Buying outside your backyard

Find out why buying close to home isn't necessarily the safest and wisest investment choice you can make.

Australia’s two biggest cities – Sydney and Melbourne – generally claim the lion’s share of media attention when it comes to housing and property. But one interesting side effect to come out of the Covid crisis has seen vigorous interest in regional property – initially so those making the move to working from home could take advantage of the sea/tree change effect, but with this lifestyle change in turn encouraging a healthy flow on affect when it comes to purchasing investment property.

Why? Because Australians love their property, and it’s a well-known fact that we’re most comfortable kicking off our investment portfolios by buying close to our own backyards. So if that new backyard happens to be near a beach in Queensland, then that’s where investors will be seeking out their next investment opportunity.

This was evidenced in the Australian Bureau of Statistics (ABS) most recent residential property prices index report, where the strongest quarterly price growth for December 2021 was recorded in oh so sunny Brisbane, up by 9.6 per cent.

Given population growth is an important driver of the broader economy, including housing demand, it should come as no surprise to learn that Queensland also led the way in population growth. In the ABS report for the year ended 30 September 2021, Queensland boasted the highest growth rate at 1.1 per cent, with net interstate migration the major driver…conversely Victoria had the largest negative rate at -0.5 per cent.

It’s fairly safe to assume that fleeing Victorians were snapping up property in Brisbane, and investment properties were next on their list.

BUT IS BUYING CLOSE TO HOME THE SAFEST AND WISEST INVESTMENT CHOICE YOU CAN MAKE?

Nope. It’s important to remember that finding the right investment property is not as simple as browsing the local real estate windows when you’re visiting your favourite local getaway destination.

Here are just some of the things you need to consider before adding a property to your portfolio.

POPULATION GROWTH

Population growth isn’t spread evenly across all of Australia and certain areas are set to benefit more than others when it comes to population increases. If there’s more demand for a finite resource (for example, housing) than can be supplied, prices will likely go up as more people compete for the limited supply.

INFRASTRUCTURE AND DEVELOPMENT

The greater, the closer and the newer the infrastructure is (for example, transport links, schools, shops, hospitals, and so on), the greater the likelihood of steady or growing demand. Major developments in the pipeline also indicate the potential for strong future growth.

DATA

You need to do your homework! Auction clearance rates, vacancy rates and rental yields offer insight into the regions with the greatest investment opportunities.

PROPERTY SPECIFIC FACTORS

The last thing to look at when negotiating and securing an investment is the property itself!

Affordability will obviously play a big role in the type of property you can comfortably purchase – new or existing, house and land, townhouse or apartment. But not all properties are created equally. Sometimes even small differences can radically change the results that can be achieved when building your portfolio. From design elements such as orientation, access to natural light, ceiling heights and density, to the quality of the construction and the fixtures and fittings used; there are numerous factors that can cause your property to gain value over time.

HOW THE PROPERTY MENTORS CAN HELP YOU TO INVEST WISELY IN REGIONAL PROPERTY

As with any investment, it’s important to do your due diligence before you jump headfirst into the regional property market, and as with any significant long-term decision it’s always prudent to consult a professional to discuss your options first.

Whether you’re just starting out, or already on your property journey, we can provide the guidance you need. Our team of strategic experts can help you weigh up the pros and cons and map out a plan that will allow you to maximise your investment potential.

Contact The Property Mentors for a free discovery call today. We’re confident that we can help you grow your portfolio further.

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