Buying An Investment Property: Metro Or Regional?

If you are considering buying an investment property, you may be wondering whether you should invest in a metro or regional location. Financially speaking, each has their pros and cons that should be properly considered before any decisions are made.

Our team at Property Club have collated a list of examples to help you make these very important decisions.

Buying an Investment Property In A Regional Area

There are several reasons why many people may consider buying an investment property in a regional area.

Regional Investment Property Pros:

Affordability

One way to break into the property market in Australia without breaking the bank is to invest in regional property. For example, Rockhampton’s median house price is $223,000 whereas Brisbane’s is $864,000. This huge gap in affordability can be extremely attractive to buyers - especially if they are young or just getting into the property market.

Growth

Many regional towns are experiencing an increase in capital and population growth that can mean your investment will go a lot further. Getting in early to these communities' property market can be very rewarding down the track.

As Australia’s urban areas burst at the seams, people will continue to move to regional and regional areas in search of housing. This can lead to an influx of infrastructure and amenities that will increase the value of your property.

Regional Investment Property Cons:

Lack Of Predictability

While there are eight major cities in Australia, there are countless small towns and areas to choose from. While you can somewhat try to understand which areas are going to be worthwhile investing in, it is difficult to know for sure.

Slow ROI

Investing in a regional or regional area and hoping that it experiences a boom of population or capital growth can mean a lot of waiting around. This transition can take anywhere from 1-20 years, especially if the area does not have sufficient amenities yet (schools, medical centres, employment opportunities).

This means that regional investment properties require a lot more ground work to research. You need to look at the population growth, the economy and industries that are strong draw-cards for young workers and families, the infrastructure, the current property market, and what experts are forecasting for the area over the next 10 years.

Buying an Investment Property in a Metro Area

Metro areas are generally more popular for property investment for a few reasons.

Metro Investment Property Pros:

Access To Amenities

Buying an investment property in an urban area can be a safe move because urban areas have access to infrastructure that sustain communities. Schools, hospitals, shops and businesses provide education, jobs, and lifestyle - all key contributors to capital and population growth.

Whereas in a regional community you may have to wait for these amenities to make themselves known, you will have these straight away in an urban area. This means the return on your investment could come a lot faster.

Security

There is no doubt that buying an urban property will be a more secure financial decision than regional. Regional properties rely on a lot more inconsistent factors in regards to potential growth, whereas urban areas offer a lot more surety.

Metro Investment Property Cons:

Costs

The biggest con to purchasing in an urban area is the cost. Houses in Australian cities are notoriously expensive and this can be very inaccessible to young and first-time buyers. For many it isn’t realistic to expect to enter the property market while maintaining a city lifestyle. However, the team at Property Club can help you to find opportunities at more realistic prices.

Stagnation

While cities have a lot more amenities and infrastructure, costs can often alienate competition. Many people often rely on the fact that their property is in an urban and this is a common mistake. House prices and rental yield will be a lot more susceptible to trends and the general economy.

Investing in Regional or Metro Property

Our team at the Property Club knows how difficult it can be to make the right decision when it comes to buying an investment property. Both urban and regional areas have their own pros and cons, as we have listed above, but it will often depend entirely on your individual circumstances as to which is the best option for you.

Since the COVID-19 outbreak, many people based in urban centres have moved into regional areas. Particularly as have seen an increase in ‘working from home’ for office-based workers, which enables them to live more comfortably in regional area. As we move forward, we will likely see declines in the value of regional properties as society ‘returns to normal’. However, our work and lifestyle patterns have now truly changed so its important not to ‘rule out’ these regional ‘lifestyle’ locations into the future for investments.

If you are struggling with this decision, get in touch with our friendly and experienced team at Property Club today!