It’s common to hear about capital growth rates and rental yields for properties in Australia’s capital cities.
But how do regional properties compare and what are the pros and cons of investing in regional areas?
The pros
1. Affordability
Housing affordability is currently a big problem in Australia. One way you can enter the property market or expand your portfolio faster is by investing in regional Australia.
You’ll likely get a better property for a cheaper price and you won’t need as large a deposit.
2. Population growth
Australia’s population is growing and major capital cities like Sydney and Melbourne are bursting at the seams.
According to the latest figures from the Australian Bureau of Statistics, Australia’s population is predicted to double by 2075.
This growth won’t just be restricted to our capital cities – it is likely there will be a trickle-down effect into some regional areas, providing better opportunities for investment and capital growth.
The Cons
1. Supply and demand
The supply and demand for properties affects both their capital growth and rental yield prospects. The demand for quality properties to both buy and rent in regional Australia will often be lower than in major capital cities.
2. The risk
Although Australia’s population is growing, that doesn’t mean all regional cities will grow. As with any property investment, location is key.
Some regional areas will always have slow (or even declining population growth), and that makes investing in them risky.
If no major infrastructure is currently being built or planned for a regional area, it’s an area you should avoid. Similarly, you should avoid areas where the local economy and business conditions are stagnant or in decline.
5 areas to consider
1. The Central Coast, New South Wales
The Central Coast is a rapidly growing region north of Sydney where the population is forecast to grow by 20 per cent over the next two decades.
It extends from Lake Macquarie to the Hawkesbury River. Popular coastal suburbs in the region include Tuggerah, The Entrance and Terrigal.
Both capital growth and rental yields
2. Wollongong, New South Wales
You’ll find ‘The Gong’ 90 minutes south of Sydney by car, so it’s still relatively close but far less expensive for a comparable property.
It has good infrastructure, nice beaches and a relaxed lifestyle to make it attractive for both property investors and residents.
1,100 people are moving to Wollongong every week, making it one of New South Wales’ fastest growing areas.
3. The Mornington Peninsula, Victoria
The Mornington Peninsula is about an hour’s drive from the Melbourne CBD. Suburbs close to the beach are the most popular, followed by more secluded hinterland locations.
The area has always been popular with holiday-makers, retirees and those looking to downsize into more low-maintenance properties, but in recent years it has also seen an influx of first-home buyers.
4. The Sunshine Coast, Queensland
Many analysts believe the Sunshine Coast will be Australia’s next regional property hotspot.
It’s a 90- minute drive north of Brisbane and is popular with both locals and tourists alike. It has a relaxed atmosphere, with less high-rise and traffic issues than the Gold Coast, its major beach rival in South East Queensland.
5. Cairns, Queensland
As the gateway to the iconic Great Barrier Reef, Cairns has always been a mecca for tourists.
However, strong employment and population growth are predicted on the back of several major infrastructure projects commencing in 2018.
This should increase demand for both owner-occupied and rental properties, driving capital growth and improving rental yields.
The bottom line
As with any real estate investment, it’s important to do your research before you buy a property in regional Australia.
The timing of when you buy and sell can be just as crucial for your investment return as your property’s location.
