Five things to look for before investing in regional areas

By Ericka Pingol | 01 Jun 2022

Regional parts of Australia witnessed strong property price growth over the COVID pandemic thanks to the sea/tree change trend that swept the nation.

Figures from the Australian Bureau of Statistics (ABS) showed that the country’s population is set to double by 2075 — the growth won’t be exclusive to capital cities, as regional areas will also experience the increase. As such, the increase in population may provide more property investment opportunities to cater to the growing population.

This means investing in a property in regional areas may be worth your while, as an increasing population means an increase in housing demand.

However, as with property investment in capital cities, there are many factors you must carefully evaluate before taking a plunge into a regional area’s property market.

Here are five things to consider before investing in a property in a regional area.

1. Affordability

Housing values in regional areas are comparatively more affordable than those in the metro areas. The affordable price tags of regional properties are due to relatively low supply and demand.

Analyse the value growth in regional markets to see up-and-coming regional areas and suburbs and information about their median prices.

2. Cash flow

Property investment in a regional area may give you positive cash flow, which can be achieved in areas with high rental yields.

Regional locations may be solid options for investors seeking higher rental returns. Our Top Suburbs search tool can help you find the suburbs with the highest rental yields in each state.

3. Lifestyle

Regional areas are perfect for getting away from the hustle and bustle of the city. Most regional areas are close to nature and have open spaces, walking and cycling trails, reserves, and beaches. Regional areas offer a change of lifestyle, especially for families who want to escape the cities.

This has been evident in the sea- and tree-change trend witnessed over the pandemic, which prompted many homebuyers to consider going outside the city to enjoy larger living spaces.

4. Infrastructure development

Infrastructure projects have made regional areas more practical as a place of residence, with highways and motorways all over the country receiving upgrades. Regional suburbs have also been better linked to the city, with state and territory governments investing substantial amounts to improving the connectivity and accessibility of these suburbs.

A quick google alert notifying you about news regarding infrastructure or economic development in regional areas may help. You may also visit the following government websites to get the latest information:

5. Economic growth

The economy in regional areas continues to improve, with many suburbs maximised and developed. Local regional economies have created thriving, sustainable communities.

For instance, a comprehensive Regional Aviation Policy statement was developed by the Federal Liberal and Nationals Government, in partnership with airlines, regional airports, local council owners, state and territory governments, and local communities. While this policy was initially deferred due to the impacts of the pandemic, the government has released a copy of the framework, which also sets out new policies to reposition aviation post-COVID-19 to ensure a competitive, safe and secure aviation sector.

Regional deals have also been rolled out, which area genuine partnership between all levels of government to work towards a shared vision for productive and liveable regional areas. The deals are tailored to each region’s comparative advantages, assets, and challenges. They reflect the unique needs of regional Australia.

What other factors should be considered?

If investing in a regional property tickles your fancy, consider watching out for value growth in your prospective area before taking the plunge. Other things you may do to determine whether it’s worth your while to enter a regional property market are:

Watch for employment opportunities. Employment is closely linked with the property market. Simply put: without a job, a person may find it difficult to pay for rent or a mortgage. You may check the Australian Bureau of Statistics for employment and unemployment rates.

Monitor the area’s population growth. The population is also closely linked with the property market—it’s simple supply and demand. The more people are in the area, the higher the demand for housing may become. Between 2017 and 2018, the number of people living outside of capital cities increased by 83,200 or 1%, according to ABS.

Look at property data. Use our property market report to further monitor your prospective regional area’s real estate market. You may also use CoreLogic’s Home Value Index to see the dwelling values in regional areas.

Reports and statistics released by various industry organisations and institutions are also a good reference in evaluating a regional market:

Regional areas may offer some untapped potential when it comes to property investment. However, you have to be cautious and do your due diligence before purchasing real estate, as investing in a regional area- as with most investments - comes with risks. These risks may include:

  • Capital growth prospects may be lower compared to capital cities due to supply and demand
  • The population may drop quickly should employment decrease
  • In mining areas, an investment may be risky as supply and demand are volatile

Before entering the regional property market, it may be ideal to consult a professional and discuss your options. An expert may be able to help you weigh the pros and cons that regional property investment has.

Top Suburbs : collingwood , west rockhampton , coorparoo , dulwich hill , millner

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