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The dire warning to those over 35 on home ownership

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IF YOU aren’t on the property ladder by 35 then you could be paying off your mortage with your superannuation, a property expert has warned.
The stark statement comes as figures show the wealth gap between generations is widening with home ownership among young Australians falling to the lowest level on record.

Startling Grattan Institute statistics show wealthy people aged 55-64 are the only group which has seen its home ownership rates increase over 30 years.

The biggest falls in ownership have been suffered by the young people aged 25-34, who saw their home ownership rate drop by more than 30 per cent from 1981 until 2011. Only 45 per cent of them own their own homes.

This is down 16 per cent from the 1980s, with almost half the decline coming in the past decade.

Only the richest Australians aged 55-64 have seen their home ownership levels increase. Picture: Grattan Institute.Source:Supplied

Only the richest Australians aged 55-64 have seen their home ownership levels increase. Picture: Grattan Institute.Source:Supplied

And, if the government doesn’t do something to help younger people own homes, there will be “stark differences” between the “haves and have-nots” in the near future, warns a leading housing policy expert.

The alarming findings come after Sydney held its title as the second-costliest housing market in the world, in this year’s Demographia International Housing Affordability Survey.

Research by Finder.com.au shows that even Sydney’s ‘bargain’ suburbs that were $500,000 or cheaper in 2012 have nearly doubled in value in the past five years.

While Melbourne, ranked the world’s most liveable city the past seven years by the Economist Intelligence Unit, is now the planet’s sixth-most expensive place to buy a house.

Brendan Coates, a housing policy expert at the Grattan Institute, said the issue of young people being locked out of the property ladder is one which will take at least two decades to fix.

“Reforming negative gearing and capital gains tax, which have added fuel to the fire, would be a good start but it would only lower prices by about two per cent.

“It’s not about how many homes we build this year or next year. We would need to see at least a decade of sustained home building to make a big difference.

“If Australians are not on the property ladder by the time they are 35, then it is unlikely that they will own their home outright,” he said.

“This means that more and more people will start to use their superannuation to pay off their debts. This is worrying because, over time, the differences between the haves and have-nots will be stark.”

He added soaring property prices are a major factor behind the rapidly growing wealth of older Australians.

‘More money going on servicing a mortgage means there is less to spend elsewhere, dragging on economic growth,’ says economist Paul Dales. Picture: Grattan Institute

‘More money going on servicing a mortgage means there is less to spend elsewhere, dragging on economic growth,’ says economist Paul Dales. Picture: Grattan Institute

“Households headed by 65-74-year-olds were on average $500,000 wealthier in 2015-16 than households in the same age group 12 years ago,” he added.

According to the ABS, house prices grew by 37 per cent on average across all the capital cities between 2003-04 and 2015-16 and by more than 50 per cent in Melbourne alone.

However, Paul Dales, chief Australian economist at Capital Economics said the age gap in home ownership is not all bad news for the Aussie economy.

“There are a lot of social issues which come out of young people not being able to afford their own homes, but for the economy – there’s not one clear answer to say whether it’s good or bad.

“One one hand, young people are spending so much of their income on mortgage repayments or on rent that they have far less money on other things.

“More money going on servicing a mortgage means there is less to spend elsewhere, dragging on economic growth.
“But, there are some offsets to this. The older homeowners have seen their family homes have soared in value and, as a result, they have more wealth to spend on other things.

“We also see a lot of young people living with their parents so they can save for a deposit for a home, and they are put off by renting because it is so expensive.

“This means their income is not being swallowed up by rent, so this can also have a positive effect on the economy.”

Some of the falls in home ownership are also partly the result of social changes Australians are waiting until later in
life before starting work, forming long-term partnerships, and having children, Mr Coates said.

“But most Australians still want to own a home, so it is reasonable to conclude that higher property prices are the biggest cause of lower ownership rates,” he said.

A Grattan spokesman said the only way young people can afford to buy a house is with help from “the bank of mum and dad”.

“Inheritances tend to transmit wealth to children who are already well-off, and home ownership is more likely among those who receive an inheritance, and more likely still among those who receive larger inheritances,” he said.

“Australia is becoming wealthier, but much of the increase is concentrated in the hands of older generations. The trend is unmistakeable: unless something changes, the young will fall further behind and inequality will get worse.”

Originally Published: brisbaneinvestor.com.au

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Opinion

Queensland is the next property hotspot, experts say

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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.

Source: brisbaneinvestor.com.au

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Opinion

Gold Coast house values record the biggest growth in Queensland

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Gold Coast house values record the biggest growth in Queensland

The Gold Coast has recorded the strongest growth in house prices in Queensland over the past 12 months.

GOLD Coast house prices are leading the way in Queensland, up six per cent in the past 12 months to an average $620,000.

The latest figures by the Real Estate Institute of Queensland show homes on the Glitter Strip are $35,000 more on the same time last year.

Unit prices are up 1.9 per cent to $428,000.

Gold Coast house values record the biggest growth in Queensland
REIQ data reveals houses on the Glitter Strip are worth $35,000 on the same time last year.

REIQ’s Queensland Market Monitor for March said the strong population growth came on the back of infrastructure projects such as the $550 million Gold Coast Health and Knowledge Precinct and M1 upgrades.

“The property market has been one of the big winners from the sporting event as the $1.5 billion infrastructure investment has boosted confidence and demand for housing in the region,” the report stated.

“We expect house prices will show an upward path in 2018. However, this growth will most likely be more moderate.”

A quiet real estate period leading up to, and during, the Commonwealth Games likely contributed to a slight drop (-0.3 per cent) in the March quarterly median sales price, the report reveals.

Gold Coast house values record the biggest growth in Queensland
Andrew Henderson says a growing population and employment opportunities were contributing to a strong property market. Picture: Jerad Williams

REIQ Gold Coast zone chairman Andrew Henderson said he expected interstate migration to continue to benefit the city.

“I expect the market to remain strong,” he said.

“There is a heavy amount of interstate buyers moving here.

“I was at an auction recently where the winning bidder was from Sydney and the underbidder was from Melbourne.”

Mr Henderson said growing employment opportunities were also attracting homebuyers to the city.

Gold Coast house values record the biggest growth in Queensland
The Gold Coast property market is expected to remain strong.

“We have some of the best health facilities in the country and our universities are world recognised.

“Those two things alone complement the tourism industry and the lifestyle aspects that the Coast offers.”

The report found the fastest-selling suburbs on the Coast included Worongary, Merrimac, Highland Park, Mudgeeraba and Carrara.

It also revealed the rental vacancy held tight throughout the first quarter of the year at 1.1 per cent.

Gold Coast house values record the biggest growth in Queensland
Andrew Bell says the Coast had evolved from a tourist town into a vibrant city with an expanding economy. Picture Mike Batterham

Ray White Surfers Paradise Group CEO Andrew Bell said the Games heralded the next chapter for the Coast, as it evolved from a tourist town into a vibrant city with an expanding economy.

“The city’s property market is riding the irreversible momentum that has now come to the Gold Coast in terms of economic diversity and with more employment options we will need more housing options for people,” Mr Bell said.

“We are no longer going to be subject to tourism upsides and downsides as we were in the past because our economy has well and truly diversified beyond just tourism.”

Source: brisbaneinvestor.com.au

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Opinion

Australia’s golden triangle of opportunity

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Australia's golden triangle of opportunity

It was great to be back on the Gold Coast for the 21st annual Australasian Real Estate Conference (AREC), attended by over 4,000 of Australia’s best industry professionals.  While I was there I was once again reminded of how much potential the South-East Queensland property market is offering both sea changers and investors at this stage in its market cycle.

In my view, Brisbane is the best market in Australia currently for short to medium term price growth, with the value gap between it and the other big East Coast capitals as large as I’ve seen it in many years.

When you factor in the key drivers for future growth – liveability, affordability, scale and future economic prospects, they all suggest that Brisbane is a market to invest in.  Check out the latest statistics from CoreLogic below.

Value gap – median house prices 

Brisbane $536,286

Melbourne $821,006

Sydney $1,019,093

Value gap – median apartment prices

Brisbane $385,121

Melbourne $573,673

Sydney $749,765

I’ve been bullish on Brisbane for many years and in hindsight, I called its next growth phase a couple of years too early. It’s had some growth in recent years but there is a lot more to come over the next few years.

According to McGrath’s top prestige agent in Brisbane, Alex Jordan, one of the dominant trends today is downsizers buying up luxury apartments.

Alex says: “Despite the reported oversupply in Brisbane’s inner city apartment market, we are seeing great strength in the prestige apartment sector.

“The luxury apartment market ($1M+) is driven by owner occupiers, particularly baby boomers and empty nesters, who are attracted to less maintenance and better accessibility.

“Popular suburbs include New Farm, Newstead, Teneriffe, Kangaroo Point, South Brisbane, St Lucia, Paddington and the Brisbane CBD. These areas offer a desirable lifestyle with an abundance of shopping, dining and entertaining precincts at their doorstep.”

South East Queensland has so many options for asset-rich, cash-poor southerners. Many of our customers in Sydney and Melbourne are looking closely at South East Queensland both for investment and a potential sea change. I believe its affordability will continue to attract record levels of interstate migration.

If you live in Sydney or Melbourne and you’re struggling with the mortgage and cost of living, Brisbane is a fantastic alternative. It offers big city job opportunities, high quality education options and the chance to transform your financial future.

The boom delivered Sydney and Melbourne home owners a capital gain of up to 75% – that’s enormous new equity that could be cashed in to fund an amazing new lifestyle with far less mortgage stress up north. Plus, you’d be buying in just before Brisbane’s next wave of price growth. It’s the perfect scenario.

I believe the area from the Gold Coast to Toowoomba and up to the Sunshine Coast is Australia’s golden triangle right now.

Toowoomba, with its expanded airport facilities which have opened up easy access to the south, is the perfect and affordable treechange destination. Known as Queensland’s Garden City, about 2,300 people moved here from Brisbane last year for its cheaper house prices and enjoyable regional city lifestyle.

Both the Gold Coast and Sunshine Coast are also appealing sea change options benefitting from a raft of new infrastructure that will drive further population growth and generate more local jobs.

Brisbane is one of the world’s great cities but I don’t think this is fully realised as yet. If you haven’t been to Brisbane for a number of years, get on a plane. This is a thriving city that offers many of the lifestyle amenities you love about the southern capitals but at a much cheaper price.

I think Brisbane will also become very attractive to migration and investment from Asia in the years ahead.

South East Queensland is offering opportunity everywhere for both owner occupiers and investors alike. Now’s the time to consider what Australia’s premier lifestyle market can do for you!

Source: brisbaneinvestor.com.au

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