Regional property has emerged as a genuine investment option in Australia.
Thousands of Australians fled big cities during Covid lockdowns for simpler, more peaceful lives in the country.
Many outsiders believed the move was just a fad and would quickly be reversed but that hasn’t proven to be the case.
The skyrocketing expense of city and suburban dwellings has prompted many Aussies to embrace their little patch of rural Australia.
They are enjoying the cheaper land and housing, the lifestyle and the ability to do most or all of their work remotely, without having to cope with the stresses of the big smoke.
It has given rise to regional property investing being viewed as a genuine opportunity.
Rural South Australia performed better than any other state in 2023 with growth in value of 9.4 per cent.
It was headed by the Yorke Peninsula which enjoyed a 15.2 per cent jump in the 12 months to April, 2024, followed by the Barossa Valley with a 14.2 per cent rise.
But like any investments, regional property carries its share of pitfalls and traps.
Beware the boom and bust markets
Regional Australia is far more vulnerable to price fluctuations than urban areas.
Don’t be fooled by evaluating an area based solely on its price point, vacancy rates and rental yields.
These can change quickly in the country because of a wide range of factors.
Always visit your regional property before buying no matter how remote to learn what makes it tick.
Is it agriculture, mining, tourism or something else?
What is the potential for the essence and lifeblood of that town to run dry?
Study the marketplace closely to give you a better feel for what its future holds.
Job prospects
One of the biggest factors influencing the demand and hence price of a region is local jobs.
But those jobs may not be permanent.
Learn if and why your target area is experiencing real and sustainable employment growth or if it is experiencing only a short-term boom from a transient population.
Don’t invest in a town that relies on one industry alone.
If that industry collapses, so does your investment.
Environmental risks
Some towns are vulnerable to natural disasters or other environmental risks that may crush local industry.
For example, many towns along the River Murray suffered widespread flooding between November 2023-February 2024.
Flood, drought, cyclone and fire risk all need to be assessed when purchasing in rural areas.
So too do other environmental factors affecting industries such as fruit fly outbreaks.
Insurance costs
Besides the potential to wipe out your investment, environmental factors usually lead to significant insurance rises in affected areas.
These costs can significantly eat into your rental yields and capital gains.
SEIFA rating
The SEIFA rating (socio-economic indexes for areas) is an Australian Bureau of Statistics tool for measuring the relative advantaged and disadvantaged regions in local government areas.
It analyses levels of local employment and disposable income enjoyed by local families as well as a location’s demographics
Do your homework to discover how your target area stacks up.
Airport proximity
The more remote the area, the more unlikely a region’s chances of being a good investment.
Being close to an airport is vitally important when assessing the likelihood of significant growth.
Government investment
Government expenditure and population forecasts can tell you a great deal about an area’s prospects.
If money is being spent upgrading roads, airports, hospitals and other local infrastructure, it might be a good time to buy.
Equally, population forecasts will mirror what the government believes the future holds for a region.
Real estate data
Explore the region’s days on market and clearance rate metrics to gain a better understanding of the local property economy.
If either figure is soft, it could indicate demand in the region is weaker than you believed or that there is already an oversupply of property available.
Get advice now
Investing in regional property has its merits and is certainly worth exploring.
But a great deal of care needs to be undertaken to ensure any purchase is sound, utilising and efficiently analysing all available data.
There are a lot of considerations, including your investment strategy, getting the right loan and financial approach and choosing the right region and property.
That’s why enlisting the help of seasoned professionals like Calder Finance Broking and Calder Wealth Management is such a sound decision.
Calder Finance are specialists in the mortgage broking business.
We can secure you the very best investment loan with premium features and the lowest rates for your specific needs.
Calder Wealth Management are wealth experts who can advise you on your overarching strategy and whether investing in regional property is a good fit for you.
They will ensure your investment strategies are sustainable and commensurate with your wealth creation goals and timelines.
They pride themselves on leading their clients into the future with structure, financial stability and confidence.
Contact Calder Wealth Managment and Calder Finance today to discuss all of your financial needs and mortgage requirements.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Calder specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.
Written by David Titley from Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.
