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Are holiday homes really still a good investment?




In days gone by, it was common for families to go to the same place, at the same time of the year, for every holiday period. Some even invested in their very own beachside shack.

But Domain Group chief economist Andrew Wilson believes the glory days of secondary properties such as holiday homes started to fade away nearly a decade ago.

“I think we’ve lost the real prosperity effect of secondary property purchases that we had prior to the GFC … and the ultimate discretionary purchase is a holiday home,” he says.

“Australians always felt like they’d made it when they bought a holiday home. Those social dynamics are changing and it’s not just an affordability issue. I think the whole nature of holidays is changing as well.”

Properties in the lower end of the market, like this one in Southport, are in high demand.

Properties in the lower end of the market, like this one in Southport, are in high demand. Supplied

Affordability is part of the equation, but it’s not just about the increased cost of housing. International travel has become much cheaper so families are often heading to Thailand and Bali instead of Noosa and Cairns.

He says the desirability of Queensland’s premier beachside locations also means that property prices are now no longer considered affordable enough to invest in a holiday house that will provide decent returns.

But Real Estate Institute of Queensland Gold Coast zone chair John Newlands says holiday homes or units still make financial sense in his region.

He says there remains good opportunities in the $350,000 to $550,000 price range.

“Properties from Broadbeach to Southport are in demand, especially because those suburbs are now also serviced by the light rail,” he says.

The permanent rental market in places like Caloundra is tight, so properties such as this apartment could be a sound ...

The permanent rental market in places like Caloundra is tight, so properties such as this apartment could be a sound investment choice. Supplied

“People are attracted to the Gold Coast because of our weather, relaxed lifestyle and the fact that our population is forecast to double by 2050.

“If you can get the right combination of a good property, with reasonable body corporate fees, then you’re going to have someone in there paying it off for you.”

Likewise, Amber Werchon, principal of Amber Werchon Property in Mooloolaba, says holiday homes can still achieve good capital growth.

The Sunshine Coast market has recorded strong property price growth of late and the rental market is picking up, too, she says.

There is also high capital growth in suburbs like Noosa Heads.

There is also high capital growth in suburbs like Noosa Heads. Supplied

“There are two ways to make money with your holiday home – capital growth and rental returns. If you chose to holiday rent, then you have the added bonus of using it yourself, too,” she says.

“Capital growth-wise, there are a number of Sunshine Coast locations where we’ve seen the median sale price increase significantly over the past 12 months.

“Alternatively the permanent rental market is tight, as tight as 1 per cent in some locations such as Caloundra.”

She says the median house price in Minyama increased by 35.4 per cent during the past 12 months, while the median unit price in Noosa Heads grew by 39.2 per cent over the same period.

Original article published at  by Nicola Thompson 13/9/16

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Market Place

Home in blue-chip street sells for $4.1 million



Home in blue-chip street sells for $4.1 million

Home in blue-chip street sells for $4.1 million
Home in blue-chip street sells for $4.1 million
Home in blue-chip street sells for $4.1 million
Home in blue-chip street sells for $4.1 million

Home in blue-chip street sells for $4.1 million


The canal-front home at 59 Witta Circle, Noosa Heads, sold on April 30 for $4.1 million through Tom Offerman Real Estate.


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Market Place

Queensland’s population hits 5 million people today



Queensland's population hits 5 million people today
PHOTO: Is this Queensland’s 5 millionth person? Cordy Kerr-Kennedy was born yesterday in Townsville. (ABC News: Mark Jeffery)

Queensland’s population has tipped the 5 million mark today, Premier Annastacia Palaszczuk has told State Parliament.

Ms Palaszczuk said several expectant families were on standby to welcome the state’s five-millionth resident.

“Somewhere today a brand new mum and dad will be eager to meet their new arrival,” she told the house.

“The whole family will want to know: is it a boy or is it a girl? And the doctor will say, ‘congratulations, it’s a Queenslander’.”

Ms Palaszczuk said the two main drivers of the increase were migration growth, particularly from New South Wales, and from 60,000 babies being born in the past year.

Queensland's population hits 5 million people today
 The state’s five-millionth resident was born today.(ABC North Queensland: Nathalie Fernbach)

“Overseas and interstate migration is up by 50,000 people in the past year, 19,000 came from interstate … more than 12,000, or 230 a week, move from New South Wales to Queensland,” she said.

ABS data also revealed the fastest and largest-growing area in Queensland in 2016-17 was Pimpama on the Gold Coast, which grew by 3,000 people.

Large growth also occurred in Jimboomba on Brisbane’s south side and in North Lakes — a suburb north of the city — which both increased by 2,100 people.

Coomera on the Gold Coast and Springfield Lakes in Ipswich also experienced large growth up 1,400 people.

The State Government’s population counter gives a “synthetic estimate” of the number of current Queenslanders, assuming a total population increase of one person every 6 minutes and 22 seconds.

Earlier this year the Australian Bureau of Statistics (ABS) said Queensland’s population was growing at 1.7 per cent and was projected to tick over to 5 million in May.

ABS data released in March also revealed Brisbane was one of the country’s fastest-growing cities and had increased by 48,000 in 2017, hitting 2.4 million people.

 Queensland's population hits 5 million people today
PHOTO: The ABS estimated Queensland’s population was growing 1.7 per cent a year. (AAP: Dan Peled)

ABS demography director Anthony Grubb said the state’s population had “come a long way” in the last century.

“In 1901 the population was half a million; a tenth of what it is today… it took 37 years to hit the 1 million milestone in 1938 and another 36 years to reach 2 million in 1974,” he said.

But Mr Grubb said population growth “picked up the pace” after that, taking just 18 years to reach 3 million then only another 14 years to hit 4 million in 2006.

Queensland could be leading growth state in future

Population demographer Dr Elin Charles-Edwards said although Queensland is not currently the fastest growing state, it is possible it could top the leader board later down the track.

‘Not in the short-term, but Queensland is coming up off a relatively subdued growth so perhaps we might be entering an era of more rapid growth,” she said.

Dr Charles-Edwards said the challenges that generally come with increased population could be managed in Queensland.

“As long as we keep up and don’t take our eye off the ball we can continue to absorb quite high levels of growth… but really it’s keeping up with the infrastructure that’s the key challenge,” she said.

Dr Charles-Edwards said it was important to note some parts of the state, particularly in western Queensland, were experiencing population decline.

“While the south-east corner is growing and also many Indigenous communities are growing, other parts of the state are shrinking,” she said.

“Perhaps we could do more to encourage people to move outside the south-east corner.

“If we were able to work out some way to decentralise our population, growth a little bit further up into the northern regional centres, I think that would benefit the growth of south-east Queensland.”


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Market Place

APRA to end cap on property investor loan growth



APRA to end cap on property investor loan growth

APRA is removing the 10 per cent ‘speed limit’ on investor loan growth.
Photo: Louise Kennerley

The banking regulator is axing a 10 per cent speed limit on bank lending to property investors, saying the cap has served its purpose and improved credit standards.

With Sydney house prices falling and credit growth slowing, the Australian Prudential Regulation Authority on Thursday said it would remove the cap for bank boards that could prove they had been following its guidelines on prudent lending.

In late 2014, amid a surge in borrowing by property investors and rapid house price growth, APRA took the rare step of setting a 10 per cent limit on the annual growth in banks’ housing investor loan portfolios.

The measure has rocked the mortgage market in recent years, prompting banks to jack up interest rates for housing investors, and demand borrowers stump up bigger deposits.

But on Thursday, APRA chairman Wayne Byres said it was prepared to remove the measure because there had been an improvement in lending standards and a slowdown in credit growth.

“The temporary benchmark on investor loan growth has served its purpose. Lending growth has moderated, standards have been lifted and oversight has improved,” Mr Byres

Even so, the regulator will retain a separate 2017 policy that requires banks to limit their new interest-only lending to less than 30 per cent of all new home loan approvals.

APRA also said there was “more to do” in improving other aspects of banks’ lending, including how they assessed borrowers’ expenses, their existing debts, and the approval of loans that fell outside of banks’ formal lending policies.

APRA said it expected banks to introduce limits on the proportion of new lending that could be done at “very high” debt-to-income levels.

“In the current environment, APRA supervisors will continue to closely monitor any changes in lending standards,” Mr Byres said.

“The benchmark on interest-only lending will also continue to apply. APRA will consider the need for further changes to its approach as conditions evolve, in consultation with the other members of the Council of Financial Regulators.”


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