Why property investors are targeting Australia's top growth corridors

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With the impact that the ongoing COVID-19 pandemic has held on the nation's economy, it's not surprising to see property prices across Australia's capital cities skyrocketing to record highs.

Even so, property developers have continued to forge ahead with development plans, and investors are still allocating funds towards investing in select suburbs across Australia. These suburbs also happen to be some of Australia's top growth corridors.

So why are property investors moving further and further away from city centres? Why are properties in Australia's growth corridors now the perfect addition to investment portfolios? There are three primary answers to these questions, all of which will be unpacked below.

There are some benefits to purchasing newly developed properties on the city's outskirts over pre-existing inner-city residences, with rental property depreciation deductions being one of the most compelling reasons to buy new.

The opportunity to make greater tax deductions over a longer period of time is growing increasingly valuable for property investors in the wake of the COVID-19 pandemic, as long-term investors seek ways to maximise the returns on all investments in their portfolios.

Alongside the ability to make higher claims with regards to property depreciation, the values of properties in growth corridors or suburbs on city outskirts, are also generally more likely to double over a shorter period of time. Earlier this year, market analysts for Domain found that house prices almost doubled across 92 Melbourne suburbs, with a good portion of these suburbs being at least 10km away from the Melbourne CBD.

Higher tax claims coupled with doubling your property's value already provide insight into investors setting their sights on properties in Australia's growth corridors.

It's no secret that Australia's capital cities are expanding at a phenomenal rate when compared with development rates over the past five years. Melbourne and Sydney have seen tremendous population growth as well as the development of a diverse array of new suburbs on the outskirts of their metropolitan regions.

Whilst city centres have slowly but surely been building upwards, council districts on the fringes of these capital cities have been expanding to incorporate new suburbs and suburbs that had once been considered regional towns in NSW and Victoria. This outward 'sprawling' of Australia's capital cities is occurring in response to increased housing demands to accommodate regional Australians looking to move closer to city centres for employment opportunities and to accommodate Australia's growing multicultural population.

However, the development of residential areas doesn't exist in a vacuum, and these new suburbs, equipped with diverse communities, are now poised to experience a wave of economic and infrastructural development.

With this development comes greater job opportunities, a boost in the region's standard of living, and exponential increases in the values of both residential and commercial properties in the area.

If investors are able to target the right growth suburbs at the right times (let's say as construction commences to extend a metro train line), they'll be able to see a prompt return on their property investment, as well as secure themselves a property that still falls within a capital city's metropolitan region at a fraction of that property's projected value upon the region's infrastructural development.

Investments that have the potential to deliver such strong and rapid growth are becoming increasingly vital in the economic uncertainty inspired by the COVID-19 pandemic.

It's worth noting here, however, that rental property depreciation isn't the only calculation that positions new developments as preferable over pricier, inner-city properties either. Whilst it's undeniable that Australia's housing market has seen housing values reach untouched heights over the past year, in particular, not all suburbs across Australia's major capital cities have been equally impacted by this market boom.

In fact, a large portion of the country's top suburbs poised for property growth, are found in regional Australia, and away from the nation's sprawling capital cities. Despite being regional locations, these areas are still classified as being 'high-growth', as cities like Bendigo in Victoria and NSW's Blacktown have still experienced local economic growth and infrastructural development.

But why are these regional Australian towns and cities suddenly experiencing their own population booms?

The cause of this may just be the COVID-19 pandemic in itself. With the rapid development of digital work processes across the Australian economy, it's now more possible than ever before for professionals to work remotely, prompting more and more working Australians to leave the city in favour of idyllic country living. High-population regional areas like Bendigo, still provide Australian families with an abundance of educational opportunities, with tertiary institutions even taking the opportunity to develop regional campuses.

The ongoing development of regional Australia has also been reported to be taking some of the population strain off of Australia's capital cities, with some urban development analysts asserting that these growing regional areas are integral to not only achieving more balanced rates of population density across Melbourne and Sydney in particular but also to ensuring that Australia's ongoing urban development holds the least harmful environmental impact possible.

In this regard, encouraging investments in regional Australia is likely to play a valuable role in the nation's ongoing need to balance urbanisation and economic development with sustainable development goals and other national environmental concerns.

Whilst it's clear that the movements of Australian property investors have been varied over the last two years in particular, given the COVID-19 pandemic, the targeting of properties in Australia's growth corridors has by no means been random. In fact, the switch from targeting inner-city properties to regional or newly-developed areas, is a reflection of Australia's changing priorities, both in the face of the pandemic as well as in response to the nation's wider future needs.

We're seeing the beginnings of future urban planning naturally through the real estate market prior to concrete urban planning initiatives, but this is certainly not uncharted territory.

As property investment, like any form of investment, relies heavily on predictions for the future, it appears that post-COVID and beyond, Australia's future lies in the ongoing economic and infrastructural development of our nation's growth corridors.

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