Regional property prices may be on the rise as buyers flee capital city lockdowns for a work from home lifestyle change, but a property expert warns investors should think twice about parking their money outside of suburban markets.

James Fitzgerald, of property investment company custodian and author of Bulletproof Investing, said many buyers thought because prices were increasing in regional areas as a result of the current demand the trend would continue.

“The skyrocketing gains being achieved in some regional areas makes buyers think it’s the perfect opportunity to buy at an affordable price and reap the rewards,” he said.

“If you want to buy in a regional area because you want to live there and it suits your lifestyle, family and work goals, that’s great, go for it. But if you are doing it because you think it is a good place to invest I would think twice about that.

“No doubt COVID-19 has changed the way we look at working from home. While I think flexible working conditions will last beyond the pandemic, we will need to live in proximity to our place of work.

“Those jobs are going to be located in and around cities – that’s always been the difference between the regions and cities from an investment perspective.”

Mr Fitzgerald said when considering investing in a regional suburban markets, it was essential you investigate long term returns before putting money into them.

“Yes, Australia is in the midst of a property boom, but that won’t last forever,” he said.

“When picking a location for investment it’s important not to just latch onto somewhere that is experiencing growth now.

“Look at how prices have gone historically in that region and whether or not it usually takes a long time to sell. It’s property in the outer city – that sweet spot where land size, demand and infrastructure investment collide – that is your best bet for achieving solid capital growth in the long term and maximising your rental returns.”

Mr Fitzgerald said price growth in real estate suburban markets was always as a result of supply and demand and that was strongest closer to a capital city, where it was driven by continued population and employment growth.

“The outer city has more rapid population growth and greater infrastructure investment than the inner city or regional areas,” he said.

“In regional areas there is still plenty of land available, so pouring money into country bricks and mortar won’t necessarily be a guaranteed investment winner.”

According to Australian Bureau of Statistics there was record high internal migration in Australia in 2020 as city-dwellers moved to regional areas, chasing more space.

“That increased demand has driven up regional values in the short term, but one or two years of property price growth is not a reliable indicator of where property values are heading in the future,” he said.

“If you have your heart set on investing in a regional location, ensure it has strong population growth, good infrastructure spending and is not too far from a capital city.

“It’s easy to get swept up in the hype and tales of massive returns in a matter of months but much of what we’re seeing today could soon change. Sound property investment takes solid research, careful consideration, patience and a long-term perspective.”