There is no simple answer to the question, “where is the best place to invest?”!
Smart property investment involves identifying assets that offer growth potential along with a sustainable level of rental return. This is the basis for long term wealth building.
Australia is a large country and opportunities exist in different states and in different locations within those states. Even within the same location, different types or styles of property present different opportunities.
The best place is the place that meets your specific situation and strategy.
One thing is for sure, the best place, is not necessarily, the place you live in now! Many novice investors make the mistake of assuming that the ‘devil you know’ is the best way to go.
Looking over the back fence of an investment property is not only unnecessary but inadvisable. The investment property is an investment vehicle, and should be treated as such, devoid of emotional attachment .
Concentrating on your own work and income earning potential and leaving the management of your asset to a carefully chosen property management professional is a smart approach. This is particularly relevant when you build a property portfolio. The logistics of managing multiple properties is beyond the scope of most people, unless it becomes your full time job!
Choosing a location to invest in ought to be a well considered decision, based on your own situation, budget, goals and time frames as well an analysis of the demand side drivers and the supply side constraints prevailing in different places at different times.
Just as the text book model of perfect competition requires perfect knowledge, (to get the lowest price for bananas you need to know who is selling them, where and at what price at any time point in time) it is also unrealistic to expect that price rises for accommodation, either house prices or rents, will see an ‘elastic’ response on the part of home seekers.
Access to employment, transport options or the lack thereof, family ties and established links to schools and sporting and friendship groups make moving home difficult. It can also be prohibitively expensive.
The affect of macro drivers for demand such as interest rates are not location specific – the RBA was not able to increase interest rates in Sydney and Melbourne alone to slow house prices during the past expansion phase without collateral and unintended damage to other property markets. So, while record low interest rates now are designed to provide a stimulus to the economy and to ‘soften the landing’ of slowing activity, they do so generically. You can’t assume all markets will grow as a result of increased consumer optimism and confidence – it’s important to look at the specifics and to match a location to your specific needs.
Influences on the choice of location include: