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Investing in regional suburbs has started to become a popular option for many Australians as city property prices continue to rise.

Investing in regional suburbs has started to become a popular option for many Australians as city property prices continue to rise.

According to the realestate.com.au HASI survey, ‘buyer interest is heading out of the major cities and into the regional centres.’

Investing in properties in regional suburbs can provide strong returns for investors, however, it is vital to find an area that has a healthy economy and a range of drivers that are going to provide a strong future for the town.

Most people have heard the horror stories of people purchasing a property in an up and coming area, such as a mining town, only to experience a major loss as the major industry in that area went bust or other money making projects failed to finish. Other issues, such as natural disasters (e.g. floods, bushfires) can have a detrimental effect on a regional town very quickly.

So, before jumping in an investing in a regional suburb, invest time into researching the area thoroughly. Some factors you may need to consider include:

Natural disasters
Is the area prone to natural disasters such as bushfires, droughts or floods? As most areas in Australia may experience some form of extreme weather, it is important to ensure that any disaster prone area also has a strong economy, population growth and employment prospects.

Number of industries
Although industries, such as mining, can boost a suburb’s economy significantly and increase the number of people who move to the area, it is safest not to rely on the one industry. Because although it may have a great impact on property, what would happen if that industry closed down? The suburb may become a ghost town and it could become difficult to rent or sell your investment.

Tourism seasons
It is important to be cautious around areas that rely on tourism. Although there will be a demand for rental properties throughout certain times of the year, if there is a ‘quiet’ season, then it could have an impact on your rental income and the rental yields in the area. Investments in tourism towns are often considered unstable.

Just like any other investment, the best way to get a sense of an area’s future prospects is to look at recent sales data. Look at factors such as recent property sales, auction clearance rates, vacancy rates and rental yields. The free Property Report on the State Custodians website can help give you some of this information.