Why it is good to buy in a regional population centre or smaller capital city?

By Maria Milillo, Business Support Manager, Property Management, Raine & Horne
FEBRUARY 9, 2021

For the last 50-60 years, urbanisation has been a powerful economic driver globally. So much so that the number of people living in our global cities is more than doubling to over 4 billion people which is more than half the world’s population[i].

However, there’s now a school of thought that people will be more apprehensive about overcrowded trains and buses, cafes and restaurants, theatres and sports stadiums and supermarkets, and as such will seek to move to regional areas.

In Australia, it seems like this trend is already underway. CoreLogic reported this month that capital growth in regional Australia is running at 7.9% compared to an average of 1.7% for our capital cities. That said, once we return to normal, I’m sure we’ll see capital growth in our capital cities start to rebound strongly.

Yet, despite the recent growth, it’s still incredibly affordable to buy an investment property in a regional centre. On average, the median dwelling price in regional Australia is around $220,000 less than the capital city average, according to CoreLogic. Better still, you’ll undoubtedly get better investment yields as a landlord. The average gross yield for a regional property is nearer 5% compared to 2.9% in a capital city such as Sydney. 

Moreover, convenience is another significant benefit of owning an investment property in a regional area. For example, in many regional towns, you’re only minutes from the CBD, which will appeal to tenants. On the other hand, in the big Australian cities, door to desk commutes can often be counted in hours. 

Apart from less traffic, regional towns are increasingly offering all the amenities, we’ve come to expect in a capital city. This usually includes a full suite of medical services and schools, plus lifestyle attractions such as cafes, restaurants, and bars. These services are sure to go down well with tenants or those who own properties in regional areas. 

Also, when choosing an investment hotspot look at areas that have growing populations. Population data is generally available from the local councils or your local Raine & Horne Property Manager.

Jobs growth is another economic barometer worth considering before buying a regional investment property. So, check out whether some significant infrastructure projects are starting soon, such as a new mine, road, or railway line, which will create plenty of jobs.

Of course, these new workers will need housing and in turn, this will underpin demand in local rental markets. 

For more information about buying a regional investment property in 2021, contact your local Raine & Horne office. 

[i] https://knowledge.wharton.upenn.edu/article/post-covid-19-world-will-less-global-less-urban/