Regional Australia has traditionally been a location of solid returns for investors seeking steady capital growth and reliable tenancies.
The recent spate of interest rate rises and shifting buying patterns in the aftermath of Covid have complicated the regional picture. However, that doesn’t mean investors should turn away.
Investors seeking to start or expand their portfolio in regional Australia should appreciate that each area is unique with its own advantages and challenges. While the post-Covid property price spike was pretty universal, each regional property market is starting to take its own path now.
Industry researcher CoreLogic studied 25 regions and found 18 declining in value as those post-Covid values come off the boil.
NSW and Victoria’s regions fared poorly regarding value growth, which means good buying may be possible.
For capital growth, Queensland and South Australia were top performers. South Australia’s tourism favourites Kangaroo Island, the Fleurieu Peninsula and the Limestone Coast registered a quarterly value rise of 9.1%, according to CoreLogic.
This checklist may be helpful if you are looking for an investment property in the current market.
Risk tolerance
Real estate investments can be subject to market fluctuations and unexpected expenses. Determine how much risk you are comfortable with and adjust your strategy accordingly.
Exit strategy
How and when do you intend to sell the property or exit the investment if necessary? This can help you make informed decisions along the way.
Property Condition
Avoid properties in poor condition that could become a headache for you and your tenants. Consider any immediate repairs or renovations, and factor these costs into your budget.
Budget
Determine your budget, including ongoing expenses such as property taxes, insurance, maintenance and property management fees.
Financing
Explore all the options. Consider using a broker to help you navigate this complex field of choices. You may need a loan that will give maximum flexibility.
Location
We can’t ignore reiterating the importance of location. Buy where tenants want to live. Proximity to schools, employment, public transport and amenities are all tick-boxes for would-be tenants.
NOTE: The information in this article is general in nature and provided as a market overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.