Episode 3: Capital v Regional City, where’s the smart money going?
When it comes to property investment, the choice between capital cities and regional areas isn’t always black and white. In this episode of Navigating Property with Ben Plohl, Ben and his guest – Lisa Wood, who was formerly a regional sales agent and who is now a buyer’s agent at BFP Property Group – unpack the pros and cons of each option – and why your decision should be driven by strategy, not assumptions.
They explore the misconceptions around regional markets, highlight the economic strength of places like Wagga Wagga, Toowoomba and Bendigo, and share practical insights into how to weigh up rental yields, tenant quality, infrastructure and growth potential. You’ll also learn how some investors are blending both capital and regional locations to create a balanced portfolio with long-term performance in mind.
If you’re wondering whether to focus on a regional strategy or stick to a more traditional metro approach, this episode will help you think through the trade-offs and make smarter decisions for your goals. It’s especially helpful for anyone exploring options outside the big cities.
Darcy Milne
Ben, welcome to navigating property with Ben plohl, the podcast that helps you understand the property market, make smarter investments and navigate your way to success. Join your host. Ben plohl, founder of BFP Property Group, as he breaks down real estate trends, interviews experts and shares insights to empower your property journey.
Speaker 1
Hello, coming up on this episode, we are going to chat about something we get asked quite a lot. It’s the old question of, should I stick to capital cities, or should I consider investing in a regional location? Here we go. A lot of investors consider capital cities as a safer option for property investment, and tend to overlook regional cities. In doing so, they’re avoiding approximately 25 to 30 regional centers across the country with populations of circa 50,000 people or more. For us, we don’t have a bias to one or the other. If a client’s strategy, risk profile and budget is better aligned to a capital, then we’ll recommend that. On the other hand, if we believe that a regional city will offer a better outcome, then we’ll provide our client with that advice. Read More
Speaker 2
Yes, same thing, definitely something that’s got a good sized population. You’re also looking for what industry is there that’s going to support the town? How strong is that industry? The other thing that I tend to look for is what’s happening in the community with council. What sort of growth have they got coming that’s really important. Are we on the cusp of growth in a particular suburb? Is
Speaker 1
it going to the local council plans, which you’re really good at? Yep,
Speaker 2
local council plans, talking to builders, talking to developers. What else is coming on that’s really important to know what sort of growth and what’s already transpired, what’s happened in the last couple of years as well. Really helps identify what’s a good area to go that the client can get something for value for money as well, 100%
Speaker 1
I think if we look at our big capital cities, you know, let’s talk Brisbane, Melbourne, Sydney, big, diverse centers, economic powerhouses, etc. So we as a business, or when we’re advising clients, it’s looking for smaller versions of those big, powerhouse cities. We talk about Aubrey. We talk about Wagga, Bendigo, Geelong, Newcastle, one of our favorite ones. These are large economic powerhouses, multiple economic drivers, strong GRP, which is gross regional product, which is similar to gross domestic product. So that’s the output that these economies are delivering. And it gives us, you know, diverse of income. It gives us confidence that jobs are going to be created. These are all the things that we know will propel a property market moving forward. And that gives us confidence that, yes, this client should consider this location and whatnot. I guess, when it comes to regions and something that we get asked a lot risks, right? I think what would you consider some of the risks and that we touched on, a few now, what would be a risky regional location, or what are the attributes that you classes more of that riskier approach? One of
Speaker 2
the things that’s really important is to find the niche little pockets. So find those pockets that are wanted. They’re wanted for a number of different reasons. They’re quite exclusive little subdivisions and things like that. And I feel it’s important because that will attract a good long term tenant. When you have these regional towns, you tend to have tenants that might stay 2345, 10 years in a property. I’ve seen 25 I’ve seen 25 and they live and stay there and treat the home as if it’s their own. So you want to be able to attract a good tenant, it’s less risk if you’re going to. Attract a good tenant too, because they maintain the home. You get great property managers as well. And you’ve also, you have the ability sometimes to pick a parcel of land that has the ability to do granny flats and things like that, because you’re looking at good sized blocks of land. But location in these regional towns, everything is 10 to 15 minutes within each other. You’ve still got airports, you’ve still got trains to get in and out. You’ve got local busses, several good schools that are attainable, both private and public. So just offers, I guess, tenants that can’t afford to buy a house, somewhere good and stable to stay and you want long term tenants, it’s less wear and tear on the property. Yeah, and
Speaker 1
I think a few other risks that I associate with wanting to think about when considering a regional location, or any location. For that matter, it’s an area that might be reliant on one or two industries. So talk about mining towns. You know, these are areas that we would be saying a blanket no to for the pure fact of let’s look at a regional city in, say, North Queensland, where it’s reliant on a Rio Tinto mine. The commodity cycle changes. Rio Tinto needs to mothball that site. What happens to the town completely? And we’ve seen it time after time. I think people get excited when we go through another commodity boom. People start to think about, Oh, what about this town? What about this city? But then people forget very quickly that will the last cycle those cities absolutely collapsed. And so looking at areas that aren’t reliant on one or two sort of industries are really important. Read More
Speaker 2
Probably what I love raising children in the area is there was universities, there was tapes, there was fantastic schooling, both public and private. But then on weekends, you had the ability to go out 10 minute drive out to the lake, and you could ski an hour to mawala and Yarrow Wonga that’s got the lake. There facilities everywhere, with Beechworth bright all of those places where all the Ned Kelly history is, and within an hour’s drive, you can take your family somewhere for sightseeing and mountain hiking and four wheel driving. The water sports that are there, the sporting communities that are there. It’s about communities that pull together during times of COVID and things like that. That community spirit is really important as well. For me, I just love that. It’s a family friendly place that that people can grow up and live it’s still affordable. People can rent vest and still buy into the area. It’s just an area where there’s lots on offer, from industry to public transport, medical options, the lifestyle options that are there and the community spirit that follows that lifestyle option is amazing. Yeah,
Speaker 1
yeah, absolutely not. All the regions that I’ve spent time traveling around to both personally and then for work, yeah, you get a very different vibe. And I think for me, living in Sydney, you become ingrained in that rat race and becomes a bit smothering at times. But going out to some of these areas, it’s a bit of a breath of fresh air. And most of these locations have lovely people. There’s a lot to offer, which is something very important that we look for, because we want to invest in areas that have that very strong owner occupier appeal. And you go around the countryside and look into places like Toowoomba, like Tamworth, like Wagga, like Albury, Bendigo Geelong these places Newcastle, Wollongong. These are areas that you know, that people you know want to live in, because they’ve got all those aspects of lifestyle, of amenity, and more importantly, they’re affordable. When we start to recommend locations to our clients, we tend to get lots and lots of clients, lot of young people that have a budget of, say, maybe 550, to 700,000 and if we look at our I guess, overarching methodology, it’s about being buying freestanding homes. Times on pieces of land if you’ve got a budget of that, well, your big cities are out of the question, your Sydney’s, your Melbournes, your Brisbane, you’re not going to achieve an outcome Adelaide that’s changing every day. So the next option is, well, okay, we need to consider some of our region. So it provides a lot of our clients that have those types of budgets access to areas that they can still get a nice, freestanding home in a robust city on a piece of land, which is great. Yeah,
Speaker 2
absolutely it’s good for them to be able to get the value for money that you can’t necessarily get in the cities as well. You know, negatives
Speaker 1
or cons with living or raising a family or whatnot in in the regions. If there is any, well,
Speaker 2
I can’t say there is any like. I absolutely love them. I’ve lived in several regional cities, and I love them for the community spirit that you get. I love them for the value of money that you get. And quite often, you know, you have a bit of tourism side to it as well, which is, which is great to boost the economy in the towns. They’re always very progressive in what are we doing next? So you know, by touching base with the council or with agents or with builders, you can always see what’s coming up next, and when a town is progressing forward and continuing to develop, I feel that’s important, because you know that it’s going to be sustainable long term and attracts more families about
Speaker 1
opportunities for young people, right? You’re born and you’re raised and then studied in a regional city. Do people find that they then like opportunities are capped and they need to seek alternative opportunities in bigger cities? Or is that kind of in
Speaker 2
some fields? Yes, absolutely. But then what you find turns around and happens Ben is they might move away for short term, and then they marry, have children, and come back. And that’s quite dominant in these regional areas where they come back to raise their children in a what they call a safe environment, an environment that’s good for kids and value
Speaker 1
for money. Yeah, that’s awesome. The next thing, which I get asked a lot is, do regions grow? Do they achieve capital growth? And it’s something that hardly is a bit of naivety. And yeah, it’s the whole you don’t know what you don’t know. But when we then start sitting down with clients, sharing data, sharing performance on a graph, their eyes just sort of light up and say, well, wow, because our regions do grow and grow exceptionally quick or strong over periods of time. And I’ve got some stats here, which is quite interesting. So the period of 2006 to 2011 Sydney achieved 6% growth over that period of oh six to 11, regional New South Wales grew by 13% the next period, which was 2011 to 2016 Sydney grew 84% regional New South Wales grew 34% so Sydney outperformed that market during that time, 2016 to 2021 Sydney grew 31% regional New South Wales grew 80% so I think that kind of debunks the myth that the regions don’t grow. Read More
Speaker 2
absolutely. There’s some older parts of fauguna, and then there’s some newer parts that are being subdivided. Lots of land that’s been carved up at the moment and developers coming in. And one of the main differences is the older parts of the gouna, which is still a superb area to buy. You’ve actually got large parcels of land. As they get further and further out into the newer parts. They are cutting some of the land up a little bit smaller. So the preference is going to either be large land or smaller land. And most country and regional town people and families, they want a larger parcel of land for the kids, you know, the shed, the boat, those sorts of things, the caravan, jet ski. But in saying that, I think when you know, when you’re at the cusp of sort of lots of land, eventually development has to come with supermarkets and that sort of thing. How long that period takes, is anyone sort of guess? But again, you go back to council, let’s find out what’s happening. When’s it coming, that type of thing. And you do find a lot of the time, you’ll get the families that have been in the older part of the Gooner. Decide, well, let’s upsize and go to something a little bit bigger. Or they do tend to have as well. In the new developments, they will pick a certain area and go, let’s do 1000 square meter blocks. Let’s do two acre blocks. You know, that type of thing as well, absolutely,
Speaker 1
looking at your capitals, looking at your regional cities. Which is better? I think there’s no clear cut answer to that. I think it’s really dependent on the client or the buy or the investors risk profile, their overarching strategy and budget really important. But what we’ve found is, for clients that have come to us with, say, a budget of, say, 1.2 million, we’ve been able to put together a plan where we say, let’s get a blue chip type of capital city opportunity, let’s say in Brisbane, and then let’s match, or pair that up with a lower priced regional city that has a better yield that can kind of compensate that negative position on that first asset, and it starts to balance out your portfolio too. Read More
Speaker 2
I think it’s about diversifying and also having a very open mind. And if it suits what your needs are at that particular time of your investment journey, then it’s important to have an open mind and consider it. Yeah,
Speaker 1
no, absolutely. Alrighty. So just to recap, so some of the key advantages of investing in a capital city, to me, would be around comfort level. So lot of people are comfortable investing in your big capital cities. So that helps. On that level, your capitals are your economic powerhouses. It’s where the bulk of the country’s output and GDP is derived, and it’s got that comfort in population base as well. So you look at your city. Cities of Sydney are 5 million and Melbourne, 5 million plus, plus, plus Brisbane, Adelaide, your big, sophisticated cities. So there’s sort of some of the advantages of your big capital cities. Key advantages of investing in the regions, I’d definitely say better yields lower price points in those areas. So it creates more options diversification, so that’s probably more around portfolio creation. So it allows you to not put all your eggs in one basket, being your capitals, diversify into some of your regional locations as well. Gives you that diversification mix and growth outperformance. Read More
Darcy Milne
Thanks for listening to this episode of navigating property with Ben Paul. Be sure to click follow so you never miss a new episode and for more insights, visit BFP property.com catch you next time you.
