As the majority of Australians live in the major cities around Australia, most investors may assume this is the best place to purchase investment properties, but is it?
Generally, regional areas often have significantly lower property purchase prices and a better rental return; however, there is a good reason for this that may not suit all investors. The market does not move at the same pace as city areas and it could take several years before an increase in growth occurs.
Areas such as mining towns also usually have a good rental return, however they are considered high risk. If the mining closes down, then you are faced with a possible long term vacancy rate.
Purchasing investment properties in the major metropolitan areas is often a more common choice as there is a higher demand for housing.
However, if you are looking to purchase an investment property within the major cities, you will have to pay the price. As the purchase price will be higher, so will the upfront costs, such as the deposit, and if you are unable to obtain a tenant straight away, you will need to be able to cover the mortgage repayments. Initially, it can be extremely costly to purchase in a metropolitan area.
Property investments are considered to be a long term commitment, therefore choosing the right property and location in the beginning will determine how successful the investment will be. Purchase prices are just one factor to consider. Population growth, rental yields and housing demand also need to be considered.
According to the Australian Bureau of Statistics, in 2012 the population in major cities of NSW was 5,395,212 people whereas the inner and outer regional area was 1,855,774 people. However, according to PRDnationwide, in June 2013, in New South Wales, “the top five regions for rental price growth in family homes are outside metropolitan Sydney.”
As metropolitan and regional markets both have benefits and pitfalls, it is hard to determine a clear winner for the best property investments. Therefore, it is vital that you do your research to find the right property for you.