In addition to its natural beauty, regional Australia offers a host of varied and exciting opportunities for property investors.
Over 6 million people live in the outer areas of Australia’s top 20 largest cities, the demand for properties in regional Australia is growing – fast. With higher demand comes higher prices, making it a perfect time for investors to capitalise on the upward trend.
The appeal to buyers is often the lower prices that regional suburbs offer, in comparison to inner-city areas. For landlords, however, rental yields can often match – or even exceed – their inner city cousins.
Typically, capital growth in smaller towns is nothing in comparison to cities, as dwindling populations and stagnant housing markets don’t make fertile soil for investments. Although many towns don’t tick the right boxes for investment suitability, there are several, however, that do.
Regardless of the lack of amenities when compared to bigger cities, regional town property investments can still stack up, making them a nice diversification to any portfolio.
If you’ve weighed up these options and are still interested in pursuing regional property, take a look at the next steps.
Consider State and Federal infrastructure
State and Federal infrastructure are typically interlinked with population growth. Where one is, the other will often follow.
Where local government infrastructure occurs after heavy population growth, larger infrastructure projects at the state level often precede it, paving the way for larger populations. A quick search online will reveal a host of government websites detailing planned federal infrastructure works.
For more information, make sure you read our article on The Effect of Infrastructure on the Regional Property Market.
Take economic indicators into account
Although using infrastructure as a market indicator is effective, taking it a step further to median property prices will help you to build a solid market perspective.
It’s also advisable to look into local business startups and larger brands that have relocated to regional areas, as these are often indicators of population growth to come. Greater business activity means a stronger economy, after all.
It is, however, important to look into a location’s economy further. If it’s made up of several smaller businesses that contribute to the local economy, fantastic. If the town exists purely because of one large business, however, it’s not going to be a secure investment. If anything happens to that business, your investment is in trouble.
With property investments, timing is key. Your outlook shouldn’t be short-term, however. Look back at the town’s history over the past 5-10 years and examine any trends there have been in the housing market. If prices have taken a downturn, how long has it taken them to increase again?
Indicators specific to real estate
Real estate indicators, which can be found online or in local newspapers, offer investors an accurate insight into the area’s market.
These are calculated based on the percentage of the area’s available rental properties, that are vacant or occupied at a point in time. A lower rate indicates a stronger market.
These are calculated with the difference between property asking prices and the end sale prices. The lower the rate, the stronger the market.
Auction clearance rates
This rate is found by dividing the number of properties sold at auction for a particular week against the number listed at auction. An increasing rate indicates a strengthening property market.
Regional Australian property is highly affordable in comparison to its inner-city counterparts. It does, however, require much more forward-thinking. Take the above points into consideration to identify your ideal investment opportunity.
For more information check out our helpful article Property Investment – Why Go Regional?