INVESTORS in search of properties that will deliver high capital growth in the years ahead may find southeast Queensland and certain fringe suburbs of Melbourne safe bets.
These regions accounted for the bulk of high growth property markets in Hotspotting.com.au’s latest Top 10 Best Buys report, which forecasts the 10 best locations for property investors seeking capital growth.
Queensland locations in the report included the Gold Coast, Ipswich and Logan, while the Melbourne regions included the City of Casey and Epping.
Just one NSW location was nominated: Wagga Wagga.
No property markets in South Australia or Western Australia made the cut, but Tasmania had a surprising addition in Hobart.
The report said these locations have “identifiable drivers of demand for real estate, which will place pressure on prices and rents … we expect them to show growth not only in 2016 but well beyond.”
GOLD COAST, QLD
Billions is being spent on infrastructure across the Gold Coast in the lead up to the Commonwealth Games in April 2018, which is expected to bring around 690,000 visitors to the city.
Ongoing projects include the $150 million development of the light rail network and a $42 million aquatic centre.
These and other developments have helped create 15,000 jobs over the past year, adding to the city’s already strong population growth. The Gold Coast’s population is projected to grow by 133,800 people in the decade — the largest population growth in Queensland.
“There will be (property) price growth, especially in the genuine residential suburbs,” the Hotspotting report said. Much of this growth is expected to occur in suburbs along the northern corridor between Helensvale and Brisbane.
Logan City’s combination of affordable property prices, good infrastructure and proximity to job hubs could boost home values.
Many of the region’s older suburbs have been revitalised through urban renewal projects and Logan is already one of the fastest growing municipalities in Australia.
It is being expanded through a $4 billion masterplanned housing community on Waterford Tamborine Road, which will result in 17,000 new dwellings.
There is also a $600 million project to redevelop Jeta Gardens Retirement Village, approved by local council in 2014. The village currently injects $10 million into the local economy annually, but this is set to rise to $100 million.
Tasmania’s economy is rising on the back of big improvements in tourism and business investment after years of lacklustre economic activity.
The property market has started to respond, with sales activity steadily improving since 2012.
Hotspotting pointed out that Hobart presents an attractive package to investors, with high rental returns and prices considerably more affordable than on the mainland.
The city’s most popular suburbs, which include Claremont, Glenorchy, Howrah, Kingston and Moonah, have median prices under $400,000.
The Epping region, on the northern fringe of Melbourne, is due a number of improvements which are likely to bring new people to the suburb and boost property prices, Hotspotting said.
These include the upgrade of the Western Ring Road, further expansion of commuter train services in the region and the relocation of Melbourne’s fruit and vegetable markets to Epping. There is also a new business park in development at Mickleham, which will create 20,000 jobs.
CITY OF CASEY, VIC
The property market in the City of Casey, in Melbourne’s southeast, has been growing, with many suburbs attracting rising sales activity.
The area’s rising population demands new housing estates and the State Government’s long-term planning document — Plan Melbourne — has identified several suburbs in the Local Government Area to play a major role in service delivery and creating employment.
An upturn in commercial development activity began in 2015 with five major projects creating 3,730 new jobs. The planned Berwick Health, Innovation and Education Precinct is expected to provide an additional 9,000 new jobs.
THE REST OF THE TOP 10:
Moreton Bay, Qld: The region offers affordable housing as well as good rail and road links to Brisbane and the Sunshine Coast, making it a strategically placed property market.
Sunshine Coast, Qld: Billions of dollars in service upgrades, including the development of a $5 billion medical hub, are driving an influx of new jobs to the area, in the process, boosting demand for housing.
Sunshine precinct, Vic: Sunshine and surrounds are destined to become a major regional hub within the Melbourne metropolitan area. Extensive investment in infrastructure and amenities will drive demand for property and pull up prices.
Wagga Wagga, NSW: The high number of first-home buyers taking advantage of affordable properties in the area bodes well for Wagga Wagga’s capital growth prospects, the Hotspotting report said. Army and air force bases are expanding in the area, while education, health and other community services are being upgraded.
Ipswich, Qld: A report by the Department of Infrastructure and Transport forecast 56,000 jobs will be created in Ipswich’s central suburbs by 2026. The jobs growth, coupled with affordable prices, will fuel demand for housing, Hotspotting said.
Originally Published On: http://www.heraldsun.com.au/
Experts warn of ‘debt bomb’ as housing downturn worsens
That’s according to the sobering 60 Minutes segment Bricks and Slaughter which aired last night, revealing the country’s property downturn was just the tip of the iceberg.
According to reporter Tom Steinfort, the current slump is actually “more like falling off a cliff”, with a number of real estate and finance experts claiming houses could plummet in value by up to 40 per cent in the next 12 months.
If that happens, it would also cause an economic “catastrophe”.
Mr Steinfort spoke with data scientist Martin North from Digital Finance Analytics, who said Australia was uniquely vulnerable when it came to an economic crash tied to a property downturn.
“At the worst end of the spectrum, if everything turns against us we could see property prices 40-45 per cent down from their peaks, which is a huge deal,” he said.
“That’s higher than any other country in the Western world by a long way.
“There’s probably no country in the world more susceptible to the ramifications of a housing crash than Australia. We are uniquely exposed at the moment.”
Mr North said Australia was now in the same position as the US was back in 2006 and 2007 — a position which triggered an economic collapse.
“As a society, and as a government, and as a regulatory system, we’re all banking on the home price engine that just goes on giving and giving and giving. It’s not going to,” he said.
“We’ve got a debt bomb, we’ve got a debt crisis and at some point it’s going to explode in our face.”
He said foreclosures had also risen by 600 per cent in the region.
“The mortgage stress is definitely being felt especially in this area,” he said.
60 Minutes also spoke with several Aussie homeowners who gave harrowing details of the stress they faced trying to pay off their mortgages, including having their power turned off and being “hounded’ by their banks.
What does a million dollars buy in Aussie capital cities?
Market analyst Louis Christopher of SQM Research said the market had been “clearly overvalued”, labelling the downturn as the “correction we had to have” — at least in Sydney and Melbourne.
“On our numbers, Sydney was effectively over 40 per cent overvalued. And Melbourne was overvalued by about the same amount,” he said.
But property investor Bushy Martin said the blame lay squarely at the feet of buyers who “mortgaged themselves up to their eyeballs” in a bid to snap up dream homes before being able to afford them.
However, the segment has also sparked backlash online, with some claiming the situation had been exaggerated.
One Reddit user branded the report as an example of “alarmist journalism and scare tactics”, while another said it was “dramatic and cringe-worthy”.
Others also criticised the segment for making it seem like all homeowners would be affected, when the downturn was actually mainly focused in the NSW and Victorian capitals.
And some said it was unfair to blame the banks for the situation, and that homeowners needed to take responsibility for their own decisions.
That was in response to comments made by one homeowner on the program, who said the bank had “suddenly switched the mortgage to interest and principal”, raising his repayments by 57 per cent.
“The interest only part annoyed me the most. The bank didn’t ‘suddenly change’ your repayment from (interest only) to (Principal and interest) your IO term expired. You a) knew this would happen and b) assumed the bank would renew it when it expired. I hope this speculator gets burnt first,” one Reddit user said.
Related article: Experts warn of ‘debt bomb’ as housing downturn worsens
Australia’s best place to invest is here in Queensland
EXPERTS are hailing Queensland’s Sunshine Coast as the hottest place in the nation to invest in property right now.
A lack of housing, a tight rental market and a rapidly growing population mean supply is failing to keep up with demand in the region – creating perfect conditions for investors.
Leading real estate industry figure John McGrath said the Sunshine Coast presented one of the best opportunities for capital growth because of its liveability, affordability and future economic prospects.
“From an investment point of view, where in Australia right now can you invest your dollar and get better returns than the Sunshine Coast or southeast Queensland?” Mr McGrath said.
” I don’t think there is a location that’s going to offer better investment growth in the future.”
His views are echoed by prestige property agent Tom Offermann of Tom Offermann Real Estate, who claims the Sunshine Coast “is on the cusp of the highest growth period in its history”.
“This is being driven by a raft of infrastructure projects that are delivering exceptional lifestyles, which in the past required some compromises for people coming from big cities,” Mr Offermann said.
The region is in the midst of an infrastructure boom, with billions of dollars being invested in upgrading and creating new facilities.
Work is underway on a new runway at the local airport, which is set to become international by 2020, and a new hospital and health precinct has recently been established.
“These are game changers,” Mr Offermann said.
“Astute property investors who recognise what is happening, and take action to secure the best located property they can afford, will reap the rewards of their foresight.”
Local agents say the region is crying out for more investment properties to cater to the needs of the increasing population.
According to demographer Bernard Salt, the Sunshine Coast’s population of around 298,000 residents is set to rise to 550,000 in 23 years, which will require more than 100,000 new homes to be built.
The latest Real Estate Institute of Queensland figures show the rental vacancy rate on the Sunshine Coast is just 1 per cent, with Caloundra having the tightest vacancy rate in the state at just 0.5 per cent.
It’s good news for investors, who are currently achieving healthy rental returns of around 5 per cent.
In its recent report, Herron Todd White noted an increase in investor activity in the Sunshine Coast market, with the sub $350,000 unit and townhouse sector particularly popular.
“It’s not uncommon to see townhouses selling for $220,000 attracting a rental of $280 per week – over 6.5 per cent gross return,” the report said.
For investors looking to capitalise on the growth in the region, McGrath Real Estate founder John McGrath said now was the time to get into the market.
“I think there is a great opportunity, in particular right now, because we’ve seen Sydney and Melbourne have shown unprecedented growth over the last five or six years,” he said.
“Now those markets have come to a plateau and a lot of people are going to be saying; ‘Do we take our profits and reinvest them, or, in fact, do we move up north and get better value for money?’
“So, I think right now there’s a terrific window of opportunity where people can capitalise on the immense growth we’ve seen in the southern states.”
Reed & Co director Adrian Reed the increased international access the new airport would provide would likely change the profile of buyers in the Noosa region.
“We’re currently seeing an increase in Australian expats buying back into the market, but if accessibility becomes easier, we’re expecting a more aggressive upward trend in high-end premium property,” Mr Reed said.
He said that lending restrictions and the impact of the banking royal commission had had little impact on the region’s prestige market.
“The vast majority of deals I’m doing at the top end of the market are cash,” he said.
“They’re self funded retirees who’ve already sold their principal place of residence.”
Owner/builder Paul Saunderson, who is selling his home in Noosa Heads through Peter TeWhata of Tom Offermann Real Estate, said the local market was “out of control at the moment”.
“There are houses getting knocked down and new dwellings being built everywhere,” Mr Saunderson said.
He said the contemporary, four-bedroom, three-bathroom property at 20 Sanctuary Ave, Noosa Heads, which he lived in with his wife and two children, was attracting strong interest from interstate and overseas investors.
“It’s a good investment opportunity because it’s been valued as holiday letting, which is anywhere from $6000 to $10,000 a week during peak season,” Mr Saunderson said.
Jamie Smith of Century 21 On Duporth in Maroochydore said he’d never seen so much activity in the Sunshine Coast property market, with strong interest from both local and interstate investors.
Mr Smith said many investors were looking to buy in the less expensive suburbs, where new housing developments were popping up, such as Caloundra, Sippy Downs, Birtinya and Mountain Creek.
“It’s definitely unprecedented in terms of what we’re seeing on the Coast,” he said.
But Mr Smith said investors who were not already in the market needed to act fast.
“If you were here three years ago, you could have bought between $400,000 and $500,000,” he said.
“Now you’re looking at anywhere from $600,000 plus, so it’s definitely changed a little bit.”
SUNSHINE COAST SUBURBS FOR BEST CAPITAL GROWTH
Suburb Property type Median price 12 month change in price
Minyama House $1.31m 45.8%
Kenilworth House $399,000 40%
Yandina Creek House $820,000 32.3%
Beerwah Unit $375,000 25%
Mount Coolum House $676,200 23.2%
Mapleton House $543,250 21.3%
Mudjimba House $739,500 20.7%
Peregian Springs Unit $475,200 18.8%
Battery Hill House $579,500 18.4%
Montville House $707,500 17.9%
Queensland is the next property hotspot, experts say
As New South Wales and Victoria continue to experience weakness. Queensland is expected to take the lead, a National Australia Bank (NAB) poll of property professionals revealed.
According to the survey, industry experts project house prices in Queensland to increase by 0.7% next year and 1.3% in two years.
Some areas seen to perform strongly over the next year include Brisbane, Cairns, the Gold Coast, and the Sunshine Coast. Out of the suburbs, Coomera and New Farm are expected to realize robust gains.
Meanwhile, Queensland’s rental market is also poised to enjoy an upward boost, growing by 1.3% next year and 1.9% in two years. This is despite the stricter rules on housing investment.
The respondents of the survey also expect Queensland to retain foreign buyer interest. In fact, the share of foreign sales hit a four-year high of 22.8% over the previous quarter.
The results of the survey go against NAB’s own projection of the market. For instance, the bank expects house prices to remain flat in Brisbane over the next three years. Unit prices, on the other hand, is seen to fall by 4.5% over the next year.
NAB chief economist Alan Oster said Brisbane’s housing market seemed to be going sideways and its unit market still creates concern.
“It hasn’t peaked yet, so that’s good. We’re seeing quite strong economic activity in Queensland, so that always helps,” Oster said, as quoted by The Courier-Mail.
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