Key considerations for buying regional property
While the high levels of regional migration seen during the pandemic have slowed somewhat, regional property is still in the sights of plenty of investors and owner-occupiers seeking a tree change.
If you’re looking to buy a regional property as an investment or to relocate for lifestyle reasons, here are some key things to consider before taking the plunge.
Choose the right location
When selecting a location there are several factors to consider to help ensure a reliable investment return and future price growth for your property, including:
Amenities - does it have all the amenities you (or tenants) would require such as shops, parks, hospitals, sporting facilities, schools etc?
Commutability - with many office workers now required to attend the office for some or all of the week, is it close enough to nearby cities or towns if you (or potential tenants) need to commute for work?
Lifestyle - whether you’re looking for a slower pace of life, proximity to water or somewhere remote to escape to – make sure the location matches your desired lifestyle.
Climate – research the area’s climate beforehand so you can prepare for any significant differences in temperature, rainfall or humidity than what you’re used to. Moving from a temperate area to the tropics, or vice versa, can be a shock to the system!
Infrastructure - are any significant infrastructure projects being planned? Major transport, health or education projects can indicate a growing region and population, and can be good news for owners and investors alike.
A thriving economy –whether you need to find a new job when you move or attract tenants, a strong local economy is always a bonus. Areas with established industries and employers (or accessible nearby) generally enjoy low rental vacancies and high demand for property.
Family appeal - families generally favour areas well-served by education, sporting and medical facilities, and enjoy a stable population thanks to families staying put for children’s schooling.
Is the price too good to be true? Affordability can be a big drawcard for regional buyers, but beware of areas that appear too cheap as this could indicate few amenities, a dwindling population or low demand, making it hard to find tenants or sell down the track.
Do your due diligence
No matter how much of a bargain a property may seem, never buy anything without physically inspecting it and getting independent building and pest reports. It's also important to visit and get a feel for how vibrant an area is - vacant shops and buildings can be a sign of economic or population decline.
Look into government schemes
Check if you’re eligible for the federal government’s Regional First Home Buyer Guarantee scheme, which allows first time buyers to purchase a regional home with a 5% deposit without paying Lenders' Mortgage Insurance.
The scheme is open to singles and couples buying a new or existing home to live in (so is not open to investors). Price caps apply for each state, with differing limits set for state regional centres versus other areas.
Take a pragmatic approach
Just like when investing in a metropolitan area, you need to be pragmatic when it comes to purchasing a regional investment property – focusing on the financial benefits rather than any emotional connection you may have with it.
While regional property can often return a higher rental yield, the property and its location must appeal to the local rental market so do your research into rental yields and vacancy rates to get an idea of local supply and demand.
Unless you plan on managing the property yourself, you will also need to employ a property manager to help you source the right tenants and manage the property on your behalf.
Think beyond holidays and retirement
If you are considering buying property in a popular destination as a holiday home or to retire to, remember that tourist hotspots can be seasonal and potentially fall out of favour. It’s a better idea to choose your property based on solid fundamentals overall, allowing you to afford to holiday or retire wherever you like.
Consider buying off the plan
Many popular regional areas have seen an influx of buyers in recent years which has pushed up prices and competition for existing properties. To secure a property in an oversubscribed hotspots you may need to purchase land and build, or buy off the plan in a regional development - read more about buying property off the plan.