Is Buying a Regional Property a Good Investment Strategy?

Regional property markets have experienced remarkable growth in recent years, as thousands of people have moved away from city life. This shift has led to significant property value increases and highly competitive rental markets.

With strong yields and steady demand, regional properties have been an attractive investment option. However, the question remains: Are they still worth the hype, or has the excitement been overstated?

Below, we explore the pros and cons of investing in regional property.

Pros of Investing in Regional Property

1. Strong Rental Yields

• Regional properties tend to offer higher rental yields compared to capital city properties.

• These higher returns make it more likely that properties will be positively geared, meaning rental income covers expenses and even generates profit.

• In contrast, many inner-city properties are negatively geared, requiring owners to cover out-of-pocket expenses.

2. Solid Capital Growth

• In recent years, many regional markets have outperformed capital cities, particularly in:

  • South East Queensland

  • Tasmania (Hobart and Launceston)

  • Victoria’s regional centres (e.g. Ballarat, Bendigo)

• While capital city markets have seen price declines, many regional areas have maintained steady growth.

3. Tight Rental Markets

• Many regional areas have extremely low vacancy rates, meaning strong demand for rental properties.

• This supply shortage is expected to continue, putting upward pressure on rents: a positive for property investors.

Cons of Investing in Regional Property

1. Diverse Market Conditions

• Not all regional areas are the same. Some are thriving regional cities with populations over 100,000, while others are small towns with fewer than 100 residents.

• Certain regions have diverse economies with stable employment, while others (such as mining towns) rely on commodity cycles, making them prone to boom-and-bust fluctuations.

2. Vacancy Risks

• Over time, regional properties can be more susceptible to vacancy risks.

• Smaller towns may have fewer employment opportunities, making it harder to attract high-quality tenants.

• Regions that rely on tourism can experience seasonal demand, leading to shorter lease periods and increased turnover.

3. Exposure to Natural Disasters

• While natural disasters can occur anywhere, regional areas have been particularly affected by floods and bushfires in recent years.

• This increases risks for property owners, leading to:

  • Higher insurance premiums

  • Increased maintenance costs

  • Potential property damage

• Investors must carefully assess risk factors before purchasing in disaster-prone areas.

Final Thoughts: Is Regional Property a Good Investment?

There is no single "regional property market". Each region is influenced by unique economic factors, including population growth, employment trends and infrastructure development.

While regional properties have delivered strong returns in recent years, certain areas have also experienced periods of stagnation or slow growth, particularly regions that rely on mining or single industries.

That said, investors seeking a balance of high yields and long-term growth can find excellent opportunities in well-researched regional markets.

Before investing, it’s crucial to analyse supply and demand trends, understand the economic outlook, and assess long-term investment potential. If done strategically, regional property can be a valuable addition to a diverse property portfolio.

Need Expert Guidance?

At Providence, we help investors identify high-performing regional markets and secure strong investment opportunities. If you’re considering a regional property investment, get in touch today for data-driven insights and expert advice.