The Hare or The Tortoise?

The Hare or The Tortoise?

When choosing a location to build your investment property, is the boom suburb or the steady growth suburb best? It’s a question of The Hare or The Tortoise!

Investing in property requires a strategic decision between targeting boom locations — areas experiencing rapid growth — or consistent capital growth locations — which offer steady appreciation over time. Each approach has its advantages and drawbacks.

You can choose to go with the racing Hare in a boom location.  Investing in boom areas can lead to swift increases in property values, offering substantial short-term gains.  Also, these areas often attract a surge of tenants due to new infrastructure projects or economic opportunities, potentially leading to higher rental yields.  However, boom markets can be unpredictable.  Certain suburbs may experience declining sales activity and prices after a boom; indicating that these areas have passed their optimal investment window this market cycle.  Besides, the allure of rapid gains attracts many investors, driving up property prices and making it challenging to find undervalued opportunities.

Or …

You can choose the slow and steady Tortoise location that has a track record of steady, consistent growth.  These areas are more likely to offer reliable long-term growth and the gradual nature of these markets reduces the likelihood of sudden downturns; offering a more predictable investment environment.  The downside is, as an investor, you may need patience, as significant capital gains accrue over a longer period compared to boom areas and, while stable, these locations might not offer the high rental returns seen in rapidly growing markets.

Choosing between investing in a boom location or a consistent capital growth area depends on your financial goals, risk tolerance, and investment goals. While boom areas can offer quick returns, they come with higher risks. In contrast, consistent growth locations provide stability and long-term appreciation, albeit at a slower pace. Thorough research and consideration of all dynamics are essential to making an informed decision.