While most people continue to look into capital city markets for investment opportunities, experts remind investors that there’s more to Australia than just the state capitals. Find out how regional markets are claiming the spotlight as growth areas.
As the property markets of Sydney and Melbourne follow a downward trend, several investors are opting to sit on their hands as they wait for them to recover. While waiting is not essentially wrong, they could be missing out on opportunities by limiting their scope to capital city markets, according to Propertyology’s Simon Pressley.
Outside these big, slowing markets, investors can still enjoy continuous growth on their properties.
In fact, Mr Pressley believes that regional markets can ultimately offer stable property values and long-term high returns over the coming years.
The property expert said: “In 2017, everyone said regional markets never grow. There’s no bloody jobs there. In 2018, there were about 40 or 50 regional locations that performed spectacularly well and 200,000 jobs have been created in regional Australia over the last two years.”
Contrary to popular belief, regional centres do not automatically mean that it’s also a mining town or a single-industry location, doomed to lose demand as the jobs market decline.
When investing in regional markets, investors are advised to look into the fundamentals of a successful property investment – the same due diligence that they would do before they invest in a capital city market.
Among the factors that are bound to influence property growth are the diversity of local economy, the consistency and strength of population and jobs growth, the level of housing supply and affordability of dwellings.
Once investors successfully remove the ‘confirmation bias’, Mr Pressley said that they can find a plethora of regional locations with ‘diverse economies, solid job growth, a long history of controlled housing supply, and median house prices of $350,000 to $450,000.’
Essentially, the secret is to remain objective when doing research for property investment and look at each market based on its own merit, according to him.
“A lot of people are surprised to hear me say that within any of our states and territories, there are 170 towns and cities with a population of 10,000 or more. I own properties in locations that have populations of well below 50,000 people.”
“The key is diverse economies with essential infrastructure, affordable housing and controlled housing supply. These markets can perform better, more often than not, than capital cities,” Mr Pressley said.
He also advised investors to find markets that have yet to be widely known as ‘hotspots’.
“I like finding markets that have a good future but haven't started their cycle yet. If you really understand these markets, you’ll see the difference between risk and opportunity.”
At the end of the day, investors are encouraged to block out the noise and ultimately make decisions based on data from their own research.
Even with doom-and-gloom headlines dominating the media nowadays, investment opportunities remain abundant across the several property markets of Australia – investors need only to widen their horizons.
“Perhaps the biggest learning for investors is, instead of throwing everything in one basket, spread your investment capital across multiple more affordable property assets in a variety of different towns and cities.”
“A lot of people haven’t explored regional markets and it’s often because they live in a capital city and there’s this perception that anything outside of the capital cities is no good. To the lot of you, I say, ‘You need to invest with your own perception because you’re missing out on some wonderful opportunities.’”
“Nothing wrong with being positive, as long as you’re sensible as well,” Mr Pressley concluded.