City market v regional market: Where should you buy your first property?

“Capital cities and regionals, there’s risk in both. There’s risk in investing. If you’re not prepared to take any risk, don’t invest,” the expert said.

To find out where you should invest, the property professional encouraged doing due diligence and engaging experts, where appropriate.

The importance of economics

As a buyer’s agent, Mr Pressley has always put emphasis on economics when doing his market research, instead of the usual values like median prices, vacancy rates and auction clearance rates.

For example, in 2014, he started recommending Tasmania to his clients even if a recession was rampant across the state. They took advantage of affordable housing and tight supply and made decisions based on thorough research and professional judgement.

Sure enough, all the investors he helped to buy in the area enjoyed a booming market after some time.

“That wasn’t numbers. That was understanding what makes up Tasmania’s economy — what's the outlook for all those different industries. We felt very confident that that was going to improve,” Mr Pressley said.

When picking between investing in capital cities and investing in regional Australia, always focus on understanding the area’s economy, he strongly advised.

According to him: “It’s not [just focusing on the] numbers… [It’s] tourism... agriculture… manufacturing. Is it healthy? What are the industries that support the economy? What are the key player[s] in that particular location? Are they expanding? Are they contracting?

“All these little dots, is it going to create a positive picture or a negative picture?”

The research team

Aside from doing your due diligence, Mr Pressley also encouraged seeking the guidance of professionals before ultimately making your decision to invest in a particular area.

As an investor, Smart Property Investment’s Phil Tarrant has attributed a huge part of his success to the team that surrounds him. These experts, according to him, will supplement your research and help you buy more effectively.

“Your mind would boggle [at] the intricacy of the detail [that professionals] get down to. So, unless you got those skills and capabilities, you are up against people who [engage them],” Mr Tarrant said.

Whether you decide to invest in capital cities or regional areas, you will definitely experience market movements along the way, especially if you implement a long-term strategy, according to Mr Pressley.

The key, at the end of the day, is understanding the economic forces that drive these markets.

Mr Tarrant said: “The message is clear: Don’t have blinkers on and think you should only be investing in metropolitan areas.

“Broaden your scope, broaden the way you view markets and don’t have prejudices on particular types of markets because of something you heard from some bloke at a barbecue.” 

Tune into Simon Pressley’s Q&A episode on The Smart Property Investment Show to know more about the risks and advantages associated with both regional and metropolitan property investment.