital cities. 

However, there are a couple of challenges.

Roadblocks to regional housing

Growing populations are fantastic for regional areas but infrastructure has to keep up. People need schools, shops, healthcare services and roads, and this takes time. 

What’s more, building approvals are recovering from an 11-year low caused by high interest rates and supply chain problems flowing from the pandemic. Many building companies have gone under because of rising expenses and the remaining ones are dealing with backlogs. 

So while a developer may be excited to have approval for 50 new townhouses on the edge of a regional centre, bringing them to life isn’t always easy. 

The other issue is connection to the city; many remote workers still have to appear in person in the office at least a few times a year or sometimes once per week. If regional areas fail to have fast rail connections, the appeal of living far from town can begin to fade.

The future of regional living (and rent rolls)

It’s not to say these challenges can’t be overcome; forecast growth for regional areas is positive and infrastructure and supply chains will eventually catch up. Regional areas will also continue to evolve as city residents move in and the ‘culture gap’ closes. In the future, country areas are also likely to become home to businesses more traditionally based in capital cities. Initiatives like the Sunshine Coast’s business and technology precinct are an example of this already happening. 

Right now, real estate agents and property managers have the opportunity to start laying foundations for satellite offices and regional rent roll growth. This transitional period is a good time to start building connections and exploring opportunities. A future-focused approach could pay off by giving you early access to modern developments in country towns.