What’s the difference between investing in metro and regional areas?
The decision to invest in property should never be just a stab in the dark.
Investing in property involves many choices and considerations, for example, you can choose between a house or unit, off the plan or a character classic. However, perhaps deciding on the location and weighing up between metro or regional location is one of the most important decisions you could make when buying an investment property.
Properties close to the CBD generally have strong capital growth. This is because values tend to rise as population and demand grows. Metro areas also tend to experience lower rental yields than regional areas due to the high management and maintenance costs. However, in some cases, the upside to metro property investment, is the potential for high capital growth.
Things to consider when investing in metro areas include what sort of properties are popular, access to public transport, rental demand and which suburbs are the place to be. Speak to property managers and buyer’s agents to find out what’s hot and future predictions.
Metro areas often give you choice between existing dwellings and off-the plan properties. If you’re considering a new build, be sure to research the developer and builder.
If you are considering investing in regional centres, it’s worth noting that most of the time, it’s a long-term investment decision.
There are benefits to investing regionally, including higher rental yields and the opportunity to eventually retire in your investment property. However, the risks can be greater when investing in regional areas. That’s why it’s important to do your research.
Consider the recent auction clearance rates, rental yields, and vacancy rates. These numbers will help you get an idea of supply versus demand in the regional area you’re considering. A high rental yield could potentially close the gap between your outgoings such as your mortgage or ongoing costs, and your investment income.
Look for areas with infrastructure such as universities and new amenities. These areas generally have healthy employment and strong rental demand.
Consider using a buyer’s agent who knows the local area and can inspect properties for you if you don’t live nearby. Also find a good local property manager who can help you find the right tenants.
Choosing an investment property can be different from finding a home of your own. Your affinity with the area doesn’t need to be the basis of your decision.
You can often take a more pragmatic approach with an investment property. You want the location and the property to appeal to the rental market. Your investment strategy will play a part in your decision between metro and regional areas.