Australian Investors Turning to Interstate Properties
A recent report has revealed that a growing number of Australian investors are looking beyond their home state or territory when choosing investment property. In this article, we examine the trend toward interstate investment and its potential advantages for investors.
Investors Favouring Queensland Properties
According to a report by Terri Scheer Insurance, around one-fifth of its insured landlords own investment property outside their state or territory of residence. The report found that:
- Queensland is the favourite location for interstate investors. More than half of the company’s insured landlords owned rental property in the Sunshine State.
- Victoria, New South Wales, and South Australia were also popular destinations. Around 14 per cent of landlords held property in Victoria, while for New South Wales and South Australia, the figures were 12 per cent and 11 per cent respectively.
- ACT investors were most likely to own interstate property. More than half of all ACT-based investors (57 per cent) owned property outside the Territory, while 50 per cent of Tasmanian-based investors owned interstate property.
- Landlords in other states and territories were also keen interstate investors. Northern Territory (50 per cent), New South Wales (28 per cent), Western Australia (27 per cent), and Victoria (23 per cent) each had a significant proportion of landlords who invested interstate.
- Queensland and South Australian landlords were the least likely to invest interstate. Approximately 9 per cent and 10 per cent of Queensland and South Australian investors held rental property in other states or territories.
Tapping Into Interstate Markets
There are significant advantages associated with investing interstate.
- Tap into different markets. Investors build their portfolio by investing beyond their home state or territory and access more areas with potential for capital growth and rental yields.
- Diversification. A diversified property investment portfolio may generate better capital growth and yields.
- High-growth areas. There may be specific development projects or high-growth areas that offer an excellent opportunity for investors to expand their portfolios, an opportunity that may be unavailable in within their state.
- Retirement planning. Studies show that some interstate purchasers are planning ahead for retirement when purchasing interstate by investing in property that will generate rental income and provide a suitable dwelling for retirement.
- Tax benefits. As land tax is levied on the amount of land investors own in that state or territory, spreading investments across different locations may, in some cases, help reduce the amount of land tax payable by investors.
Sourcing and Managing Interstate Properties
Finding the right interstate properties requires lots of research, especially if the investor is unfamiliar with local conditions. Investors may find it advantageous to consult specialist property investment strategists who can assist with researching or sourcing appropriate properties on your behalf.
Researching high-growth areas, identifying prospective properties, and performing pre-purchase due diligence – these are other important factors to take into account when investing interstate.
Once the investor has made their purchase, it’s practical to use a dependable property manager who can provide the close management that all rental properties deserve. Property managers can help you find appropriate tenants and ensure that the property retains its capital value by supervising maintenance and repairs where required.