Why build in regional Victoria?

There has never been a better time to buy in Regional Victoria. Whether you’re looking to escape Melbourne’s increasingly high entry costs, or you’re a property investor seeking a lower price point to enter the market – Victoria’s mushrooming regional economies are the ideal place to start.

And it was Greater Geelong’s burgeoning Surf Coast peninsula that piqued Metricon Regional West manager Simon Taylor’s investment interest.

Simon, who has worked with Metricon for the better part of two decades, has long discussed the benefits of building rather than buying an existing property, and says seeing the growth of his coastal home corridor prompted him to consider taking his own property investment advice.

“Armstrong Creek is a real growth area,” says Simon, who has build a number of investment properties in the area. “There is a lot of really good infrastructure – including a new supermarket and a new school – and there is great access to Melbourne via the Ring Road, as well as to the Surf Coast, the beaches and to Geelong, too. But the best part is that is still has a real sense of community – there’s not the same hustle and bustle that you get in the city.”

Regional growth corridors the likes of Greater Geelong and Bendigo are attractive to investors because they provide myriad options for income generation. They can offer good rental yield, which is an important consideration for rentvestors looking to buy where they can afford and rent where they want to live or, if the market is strong, there is plenty of price growth opportunity for re-sale.

“This is good for investors as it means they can appeal to multiple demographics – from first home buyers to families looking to upsize, retirees looking to downsize and even other investors looking for a solid rental return. A newly built house that has not been lived in gives you exposure to the first home buyers market because they still get the grant, and it also appeals to investors as they get an instant return if they can find a tenant straight away."

Simon says the credit crunch has also contributed to regional’s allure, with tighter lending restrictions forcing people to seek more affordable options.

“Responsible lending is seeing more people look to regional Victoria as it offers a more accessible price point,” Simon explains. “Being a growth corridor also makes it more favourable when it comes to the bank valuation. The home is more likely to develop equity so buyers are more likely to get finance.”

The key, Simon says, is to make sure you don’t overcapitalise.

“You have to make a decision,” he says. “You can find a block of land that costs less, but has a 12-18 month wait until it titles, or you can get land that is closer to titling, but you’ll pay a bit of a premium on it. Do you want to sit on your land and let it appreciate or do you want to pay a premium and get a return on it sooner?

"I purchased land at a good time so by the time it titled it had already built up some equity, then all you have to do is put the house on it,” he explains. “Instead of building to rent, the aim is to sell straight away so that I can continue to invest in the market. That way I can slowly build cash flow and keep reinvesting in the market.”

Aiming for smaller, more regular increments is also a good way of minimising risk.

“The more equity you have in the home, the more you are going to pay in tax if you are looking at selling straight away,” he says. “Whereas if you’re making 20-30k each time, you pay less in tax. But do that five times over five years and it quickly turns into 100k. It’s all about putting small wins on the board.”

For more investment and design inspiration, head to our blog, Home Truths.