A question I am often asked is whether it is best to buy an investment property in the city or the country. There is no easy or right answer to this question but like all investment decisions you should always invest some time in research.
One of the primary drivers of property prices and to some extent rental returns is where people choose to live and therefore where future population growth is likely. Growth is what supplies demand and demand is what drives prices and rental incomes upwards.
Now the vast majority of people, over 64% of the total population, live within the capital cities. Staggeringly, this means that over two thirds of our population live in just 0.5% of our overall land mass. Going back a century or so more people lived on the land but with the industrial revolution, the jobs and therefore the people moved to the big cities. The resources boom is drawing some people back to some regional areas but the fact is the vast majority of the jobs still remain within the capital cities.
With good employment prospects and diverse major infrastructure such as schools, hospitals, transport, shopping, recreation and other amenities concentrated in the capital cities, it is here that will see the vast majority of the population choosing to reside.
However, having said that there are some regional centres that have shown great capital growth in recent years but a deeper investigation shows that their growth is tied to one or two major industries so their continued growth is very reliant on the future performance of those industries. Just look at the once booming Gold Coast and Sunshine Coast. Areas that were heavily reliant on the tourism market and due to the downturn in tourism these areas have taken some real hard hits which will take many years to recover, if at all.
Of course all property markets are cyclical and will have their highs and lows, but property should always be viewed as a long term investment. Over the long term property in capital cities has shown above average capital growth and with the current shortage of housing stock and good levels of population growth I see every reason for that trend to continue.
Filed under: Property Investment
