According to the Australian Bureau of Statistics (ABS), some areas of Australia have seen growth in their properties over the past two years. The population of these areas has also increased.
ABS figures also showed that the country's population is expected to double by 2075. Growth will not be exclusive to capitals, with regions also experiencing increases. As such, the increase in the population may offer more opportunities for real estate investment to meet the population growth.
This means that you may want to invest in a property located in regional areas, as a growing population means an increase in housing demand.
However, as with real estate investment in capital cities, you must carefully evaluate many factors before you immerse yourself in the regional real estate market.
Here are five points to consider before investing in a property located in a regional area:
Affordability. The value of housing in regional areas is comparatively more affordable than in metropolitan areas. Affordable prices for regional properties are due to relatively low supply and demand.
Analyze value growth in regional markets to identify emerging regional areas and suburbs and inform them of their median prices. You can use our Top Suburbs page to view a complete profile of your desired suburb.
Cash flow. A real estate investment in a region can generate positive cash flow. According to CoreLogic, for example, regions such as Cairns, Townsville and the Hunter area have the highest average rental yields in Australia. Regional locations can be strong options for investors looking for higher rental returns.
Another example: in the past three years, the Burnie and Launceston real estate markets have outperformed those in Brisbane, Perth, Adelaide, Sydney and Darwin, according to Simon Pressley, General Manager of Propertyology. In contrast, Moranbah and West Gladstone in Queensland have recorded a decline of more than 40% in the value of their property, according to Domain.
Lifestyle. Regional areas are ideal for getting away from the hustle and bustle of the city. Most parts of the region are close to nature, have open spaces, hiking and biking trails, reserves and beaches. Regional areas offer a lifestyle change, especially for families wishing to flee the cities.
In fact, some affluent Australians are embarking on luxury residences in the regional markets of NSW and Victoria, reported the Australian Financial Review. For example, a 155-hectare property in Kangaloon was sold in August to technology billionaire Mike Cannon-Brookes for $ 14.5 million.
Infrastructure development. Infrastructure projects have made regional areas more convenient as a place of residence, with roads and highways across the country modernized. Regional suburbs have also been better connected to the city, with the government investing $ 100 billion over 10 years starting in 2019-20 in transportation infrastructure across the country.
A quick alert from Google informing you about current infrastructure or economic development in the regions can be helpful. You can also visit the following government websites for the latest information:
Economic Growth The economy in regional areas continues to improve, with many suburbs being maximized and expanded. Local regional economies have created prosperous and sustainable communities.
For example, the federal Liberal government and the national government must develop a general policy statement on regional aviation, in partnership with airlines, regional airports, local council owners, state governments and territories and local communities. This is part of the government's commitment to ensuring economic growth in Australia's remote areas through a strong aviation sector.
Regional agreements have also been concluded, which constitute a true partnership between all levels of government to work towards a common vision of productive and viable regional areas. Transactions are tailored to the comparative advantages, strengths and challenges of each region. They reflect the unique needs of regional Australia.
Tourism in regional Australia is also on the rise, with a growth of 5.6% in the number of visitors per year over five years, according to Tourism Tourism in Regional Australia.
If you want to invest in a regional property, consider monitoring the growth of value in your potential area before you start. Here are other things you can do to determine if it is worth entering a regional real estate market:
Watch for job opportunities. Employment is closely related to the real estate market. In simple terms: Without a job, a person may have trouble paying rent or mortgage. You can consult the Australian Bureau of Statistics on employment and unemployment rates.
Watch for population growth in the region. The population is also closely linked to the real estate market: it is a simple supply and demand. The more people in the area, the greater the demand for housing. Between 2017 and 2018, the number of people living outside capital cities increased by 83,200 or 1%, according to ABS. You can keep abreast of the latest population report by visiting the official ABS website here.
Look at the data. Use our report on the real estate market to better monitor the real estate market in your potential region. You can also use the CoreLogic Home Value Index to find housing values ​​in the regions.
Press releases and statistics published by various organizations and institutions in the sector are also a good reference for evaluating a regional market:
Regions can offer untapped potential for real estate investment. However, you must be careful and diligent in buying real estate because investing in a regional area – as in most investments – is risky.
These risks may include:
Capital growth prospects may be lower than those of capital cities due to supply and demand
The population could fall quickly if employment were to decline
In mining areas, investment can be risky because supply and demand are volatile
Before entering the regional real estate market, it may be ideal to consult a professional and discuss your options. An expert can help you weigh the pros and cons of a regional real estate investment.
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