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Will regional areas outshine capitals?

Is it better to buy in capital cities or regional areas? It's a topic that continues to be debated.

While the majority of locations in API's Hot 100 are in capital cities, with only 22 in regional areas, Terry Ryder of Hotspotting.com.au is a firm believer that key regional centres are where investors should be focusing.

He sees them as having the best prospects for investors to buy affordably and achieve above-average capital growth.

There are five specific reasons why Ryder believes property investors should be focusing on regional areas:

  • Much of the Federal Government's stimulus spending, which started with former Prime Minister Kevin Rudd, was directed at regional areas of Australia and it's still washing around in regional economies.
  • Prime Minister Julia Gillard is ruling with support she's secured from independents, who are largely demanding that more infrastructure be poured into regional areas.
  • The resources boom that's under way will have a wide impact and while it will benefit capital cities, it will affect regional areas most directly.
  • A number of state governments have decided to put more resources into regional areas, partly to take pressure off capital cities.
  • We're starting to see a reversal of the population trend that's dominated for the past couple of decades - people were moving away from rural areas to cities and the coast, but that's starting to reverse, with the population now drifting away from those areas back into key regional areas. People are seeking a more affordable and less stressful lifestyle, says Ryder, and he also points out that while the jobs used to be in capital cities the balance is now shifting a bit and there are plenty of jobs in certain regional areas.

If you put all these factors together it starts to really add up to something that's quite powerful for the regions, says Ryder.

While he points out that he doesn't like to talk in general terms about the property market, Ryder says prices in capital cities aren't doing much - they're either stagnating or falling a little - but key regional areas are actually performing quite strongly at the moment and in many cases jobs growth is translating into growth in the property market.

"Regions are the places to be this year and next year and beyond really," he says.

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