Advantages of regional property investment: Terry Ryder

If you listen to people who see real estate through generalised numbers, you would never invest anywhere in regional Australia.

There is no shortage of commentators ready to quote average numbers that, at face value, downgrade regional cities and towns as places unworthy of investor attention.

If the average capital growth for regional Australia is less than the average for the capital cities, it’s taken as evidence that the regions are inferior. That blanket assessment covers all regional locations.

The commentators should know better (some of them do, I’m sure, but don’t care about accuracy or balance) and so should the media.

The average for regional Australia includes every depressed or drought-affected country town on the continent. It includes all those locations impacted by the decline in the resources sector or by the growing use of workers camps to accommodate fly-in-fly-out workers, which has created price decline in specific areas. 

The generalised figure is dragged down by all those negative situations and disguises the locations which don’t fit the apparent norm. Many regional cities are above average and some are exceptional.

Locations like Toowoomba in Queensland, where price growth has been in double digits over the past 2-3 years, or Gosford in New South Wales, where many suburbs have delivered growth higher than Sydney’s.

Investors need to consider the advantages of focusing on regional Australia, which can present a win-win-win situation: lower entry prices, better rental yields and great prospects for capital growth, if they do their research and identify the best places to buy.

Then they need to consider the fundamentals of what makes a good destination for their investment dollars: a large and growing population, a strategic location, economic diversity, good infrastructure, services that attract residents from the wider area, good transport links to key locations like the nearest capital city, affordable prices, low vacancy rates and strong rental yields.

Across the vast continent of Australia, there are many towns that simply don’t fit the criteria.

That’s irrelevant. What matters are the ones that do.

Yesterday Prime Minister (for now, anyway) Malcolm Turnbull made an announcement that’s pertinent to this discussion. He announced a contract for the construction of army vehicles worth over a billion dollars and one that will secure many hundreds of jobs in the Victorian regional city of Bendigo. 

Thales Australia, which will manufacture the new armoured personnel carriers, is one of many major businesses that are based in Bendigo but operate nationally. 

Bendigo is one of those regional cities that tick most of the investment boxes. It’s strong, it’s growing, there’s big spending on new infrastructure, it has great economic diversity and it now has faster connections to Melbourne through the $5 billion Regional Rail Link. 

It offers the affordable prices and attractive rental yields that you usually cannot find in Melbourne and other major capital cities.

But if you looked only at the sweeping generalisations of shallow commentators, you would never consider it.

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.