It is becoming “the new normal” for real estate investors to invest in markets far away from where they live.

A study by MCG Quantity Surveyors, which analyzed investor trades for the year to January 2020 and for the year to 2021, revealed the changing buying habits of investors, particularly in terms of where they choose to invest.

The average distance between a landlord’s home and its investment property had increased significantly in the two periods, from 294 kilometers to 559 kilometers.

MCG Quantum Surveyors Director Mike Mortlock revealed that remote and borderless investing had been ramped up by the COVID-19 pandemic.

“Instead of getting bogged down during lockdowns, it seems investors were looking for real estate opportunities further from their suburbs than ever before,” he said.

“Perhaps most telling is the rapid increase in people seeking assets at exceptional distances from their homes.”

The survey found that the proportion of buyers investing in locations more than 200 miles from their home rose to 44.7% in the year to November 2021, up from 29.5% in January 2020.

Interestingly, the proportion of buyers investing in properties more than 1,000 kilometers away from their home more than doubled, from 7.7% in January 2020 to 17.15% in November 2021.

“The latest figures showed that only 6.75% of Australia-based investors bought in their own suburbs. I’d say this is a dramatic drop from the stock we’d seen 10 or 20 years ago,” said Mr Mortlock.

Why distance buying became attractive

The survey also found that Queensland was the top choice for many investors, with more than a third of investors taking advantage of the state’s thriving conditions.

Just behind Queensland was New South Wales, which also shared a third of all investors.

About 11% of investors chose to invest in Victoria, with all states accounting for the remaining 15%.

Mortlock said there are several reasons behind the distance buying trend and top of the list is the changing dynamics amid the lockdowns and economic uncertainties.

“Technology makes it possible to buy real estate from the comfort of a locked house. Modern investors see all of Australia as a potential market – not just their state or city,” he said.

In addition, Mr Mortlock believes that distance buying has become easier as more investors rely on local buying agents.

“Also, the rising popularity of regional relocations in this world of remote work has boosted those real estate markets.”

A recent report from CoreLogic found that the Rising demand in regional markets has already raised affordability concerns.

“While the numbers may come back a bit, I suspect the world has changed for good and long-distance buying is well and truly established,” he said.

“There is little evidence that we will see rates return to pre-pandemic levels anytime soon.”

Photo by Helena Lopes on Unsplash

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