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If you are looking to invest in properties that will deliver good returns and capital growth over the long term, there are untapped opportunities in the regional areas of Australia.

Why Are Investors Looking At Regional Areas?

  • Inaffordability in capital cities has driven buyers and investors to regional areas, as they can offer better value for money and growth opportunities.
  • Regional areas are showing strong growth, with an increase in population and a robust local economy.
  • You get onto the property ladder faster, which means there is an opportunity to build your property portfolio in affordable and strategic ways.
  • Major infrastructure development is a game-changer. Good transport and other developments can boost lifestyle and the local economy all point to signs of growth.
  • Regional areas are ideal for wealth creation, as property values are stable and long-term high returns are achievable.
  • There is strong interstate and internal migration.
  • Regional areas provide opportunities for immigration, as the Australian Government has made it easier to obtain visas in designated areas. This creates a demand for houses and units.

Is The Growth In Regional Areas Happening Due To The Pandemic?

While the pandemic accelerated the demand for living and investing in regional areas, it is not the only factor that boosted growth.

Preliminary migration data does show Australians left capital cities in the first three quarters of 2020, but this trend goes way back to 2001.

The Regional Australia Institute’s The Big Movers report states between 2011and 2016, more than 1.2 million have either moved to a regional location or moved from one regional location to another. Between 2011 and 2016, more Millennials moved away from Sydney than to Sydney. The lure of affordable property prices means the move was by necessity, not by choice.

>The urban claustrophobia the pandemic brought on has only heightened these trends. People have come looking for open spaces in regional areas and there are other benefits:

  • People can work from home and are looking for larger spaces to accommodate home offices
  • Prices are lower than in capital cities
  • There is preference for lower-density housing options

Where Are The Best Regional Areas To Invest?

StateCapital cityBest Regional Areas To Invest Reasons To Invest
Sanctuary Point
Banora Point
Coffs Harbour
  • People are leaving Sydney to look for affordable options
  • Most of these towns are located a few hours from Sydney
  • Rental yields are high
  • Large sales volume and demand from tenants
  • History of strong price growth
  • There is a broad appeal from home buyers and tenants
Alpine Shire
Watsonia North
  • House prices have increased
  • There is steady growth for those looking for a sea change
  • Developers are taking action
  • Major infrastructure developments
  • More bang for the buck
  • Most of these suburbs are located close to Melbourne
Port Douglas
Biggera Waters
Surfers Paradise
  • Strong interstate and internal migration.
  • Considerable increase in sales prices and rental yields
  • Strong capital growth
  • Vacancy rates are low
  • Scope for investment in both units and houses
South AustraliaAdelaideMount Gambier
Murray Bridge
Port Lincoln
  • High year-to-year value growth
  • Median prices are increasing
  • Investors can enjoy the highest rental yield
  • Poised for capital growth
  • Vacancy rates are low
  • People are moving away from Adelaide
Western AustraliaPerthGeraldton
Port Hedland
  • Some cities are experiencing the highest price growth of any regional centres in Western Australia
  • Mining industries have a localised workforce
  • Increase in listing volumes
  • Median selling times are dropping
Northern TerritoryDarwinMalak
The Gardens Ludmilla
  • House prices are affordable and still growing
  • Rental yields are increasing
  • Vacancy rates are low
  • Some regions are enjoying significant capital growth
  • Strong interest and internal migration
  • Well connected to suburbs
  • Great access to CBD
  • Future infrastructure development
  • Stable and reliable market
  • Property values are rising at a reasonable rate
  • Solid capital growth over the years
  • Strong population growth and labour market
  • Be aware of their high land tax compared with other regional areas.
Geilston Bay
West Moonah
Lenah Valley
Dodges Ferry
Blackmans Bay
  • Unit markets are on the rise
  • Some suburbs are experiencing large rental yields
  • Increase in house values, but still offer good value for money
  • Demand is growing
  • Proximity to CBD
  • Vacancy rates are low
  • Easy access to schools, shopping centres and water views
  • New developments under way

What To Look For When Investing In Regional Property

You don’t need to fork out millions of dollars to buy in a regional area.

Here are six factors to consider to find the best regional areas to invest in:

  • 1. Infrastructure development: Regional towns are bolstered when major government infrastructure projects strengthen their local economies and drive employment and population growth. Infrastructure development has made regional areas more practical as a place of residence and work.
  • 2. Employment opportunities: Without a job, a person can’t pay rent or get approved for a home loan. That is why employment is closely linked to the property market. If a regional area has new development projects and up-and-coming industries, employment opportunities will follow.
  • 3. A diverse local economy: The town must be big enough to accommodate multiple industries. Look for towns close to prominent regional centres. Do not invest in areas that have only one industry. Tourist hotspots can be unstable, seasonal and fall out of favour.
  • 4. Population growth: An increase in population provides investment opportunities in catering for their needs. The more people there are in the area, the higher the demand for housing.
  • 5. Lifestyle preference: Remote work means more employees are looking towards regional areas. People relocate to regions for the sights and tranquillity, all at an affordable price. They want to get away from the bustle of the city and have more open spaces and options for a home office.
  • 6. Data and metrics: Look at information on clearance rates, vacancy rates, rental yield, rental growth, capital growth, auction clearance rates, days on market and even searches on property websites. If areas have low supply and high demand, it means there are eager buyers. Low vacancy rates indicate the area is popular with renters.

Should I Invest In Property In Regional Areas?

Investing in regional areas is not without risks:

  • Capital growth could be lower, compared with capital cities, due to supply and demand
  • If there are limited employment opportunities, then the population will probably decrease. With a decrease in population, there will be less demand for housing
  • In mining areas, investment can be risky, as demand is volatile.
  • Never assume what works for capital cities works for regional areas. Buyer demand will differ.
  • Flipping properties too quickly could be costly in regional areas.

Population growth in major cities is bursting at the seams and is set to double by 2075; however, the growth will not be limited to capital cities. It will ripple towards regional areas. Savvy investors are now looking to invest in these areas, where some of the fastest-growing suburbs for investment are located.

Regional Vs Metro Areas: Where Should I Invest?

Investing in regional areas means you could enjoy higher rent returns. Tenants who live in regional areas often prefer houses over units. Regional areas also experience bigger shifts in population. The shift to remote working gives people higher disposable incomes and more affordable homes. The sea changers and tree changers choose to live in regional areas for a better lifestyle.

Capital cities and metropolitan areas might have lower rental returns, but their local economies are more stable. There is higher international migration in capital cities and tenants are happy to live in either houses or units. Infrastructure and amenities are well developed in cities, which means more convenience for people living there.

Which is a better choice? Risk-averse investors tend to focus on capital cities. However, if you pick a regional area with a booming local economy, you’re more likely to do well. Take caution when investing in single-industry towns, in particular mining towns. These towns experience booms where prices double but they can become ghost towns overnight. Research, experience and buying in diverse locations reduce your risk.

Investing in regional areas takes careful consideration and preparation. Before dipping your toes into uncharted waters, get your finances in order. At Home Loan Experts, our mortgage brokers can help you get suburb and property reports and get you the best deal for your investment loan. Call us on 1300 889 743 or enquire online today.

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