When we talk about investment properties, we’re hearing more and more about regional markets. Margaret Lomas talks to us about whether they are becoming more attractive to investors, and if so, why.
Kevin: When we talk about investment properties, we’re hearing more and more about regional properties, and I’m just interested to know if they’re becoming more attractive to investors, and if so, why. Margaret Lomas from Destiny Financial Solutions joins me, also the star of Sky TV and Real Estate Success with Margaret Lomas.
Margaret, welcome to the show again. Nice to be talking to you.
Margaret: It’s great to be back.
Kevin: You’re into the new season on Sky, too, looking really good.
Margaret: I get excited about every new season. We try to come up with a couple of new things for each of those new seasons. Yes, it’s quite exciting for me to be going into season nine. It’s been nine years now, which is great.
Kevin: It’s a tremendous story, isn’t it? One of the things I love about talking to you, too, on the back of the show is that you get to see so many of the regional areas around Australia. Are you noticing, are they becoming more attractive to investors, Margaret?
Margaret: It’s funny because many, many years ago, I was definitely talking about the regions as viable places to invest. At the time, I got a bit of a reputation for being a property investor who only ever invested in the regions. I remember reading about myself as if I was stuck on the regions and nowhere else, when at the time, my own portfolio was probably 70% city or capital cities and only 30% regions.
It’s important for all investors to note that you can’t just say “Is it good to invest in the regions?” without looking all around that at everything else that’s happening. But there are definitely times when the regions are a better place to invest and times when they’re not.
I’ve always said that anyone who says the most important thing when you’re investing is time in market, that would normally come from someone who is probably trying to sell you a dodgy investment that needs time to perform. I actually believe the most important thing when property investing is market timing, and whether to invest in regions or not comes down to market timing.
Kevin: That’s an interesting twist. I’ve never heard it put that way. Is this the time, and are there certain markets that we should be looking at, Margaret?
Margaret: Yes. I think we’re coming toward a time when we are going to see some regional markets perform very well, but it won’t be all regional markets. Just like with all property, everyone is talking about the big property boom at the moment, but if you speak to someone in Adelaide, they’re going to say, “What property boom? We’re not having a property boom here.”
It’s the same with regional markets. There will be times when some of them are good to invest in, times when they’re not, and other regional markets that are never going to present a good investment in our lifetime.
I feel at the moment, those regional areas that are really worth watching are the ones that are closer to our recently boomed capital cities and even those ones if you have a little bit more time to wait, close to those capital cities of ours that haven’t quite boomed yet or still have more grunt in them. They’re normally the kind of regional areas where you’re just beginning to see people move out to them by choice and commute back to their city jobs.
Kevin: It’s that ripple effect – isn’t it? – that ripples out.
Margaret: Yes. It’s a ripple effect that’s forced on us by the fact that, very often, those main areas, those main cities, do reach a point where the average person can no longer afford to buy in, and they then make that choice. It reaches a point where they make that choice where it now becomes better to put up with the longer commute to save the money before it gets to that peak where it’s far too expensive.
People are willing to pay a bit more, a bit more, and a bit more, but it reaches a point then where they go, “Right now, it’s worth me spending that hour to an hour and a half on the train every morning and afternoon to get both a better lifestyle and also a cheaper property.”
Kevin: It’s the improvements – isn’t it? – that are going into an area to attract people there, because if you attract the people there, they like living there, and even if they do have to travel a bit for work, they’re still going to need some housing accommodation, which would be the magnet.
Margaret: That’s exactly right, and that was going to be my next point. You can’t just point to any regional area just outside of a capital city and within commutable distance and say, “That one is going to take off.”
It isn’t going to take off if it isn’t providing a certain amount of amenity, and normally, better amenity than you can get if you were to live in the cheapest place you could find in the nearby capital city.
Let me give Sydney as a good example. In Sydney, you can choose to either move all the way out to a suburb as far out as you can possibly imagine that may not have a lot of amenity, or you can invest or buy in the Central Coast with a similar commute time and yet a lot more amenity, because you could be living right near the beach or certainly on water. You’d probably get water views for the amount of money that you won’t get anything in Sydney.
You’re going to get a lot of other good amenity with cafés really starting to come. We’re seeing a lot more cafés and great dining options, a bit more culture, certainly big shopping centers, and all of the stuff that people really want, and it’s only an-hour-and-a-half commute from Sydney.
Kevin: Great example. Margaret, are there any Internet sites that you monitor that will indicate to you that these areas should be looked at a little closer?
Margaret: I don’t like Internet sites and I don’t like data, because to me, all they’re doing is telling us the obvious that we can see and witness with our own eyes. If you’re seeing it, then you’re probably too late already, which is why I don’t like those sites.
I simply use maps. I find out where those areas are that are getting really hot, go in, look at my maps, start looking around those areas, go back to RealEstate.com, see what properties are selling there for. If they’re significantly cheaper, I start then to narrow down the process: are the days on market reducing in those areas to show that people are starting to gain an interest?
Then I go to the council to see what they’re doing. Then I work out whether there are schools close enough by where the people can get close enough to a bus stop, a train stop, or light rail or whatever else is available, and then start the process of being able to whittle down. And in doing that, you’ll toss areas off the list.
At the moment, I’m thinking not only the Central Coast makes a good opportunity. You can certainly buy a house and land here for between $500,000 and $600,000, which probably sounds a lot to a lot of people up in Brisbane, but it’s quite cheap in the scheme of things in the Sydney area.
But there are other places I really like too, like Sunbury in Melbourne. People call that a regional area. Have you been there? It’s ten minutes from the airport, so I don’t see that as a regional area, yet we’re starting to see a lot of things happening out that way.
Even places like Geelong: there are outer suburbs of Geelong that are being developed that are subject to a lot of really good infrastructure that are going to give some really good returns for investors and great places for people to live.
Pakenham out toward the east there: that’s another affordable area that’s definitely commutable not only to Melbourne but highly commutable to the Monash employment lands, which are going to employ 50,000 people in the coming ten years. There is plenty of them out there and available.
Kevin: That is great advice. You can get a lot more of that sort of advice by following Margaret on her shows on Sky TV 602. There are a couple of shows, Property Success with Margaret Lomas and the other one is more of a talk style where people actually call you up and ask you about areas.
Margaret: Yes. Your Money Your Call, and we try to tell people don’t necessarily ring up and ask about areas because that makes a really boring show when every caller says, “What about this area? What about this area? What about this area?” But people ring us up with all sorts of questions. They ask us about property and tax, they ask us about the Budget, they ask us about all sorts of things: insurance. Every single question you can imagine related to property, we get asked on that show and we can usually answer them.
Kevin: You always do every time I watch. Margaret, great talking to you. Thank you so much for your time. Margaret Lomas from Destiny Financial Solutions, I look forward to seeing you on telly really soon.
Margaret: Great. Thank you.