You need to understand that the income levels of the average SS contributor is a lot higher than the general population, so many of them can afford to purchase expensive properties in capital cities, but not all investors can do this.
Regional towns DO get capital growth, and they can be good investments, especially if you are on a lower income, but it's an individual thing.
We have a mix of regionals and Sydney. Sydney has been the best performer, but we've also had good results in regionals.
Good points Skater.
Thanks Knight. From your signature, it says you're focusing on NSW regional towns. Could you please share ideas on what sort of regional town do you look at and key criteria? I'm also mindful that a lot of people in this forum suggest to entirely forget about investing in regional town and only capital cities.
TBH, I haven't looked at regional towns but would like to know more especially NSW south coast (closer than brissy hence more appealing to me)
Lamecrocs - I have invested across the country but am from Sydney. I left Sydney 7 yrs ago and sea changed down to the Shoalhaven. In my view its beautiful, affordable, underdeveloped, a short drive to Sydney, small (compared to northside) but growing population and the people (and beaches) are amazing.
So firstly when we are talking regional you might mean "south of sydney" which is my core patch and in my view well timed to catch the ripple out of Sydney which always comes at the end of the boom.
If you are talking about regional regionals then I offer the below thoughts...
I have had properties in major city suburbs and in regional towns. My view is that with the right research and application either option can work, and it is important to understand each investor's own goals, cashflow and growth position and timeframes to build a portfolio. My ideal portfolio would be a mix of capitals and regionals spread across the country. The diversity reduces the risk. I don't really enter into the debate about cf vs cg as I have had +cf and -cf properties myself and profited from both.
This forum is heavily capital city weighted in its content and discussion. This is fine and probably appropriate given the numbers of deals done, population sizes etc.
I am happy to discuss regionals if you want. I have targeted a few over the years for myself or for clients and the reasons have varied. If a client(usually with their own inside industry knowledge or other reasons) has a particular need for a small remote town but is time poor or reluctant to do the travel and due diligence I can do that, and have done a number of times. This is usually an experienced investor who understands the risks associated with particular small towns but still wants to proceed.
If people are asking me what they should be buying then we are talking about a different kind of buyer. I don't know you so I am sorry if I offend but I would never suggest someone new to investing consider a small one horse town as their first investment. In that case I would want a low risk diverse regional option depending on their price point.
The very broad overview answer to your question is "it depends" but in terms of putting some meat on that concept the kinds of metrics I look for include the following:
ESSENTIAL
1 Diverse economy
2 Growing population
3 Low vacancy rates
DESIRABLE:
4 Freestanding housing with below median entry point options
5 Some kind of new infrastructure or "kicker" entering the economy
6 Limited or falling supply of housing
7 Increasing buyer interest (but not a swarm of media driven investors yet)
8 Fantastic yields (who doesnt want that?)
9 Some kind of value add potential (reno or dev)
10High or increasing incomes
Hope this helps