After over a year of regional cities outperforming capitals, due to the pandemic induced sea and tree change, the tide has turned. As we predicted at the start of the year, capital cities are now overtaking regional growth rates. Regional areas are still exhibiting strong results, but the capital cities will continue to make up ground lost during 2020. We believe this continues to present a strong investment opportunity over the next 1 to 2 years in relative terms, notwithstanding that quality property selection remains the key determinant of a successful outcome.
Following are two key reasons capital cities will return to favour:
- As vaccination rates increase, the relative safety of living in a city will return as it is clear that vaccinations are reducing hospitalisations and deaths in countries such as Israel, USA and the UK, who are setting the benchmark with inoculation rates.
- International borders opening and migration resuming, as the vast majority of migrants reside in capital cities. They all need a place to rent, and in the future, purchase property. This will cause significant demand increases as Australia’s popularity as a destination nation will only have increased with its proven ability to withstand significant financial and health shocks.