The typical strategy of investing in markets close to home appears to be changing, with investors now exploring remote markets, according to a study by MCG Quantity Surveyors.
MCG Quantity Surveyors analysed the details of its clients who commissioned depreciation reports in the year to May and found the increasing number of investors investing in markets that are almost 300 kilometres away from their principal place of residence.
Mike Mortlock, director of MCG Quantity Surveyors, said this could reflect that many property investors are setting aside familiarity and are now studying the potential of a market before investing.
"There has been a tradition among Aussie investors to invest where they know and, in general, they know where we live. The idea of wandering too far from your ‘locality of comfort’ frightened investors in the past, so an average distance of 293 kilometres is substantial," he said.
The analysis showed that only 6.9% of investors have an investment property within the same suburb, while 7.7% have invested in markets that are roughly 1,000 kilometres away from their homes. Around 30% of investors bought a property in markets that are more than 200 kilometres from home.
A bulk of investors, at 60.1%, have invested in markets less than 50 kilometres away from their homes. Mortlock said while a significant share of investors still prefers investing within their locality, the number of those looking remotely will likely continue to increase.
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"Readily available online information, combined with easy access to independent professionals like buyers' agents, have made it a cinch to confidently buy in national hotspots regardless of where you reside. In fact, investors have never been better educated about the best locations for investment," he said.
Mortlock said investors are now setting their sights on regional localities and smaller cities amid the COVID-19 outbreak. The impacts of the outbreak on work arrangements, Mortlock believes, could boost the attractiveness of these markets.
"The ability to work from home will only boost their attraction, particularly in lifestyle hubs. For investors who are simply interested in seeking locations where there is good rental demand and potential for capital gains, following the population makes sense," he said.
A separate analysis by CoreLogic showed that while the normalisation of remote work amid the COVID-19 is likely to boost regional migration, the return to an office environment may still be desirable for some employees and employers.
"Furthermore, it is important to note that the broad-based impact to housing demand from the pandemic could see prices fall in regional centres over the second half of 2020," said Eliza Owen, head of residential research at CoreLogic.
If house prices in regional markets are poised to drop, the decline would not be as sharp as what will be observed in capital cities.
"Regional growth rates peaked around late 2019, and could nudge into negative territory later this year without significant improvement to economic conditions or a demonstrated shift in demand-side factors like population growth," Owen said.