We all know Sydney’s property market has experienced very significant growth over the past few years.

Dwelling prices have risen by a huge 74% since the growth cycle started in early 2012, according to CoreLogic.

Growth has slowed down more recently and even entered negative territory, with the median dwelling price falling marginally over the three months to the end of October. But even so, prices are now so high and yields are so low, sitting around 2% or 3%, that it no longer makes sense for investors to buy in the New South Wales capital.

Sydney’s median dwelling value is over $900,000, according to CoreLogic figures, nearly $200,000 more than the next expensive, Melbourne, and more than $300,000 higher than the city behind that, Canberra.

At The Edge Property Buyers, we believe the best opportunities for property investment in NSW are in more affordable regional areas outside the capital. We’ve done extensive research to unearth the locations with the greatest potential for growth. Here’s a brief overview of where and what they are:

Newcastle and Lake Macquarie are a key focus

Our research has led us to the Hunter Valley, otherwise known as the Hunter region, that starts more than 100 kilometres or two hours north of Sydney.

The region covers a lot of ground, with lots of different cities and towns, with one of the standouts being Newcastle, situated on the Tasman Sea at the mouth of the Hunter River.

It’s one of – if not the – key regional centres for NSW, having the second highest population in the state behind Sydney, and being the world’s largest coal export port.

People have been moving to the Hunter Valley, and in particular Newcastle, from Sydney for some time, making it one of the fastest growing regions in NSW.

It’s attracting people due to its relative affordability, with median prices in many suburbs around half of that for Sydney, or even less. Its lifestyle is also a drawcard, as well as the fact that it’s in a potentially commutable distance from Sydney, either by car, especially with the Hunter Expressway, completed in 2014, or plane.

Newcastle’s population is expected to grow by 0.8% per year between 2016 and 2036, helped along by growing student numbers at the University of Newcastle.

It has a rising economy and property market, with an overall solid growth record. The city has delivered solid capital growth over the past three years, and in the past 12 months, several Newcastle suburbs recorded double-digit median price growth. All predictions are for the growth to continue, but yields are still up around 3% to 4%.

Population growth will push prices up further, but other growth drivers include accompanying infrastructure projects; growing amenity; employment, with solid job prospects including mining and education (with the University of Newcastle); and urban renewal.

Key projects keeping the Newcastle economy strong include:

• $350 million CBD revitalisation, including transport interchange

• $2 billion in residential construction

• Upgrades to transport infrastructure, including the $510 million Newcastle Light Rail

• $1.2 billion expansion of port facilities

• $1 billion upgrades of the Newcastle Airport and RAAF base

• $13 million major cruise ship terminal

• $80 million expansion of Newcastle Private Hospital

Accessible within a 40-minute drive of Newcastle are the surrounding areas of Lake Macquarie and the holiday destination of Port Stephens.

These areas will benefit from the flow-on effect of activity in Newcastle, as well as the wider Hunter region.

In Lake Macquarie, infrastructure projects include the $500 million Pasminco site development – which will come about thanks to the $38 million Lake Macquarie Transport Interchange – and the $388 million Trinity Point Marina.

Port Stephens is expected to experience stronger population growth, however, with forecasts of 1.1% per year until 2036.

The wider Hunter region is also promising

While Newcastle has many infrastructure projects of its own, the city and surrounds have also benefited from major new projects in the wider Hunter region, including:

• $1 billion in rail upgrades

• $1.4 billion Anvil Creek mixed-use development

• $2 billion Mt Pleasant coal mine

• $400 million new Lower Hunter Hospital in Maitland

Other areas in the Hunter Valley benefitting from all of these projects – as well as the region’s diverse economy, with industries such as tourism, agriculture, mining, power generation and manufacturing – include Maitland, Rutherford and Cessnock, which offer cheaper opportunities for property investors in the Hunter Valley region.

Data Sources: Australian Bureau of Statistics, Queensland Government Statistics, Hotspotting, SQM Research

To find out more about why we advocate buying in the Hunter region, contact us here.

There are plenty of buying opportunities out there, but careful selection is crucial for a successful long-term investment. If you want help with finding the right property in the right location, contact us for an obligation-free 30-minute strategy session. For guidance on where to start when it comes to property investing, subscribe to our six-part ‘Ready to Buy Checklist’.