If you love where you live, there is a fair chance that others will love the city, town or suburb too. You possibly chose it for its proximity to your workplace, it is in the right school zone, or it is simply an exciting place to live; and it may well suit a whole lot more people just like you.
However, as at 31st December 2019, there were 25,522,169 people in Australia (ABS.) It is anticipated there will be more than 12.6 million households by 2040. New Zealand’s resident population reached five million in March 2020. There were around 1.8 million households at the end of March last year.
Now that’s an awful lot of people, many of whom might want to live somewhere other than where you do. So, don’t restrict yourself when it comes to investing in property.
Put your bias and your emotions aside and broaden your geographical and even type of property when it comes to choosing a long-term investment property.
Have you ever considered just how many property markets there are in any one country? Or what a property market actually is.
The property market is all around us. It could be as small as a few streets or as large as a state. That said, it can encompass a nation, or the world! Its parameters are set by the person talking about it. It is where one goes to buy real estate.
The strategic investor is guided by performance, so logically looks beyond just their own suburb.
Often the property cycle is a starting point. The investor looks at various locations and where they are in their property cycle. Next, they look at how the economy is performing. Is one state leading the others, or poised for economic growth? If so, this may lead to jobs growth, which leads to wages growth and population growth, which eventually leads to property price growth. Within that state, take a good look at provincial cities and well as the capital.
Particularly if your investment strategy involves a portfolio of properties, owning geographically diverse investments allows you to make the most of market ‘ups’ and protect your finances during any ‘downs’.
What’s beyond the big city?
There is more to real estate than property in capital and major city markets, although so much of the investor focus still seems to be there. At times, even the outer suburbs are overlooked.
Buyers might be doing themselves a disservice by not looking at regional centres and the extremities of larger cites.
Research any location you are looking at. Look for something big that is going to occur in the area, which will guarantee growth. This could be an airport under construction or a new hospital.
If there is a project that may attract people for employment over an extended period, you can be pretty sure that the property market will be good – regardless of it being in a country town or a major city.
Factors influencing property growth include the health and diversity of the local economy, population and jobs growth, the level of housing supply and housing affordability.
Recognise the importance of gainful employment for the homeowner, which is generally critical to anyone with home loan repayments. Recognise also that suburbs well away from the city centre, outlying towns and regional centres often have appeal through lifestyle as well as affordability.
Employment opportunities and essential infrastructure are boxes
to tick for both the owner occupier and the investor, but if buyers do their research and look at each market based on its own merit, they may open themselves to some wonderful opportunities.
It is possible for regional markets to offer stable property values and long-term high returns.