The benefits of buying outside capital cities

For some time the property spotlight has been focussed on housing affordability.There's no doubt that it's extremely challenging for people, even with two incomes, to save up enough money for a deposit, especially in our capital cities.

The median home price across our capital cities now stands at over $500,000, which means you need at least $50,000 for a 10 per cent deposit.

For many people, they simply can't afford capital city real estate but they don't want to move. And there's no reason why they have to. There are regional areas that offer smart buys. Buying in an area that's more affordable and offers good rental returns means those who want to continue to rent in the city they love can get a foot in the property market. Here are some of the benefits.

It's more manageable

Making the decision to buy and being financially ready to buy are two different things. The option of buying outside of capital cities opens up more opportunity. For those who can't afford a home loan of half a million dollars or more, could look at areas that offer cheaper real estate. You get the added benefit of getting an income from your property, which could cover your mortgage repayments or the rent you're paying in the city. You also become eligible for all the tax deductions that come with owning an investment property.

And there's value to consider. You may be able to buy a much larger property than if you were buying in a major city.

You can use the equity to buy elsewhere

With record low interest rates, you can pay off an affordable mortgage faster. It's in the first few years of a mortgage where you pay the most interest. By paying back more than the minimum repayment - and remember that the rent you're receiving from your investment can go towards your mortgage - you can not only pay off your debt faster, you can shave thousands of dollars off your mortgage.

An added benefit is that it helps you build equity in your property if you do have the goal to expand your investment portfolio or buy where you're living in the future. The reality is that the regional areas on the outskirts of capital cities don't generally experience the price growth of the city, but if you hold onto your property and think longer term, you will see price rises. Think of it like a bad haircut - if you're patient, it'll grow. And that growth will contribute to your equity.

Property investment 101 is to know your marketplace and it's important to do your research before buying anywhere. So if you're considering your options speak us today and be sure that your decision is the right one.