Why Capital City properties make better investments

If you’ve been reading my blogs for a while, you’ll know I have always advocated investing in capital cities rather than regional areas.

Recently released statistics from RP Data back this up. And it not only that, in general, capital city properties have higher capital growth than regional properties.

According to a research note from RP Data, Sydney accounted for more than one of every four sales in November 2010, and Sydney and Melbourne sales collectively accounted for 43.1 per cent of all national sales.

RP Data said 75 per cent of all unit sales, and almost 63 per cent of house sales occurred within the capital cities in November 2010.

While over time there have been fluctuations in the proportion of sales between capital city and regional markets, RP Data research analyst Cameron Kusher said there has been occasions when demand for capital city dwellings has fallen, for example during the 2001/04 national property boom.

“This is when affordability issues began to arise in the market but it was also the time when the sea change phenomenon started to gathered pace,” Mr Kusher said.

Since then, capital cities have come back into favour, with the larger cities maintaining their popularity over a long period of time.

“Unlike many other countries, Australia’s population is focused within a few areas and this seems unlikely to change any time soon,” Mr Kusher said.

Apart from the bigger demand from owner occupiers – who buy the properties and push up property values, there is a wider range of potential tenants for capital city properties. And the trend for more and more of our population moving to capital cities will only continue.

Add to that the fact that many regional towns are dependent on one or two industries, and this makes them more vulnerable than the larger capital cities. This is why prices fluctuate more in regional areas.

Your money will run out before the investment opportunities will, so for my money capital cities are the way to go.


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au

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