Published on August 11th, 2017
Buying an investment property in regional AustraliaWhile Australia’s capital cities have some of the highest property prices in the world, there is another way to get a foot on the investment ladder. Venture out from the urban centres of the country and you’ll find a wide range of properties at much more affordable prices.
Buying an investment property in a regional town can be a great way to start building an investment portfolio. Before you take the plunge though, there are some specific things to look out for which will help you choose the right investment for your needs.
1. Population trends
As well as looking at the current population of the town you’re considering, look at the longer term trends. A steady upward trend is ideal, although a stable population is also acceptable.
You can also tell a lot about whether a town’s thriving by taking a walk through its main streets. Look for occupied shopfronts, newly opening businesses, accessible public services and foot traffic to find a vibrant spot with an engaged community. If it’s a tourist town, try visiting in off season to get a fuller picture.
2. Vacancy and sales rates
Check out the demand for rental properties in the regional area you’re considering. High rental yields and low vacancy rates indicate that the town might be an excellent buy if the other boxes are ticked. Look, too, at sales data. Low vendor discounts suggest that properties are in demand, as do high auction clearance rates and short time on market.
Because it’s difficult to compare with capital cities, you can get a clearer picture from examining local trends over time, as well as looking at similar areas nearby.
Look at the infrastructure that’s in place in the area. Is travel in and out easy, and are there major arterials to a capital city? Large regional centres near East Coast cities have seen a huge rise in prices as people are priced out of the capitals, but smaller towns have also been affected.
Look for areas where high speed freeways or train services offer a realistic commuting option. Savvy investors should also consider checking out local council information to see if any major projects are to be planned. That could be a new freeway to connect the area to something larger, but it could also be a new large source of employment. Hospitals, university campuses and air ports are all great signs that the area will continue to show growth.
Make sure that plans allow for upgrades to current infrastructure, too, so that the projected rise in population is well supported and will endure.
4. Mixed industry
Regional areas which are reliant on a single industry, whether that be agriculture, tourism or mining, can be high risk for investors looking for a long term option. Instead, look for an area where employment options are varied. Tourist towns, for example, experience both seasonal demand and are responsive to larger economic changes: when times are tight, people forgo their annual holiday and the town suffers. On the other hand, tourism can be an excellent industry in a spot with several other revenue streams, so don’t write it off completely.
A diverse set of industries means stable employment and a consistent population, which are at the forefront of any investment purchase.
While investing in regional and rural property requires a different set of calculations from those purchasing in urban areas, there are great opportunities to be had. Look towards the countryside and you’ll find affordable, accessible investments in a range of areas. Happy house hunting!