Many of us Aussies know at least one family who has moved from a city to a regional town over the past few years, because of COVID.
It’s tempting to be lured by Pied Piper’s flute and trail along with the rest to the next new fantastic place to live.
What we want to emphasise here at Buyers Agency Australia is that no matter what new trend seems to be happening, the fundamentals of good property investing doesn’t change. It’s important to know if these trends are new, old, or simply a fast track of a growing trend.
Today we want to share a few crucial things to consider if you’re tossing up between buying an investment property in a major capital Aussie city vs a regional town.
Now it’s important to note that each Aussie state and regional town is different. These are general considerations, yet fundamental considerations every property investor needs to look at.
Capital cities: Property investing considerations
Pros of property investing in capital cities
Capital cities are well established with plenty of amenities and infrastructure – with constant plans for more. These bring long-term benefits for the economy such as creating more jobs which is pretty important for paying down a mortgage in the city.
A larger population and a strong economy bring more opportunities for workers and businesses, including investment from global companies. All this feeds into each other. Then there’s the hustle and bustle of city life. More shops. More cafes and restaurants. More entertainment. More of everything.
Cons of property investing in capital cities
The downside of having such a large population is all these people need housing. This naturally leads to more competition and high house prices as both homeowners and investors bid as high as they can for the properties they want.
Of course, then families are stuck with high mortgages for fulfilling the great Aussie dream of owning a home. And investors who might provide rentals to families who can’t afford that dream, well, they’re also left with big investment mortgages. So mortgage stress tends to be high in cities. Rental yields low – and capital growth is what many investors are banking on.
Regional cities: Property investing considerations
Pros of property investing in regional cities
Properties in regional areas generally offer better value in lower populated areas, which means there’s a lot less competition for housing than in cities. You’d be looking at higher cash flow from strong rental yield, less capital growth.
The appeal of regional areas has been particularly obvious with the mass exodus of city siders looking for a seachange. Add to that the luxury of less traffic, stress, and bustle and you can understand why the price of properties has soared in regional areas for instance, in south-east Queensland.
Still, this is the lucky country and there are so many underrated regional areas around Australia. The government response to the overflow in cities is decentralisation. For instance, in Melbourne, government departments have been moving to Geelong and Ballarat.
The new infrastructure makes it even easier to travel to and from these regional areas from Melbourne. The plan is to create suburban hubs that give people lifestyles similar to those they’d enjoy near the city.
Keep up with what’s going on in Aussie regions through the Department of Infrastructure, Transport, Cities and Regional Development and Regional Development Australia.
Cons of property investing in regional cities
A property investor needs to be careful about the demand and supply in regional areas. It’s far more fickle, with the population and economy reliant on tourism and large employers. We’ve seen how tough regional areas have had it with international tourism disappearing.
It may be a matter of those areas adapting and reinventing themselves – to attract local tourism and regional hubs that thrive in their own right. There are fewer services, amenities, and infrastructure in many small towns, so you’ve got to look past the quaintness and chilled holiday feel of the town to look at the hard facts and figures. For instance, look up the value of regional homes on CoreLogic’s home value index.
There are valid pros and cons of cities and regional areas. You can find great properties in both, depending on where you look, what you’re looking for, and who’s looking for you. What COVID has shown us is things change quickly – and the average investor can easily be carried along with the wind.
It pays to anchor down and look objectively at the situation: having a solid property investment strategy can help you understand quickly what properties and areas make sense for your goals, finances, and your stage of life. That should always drive your search for property – not the other way around.
If you’re keen to set up a sensible retirement strategy that will help you maintain the lifestyle you deserve, let us help you get started.