Why it Makes Sense to Invest in Property Outside of Capital Cities

Feb 18, 2019 | Property Investing

When you’re searching for the perfect location for your next investment property, you might assume that choosing a capital city is the safest option. After all, cities such as Sydney and Melbourne are very popular investment locations, and they’ll remain so for years to come. That said, does that mean they’re the only option, or even the smartest option for your next investment property? 

Below, we explain why looking beyond capital cities is not necessarily a bad move and could actually turn out to be a wise property investment decision.

The Importance of Choosing the Right Location

With the Australian residential property market worth an estimated $5.5 trillion, it’s safe to say that residential property investment is a potentially great opportunity for any investor. However, it’s important to choose the location wisely. Your decision should depend on certain factors, including your:

  • Investment strategy
  • Portfolio goals
  • Budget and finances available
  • Short- and long-term financial goals

What’s important is that you’re aware of how many options there are if you’re looking to invest. Securing the right property investment for you comes down to doing your research and making the most of fluctuating property cycles.

So, why do areas and locales outside of capital cities make potentially savvy investment opportunities? Here are several reasons why you may boost your property portfolio by looking in less-popular investment spots.

High Cost of Living

Research suggests that residents are moving out of crowded major cities in favour of more affordable areas. Sydney is the 32nd most expensive city in the world to live in, and it’s the 16th most expensive city to rent an apartment in. Melbourne is the 64th most expensive city to live in, and that figure is expected to rise further in the next few years.

As living costs escalate, capital cities become less attractive to first-time buyers and families looking for affordable living. This will affect your strategy and how and where you search for investment property prospects. With this in mind, suburbs away from city centres and even country towns might be worth looking at. As such, looking for areas beyond capital cities makes perfect sense from an affordability standpoint, both for you and potential buyers or tenants.

Purchase Prices

House prices are falling in Australia’s capital cities, which can make it harder for you to secure a high return on your investment. For example, house prices fell in Melbourne and Sydney at rates of 7.2% and 11.1% respectively in 2018, and prices dropped 4.8% nationwide.

On the other hand, experts predict that buyers are moving north and that house prices in northern regions will remain steadier. House prices in parts of Queensland are far lower than in major cities in NSW or Victoria, for example. Knowing your market and pricing trends is crucial to cashing in on long-term investment opportunities.

Infrastructure Development Outside of CBDs

Infrastructure plays a major part in making a particular area—and the properties within it—more attractive. Solid infrastructure means having things such as reliable transportation facilities and public amenities, both of which are major selling points. Having plenty of planned developments in the next few years can also lead to stable demand.

Research will reveal relatively affordable locations outside of expensive capital city CBDs that are set to enjoy more infrastructure developments. For example, the new university campus being built for the suburb of Petrie within Moreton Bay is expected to draw in over 10,000 students looking for rental properties in 2020 alone. That same area is expected to have a 40% population increase in the next two decades, making it a prime location to invest in.

Raceview, a suburb in Ipswich, is another area experiencing major growth. The $5 billion Defence contract and the $340 million Cunningham Highway upgrade are expected to drive job creation and faster commuting times, boosting property demand and prices.

Lifestyle Change and Convenience

More and more Australians want proximity to capital cities without the traffic, crowding, and high living costs. Smaller towns and cities within commuting distance of major cities win out here. The driving forces in this case are affordability and transportation convenience, and you’ll find a location that offers both outside of capital cities if you do your research.

Locations such as Geelong in Victoria offer a more cosmopolitan, healthy lifestyle as well as easy access to a major city at a fraction of capital city prices—you can pick up property significantly below $500,000 in this burgeoning location. There’s a clear trend of population growth outside of capital cities for many reasons, but they all suggest one thing: looking beyond capital cities is a smart property investment decision.

Make the Right Decisions

While capital cities are go-to choices for many property investors, you shouldn’t limit yourself—where you decide to invest your hard-earned money in will have a major impact on your journey to success.

Speaking of making the right decisions, seeking expert assistance will surely help when in doubt. At Clever Finance Solutions, we have the expertise, experience, and professional network to help you decide wisely when it comes to different financial aspects, from getting the right loan to growing your property portfolio. Please feel free to get in touch with us if you have any questions.

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