Investor confidence has returned to regional Australia due to its strong price resilience in the past 12 months and continuing demand for rental properties.
Dwelling values in three-quarters of regional suburbs (72.6%) analysed by industry researcher CoreLogic increased over the three months to January.
By comparison, fewer than half the suburbs in capital cities produced a similar result. Three in four Sydney suburbs saw a decline in value in that period, as did 90% of Melbourne suburbs.
CoreLogic described regional values as showing “remarkable resilience” and noted there had been a “second wind” of migration from the cities to regional areas following a first wave during the pandemic.
“With demand skewing towards the more affordable end of the market, it’s not surprising to see value growth shift towards the regions,” said CoreLogic.
Investors face similar affordability challenges to buyers, and they now recognise regional centres offer opportunities for capital growth and higher rental yields.
If you’re looking to start your investment portfolio, a property beyond the city limits may be a suitable option.
Here are seven tips for starting a portfolio:
Define your strategy: Determine whether you will prioritise properties that will increase in value over time (capital growth) or those that generate consistent rental income (rental yield). Ideally, you’ll aim for a balance.
Long-term goals: Research your target markets and know the type of renter you’d like to attract, such as families or single professionals. This will help you decide the type of property to purchase.
Research the market: Location is always the most critical factor. Identify areas with strong growth potential, good infrastructure and low vacancy rates. Consider proximity to schools, transport and amenities. Talk to an experienced agency for additional insight. We’d be delighted to help.
Be on top of trends: Stay informed about current market trends, interest rates and the economy.
Know your budget: Assess your financial capacity. On top of being able to gather a deposit and make loan repayments, factor in costs such as stamp duty, insurance, property management fees and maintenance.
Gather a team: Surround yourself with experts. Use the experience of a financial adviser, solicitor, mortgage broker and real estate agent to ensure every step you take is the right one.
Build gradually: Focus on acquiring one solid investment property before expanding your portfolio. This allows you to gain experience and minimise risk. Make a long-term plan for how many properties you would like, and a timeframe in which to achieve those goals.
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.