Investors are viewing regional houses as such good investments that some are buying them sight unseen, according to a real estate agent and an academic.

Across Australia, regional areas have seen a residential property price boom, with the latest data from PropTrack showing a nearly 60 per cent increase over the past five years to a median price of almost $700,000.

While regional SA remains cheaper than other states, at a median value of shy of $500,000, this represents almost a doubling of property prices in five years.

Adelaide University school of management dean Andrew Beer said the trend started with COVID-19.

“People left the big cities to head to the regions … and that has continued,” he said. 

A blue lake, with a green cliff and a rural city stretching on behind the cliff.

Regional centres such as Mount Gambier have proven popular with buyers. (ABC South East SA: Bec Whetham)

While some buyers were looking to relocate themselves, Professor Beer said others were buying dwellings as investments.

“Demand from investors looking for rental properties has been really important in driving up house prices across regional Australia, including Mount Gambier, and that’s partly because you get a better return on your investment,” he said.

“You might be able to buy a $1 million house in Adelaide or Melbourne and rent it out for $700 per week.

“Or you can buy a $500,000 house in Mount Gambier, and you can rent it out for $550 per week.

“There’s been a significant shift away from relying on local investors to being a national market, often people purchasing online never seeing the property.”A yellow 'Ray White' 'For Sale' sign outside an average-looking cream rendered house.

Property prices in regional SA have almost doubled in five years. (ABC South East SA: Selina Green)

Tough competition for buyers

As the demand for regional properties as investments has increased, first home buyers have been squeezed out.

Ex-Mount Gambier local Brenna McKay recently purchased her first home with her partner to return to the regional city.

“There was always one or two local people who we knew going through opens, but then there were always investors on the phone,” she said.

“There were two houses that we were looking at seriously, and one of them was snapped up by an investor.

“It’s a bit tricky to compete with that.”A woman in a black tank top and white shorts smiling while standing in shallow water

Brenna McKay and her partner recently bought their first home in Mount Gambier. (Supplied: Brenna McKay)

While Ms McKay and her partner eventually entered the market, she said she felt for people who were still looking.

“I can only imagine how challenging it would be if you’re doing it by yourself,” she said.

“It’s not going to happen overnight. It’s a big sum of money you now need for a deposit.”

A shift caused by COVID

Ray White Mount Gambier’s Tahlia Gabrielli said the affordability and value of investing in the Limestone Coast drew investors from all over the country.

a woman in a white shirt smiling in front of plants and flowers

Tahlia Gabrielli says there is a range of investors. (Supplied: Ray White Mount Gambier)

“There’s mum and dad investors, we’ve got people buying properties in their superannuation fund, a lot of out-of-town buyers from the Sydney and Melbourne markets buying here, and locals as well,” she said.

Ms Gabrielli said the trend of people purchasing property without physically setting foot in it originated during the pandemic.

“Everyone was doing it via video walk-through, or not even, just going off what was online,” she said.

“That changed the way in which real estate was viewed, bought and sold.”Academic in a suit posing for a professional photograph.

Andrew Beer says investors are attracted to the strong returns from regional properties. (Supplied)

While the investment has been great news for sellers, Professor Beer said it also has negative impacts.

“Many people are being forced into things like caravan parks or even tents to find temporary accommodation,” he said.

“In some instances, what it means is those regions aren’t growing at the rate they would otherwise grow, because there are no workers to take on the jobs.”

With interest rates also now on the rise, Professor Beer said the government needed to invest in infrastructure to allow for extra housing supply, as well as training to create a high-quality workforce to build more new homes.

“Those two steps will take us a long way to solving the problems we have at the moment,” he said.