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What’s in store for the property market – by Matusik

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Ipswich Investor, Property Management, Real Estate Ipswich, Mortgage Broker Ipswich, Ipswich property market, ipswich property prices

FOR those with a vested interest in the residential market and those who are considering buying residential property, some recent figures hint at the future direction of the market.

Ipswich Investor, Property Management, Real Estate Ipswich, Mortgage Broker Ipswich, Ipswich property market, ipswich property prices

These have to do with population growth and employment and both have the potential to impact positively on the housing industry.

Australia’s permanent population jumped by 400,000 last year – that’s enough people to populate a city the size of Canberra or Newcastle.

And that, along with the population growth seen over the past several years, suggests good news ahead. More people means higher housing demand, more construction, better job prospects and more sales.

For property owners, this also means price and rental growth.

House prices, in fact, have risen over the past year with modest increases – growth in our capitals rose almost 4 per cent in 2012 and vacancy rates remain tight at under 2 per cent in most major regions.

Top winners were Darwin, up 6.1 per cent; Perth up 6.0 per cent and Sydney up 5.6 per cent. Melbourne followed, up 3.4 per cent; while Brisbane saw a humble 0.6 per cent increase and Hobart fell by -1.8 per cent.

Economic forecasters BIS Shrapnel have released encouraging figures for price growth for the next three years.

Between now and the end of fiscal 2016, BIS think that Sydney’s average values will lift by 19 per cent; Brisbane’s by 17 per cent; Perth by 15 per cent; and Melbourne by 5 per cent.

If you add to Sydney’s numbers its stock decline of -23 per cent so far this year – which brings stock levels on par with those in 2009 – it is easy to see that Sydney’s recovery is well underway.

And that is good news for southeast Queensland because, in a nutshell, “peaks head north”. And they will come, with Brisbane and then both coasts seeing a lot more inquiry from later this year.

Job growth leads to increasing demand and stronger housing markets.

The Sydney market is strong because jobs are being created there. Half of new jobs created in Australia – 160,000 total last year – are in New South Wales and most are in Sydney.

Along with employment is a corresponding measure of underemployment. Currently 911,000 workers are underemployed across Australia, which means that one in every eight employees would like to have more work.

Throughout the last consistent residential market upturn – calendar 2007-08 – underemployment was below 10 per cent.

Queensland is experiencing 14 per cent underemployment, which helps to explain why the state has paused at the start of a recovery.

Theory strongly suggests that Queensland’s residential markets should be recovering, but labour utilisation must be improving and business profitability must be rising before the housing market recovers in earnest.

Astute property investors are keeping a keen eye on the Queensland market.

 

FOR those with a vested interest in the residential market and those who are considering buying residential property, some recent figures hint at the future direction of the market.

These have to do with population growth and employment and both have the potential to impact positively on the housing industry.

Australia’s permanent population jumped by 400,000 last year – that’s enough people to populate a city the size of Canberra or Newcastle.

And that, along with the population growth seen over the past several years, suggests good news ahead. More people means higher housing demand, more construction, better job prospects and more sales.

For property owners, this also means price and rental growth.

House prices, in fact, have risen over the past year with modest increases – growth in our capitals rose almost 4 per cent in 2012 and vacancy rates remain tight at under 2 per cent in most major regions.

Top winners were Darwin, up 6.1 per cent; Perth up 6.0 per cent and Sydney up 5.6 per cent. Melbourne followed, up 3.4 per cent; while Brisbane saw a humble 0.6 per cent increase and Hobart fell by -1.8 per cent.

Economic forecasters BIS Shrapnel have released encouraging figures for price growth for the next three years.

Between now and the end of fiscal 2016, BIS think that Sydney’s average values will lift by 19 per cent; Brisbane’s by 17 per cent; Perth by 15 per cent; and Melbourne by 5 per cent.

If you add to Sydney’s numbers its stock decline of -23 per cent so far this year – which brings stock levels on par with those in 2009 – it is easy to see that Sydney’s recovery is well underway.

And that is good news for southeast Queensland because, in a nutshell, “peaks head north”. And they will come, with Brisbane and then both coasts seeing a lot more inquiry from later this year.

Job growth leads to increasing demand and stronger housing markets.

The Sydney market is strong because jobs are being created there. Half of new jobs created in Australia – 160,000 total last year – are in New South Wales and most are in Sydney.

Along with employment is a corresponding measure of underemployment. Currently 911,000 workers are underemployed across Australia, which means that one in every eight employees would like to have more work.

Throughout the last consistent residential market upturn – calendar 2007-08 – underemployment was below 10 per cent.

Queensland is experiencing 14 per cent underemployment, which helps to explain why the state has paused at the start of a recovery.

Theory strongly suggests that Queensland’s residential markets should be recovering, but labour utilisation must be improving and business profitability must be rising before the housing market recovers in earnest.

Astute property investors are keeping a keen eye on the Queensland market.

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Opinion

How good an investment is south-east Queensland

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How good an investment is south-east Queensland

Why do we believe we’ll see increasing investor interest in this market? Strong population growth, a diversified and growing economy, and substantial investment in infrastructure should combine to boost demand.

We expect that these factors will swell the number of white-collar jobs – increasing demand for office space, which in turn will push down vacancy rates and raise rental incomes. This should be good news for office property investors – especially those like Centuria Metropolitan REIT (CMA) that are already well-positioned in the market.

A significant and growing population

South East Queensland (SEQ) stretches from the Gold Coast up to the Sunshine Coast and across to Toowoomba in the west. As Australia’s third-largest population zone, the region has been growing significantly, particularly Brisbane and the Gold Coast. Interstate migration figures show a pattern of steady net migration, with Queensland the only Australian state with consistent net inflows of people from other states. In the five years prior to the 2016 Census, over 220,000 people moved to the Sunshine State – mainly to SEQ where nearly 90% of population growth occurred. This is important for property investors because of its implications for demand, but the trend is interconnected with other favourable factors.

A diversified economy poised for growth

Queensland’s economy is diversified across a range of industries including agriculture, resources, construction, tourism, manufacturing, and services. Over the past two decades, its economic growth has consistently exceeded the national average – and in our view this is likely to continue.

The resources sector is gaining momentum, and a significant pipeline of major infrastructure and development projects is helping propel economic and jobs growth, in turn increasing interstate migration and driving demand for both residential and commercial property.

Investment in infrastructure

A strong infrastructure program delivers more than business and consumer amenity – it generates jobs, drives investment, and facilitates population growth. The pipeline of infrastructure and development projects announced in the past few years is likely to have a material impact on the region – substantially improving its accessibility and amenity – most notably, Brisbane’s Queen’s Wharf precinct and the Cross River Rail.

Queen’s Wharf, touted as a “world-class entertainment precinct”, is an integrated resort development costing $3.6 billion and covering over 26 hectares with retail, dining, hotel and entertainment spaces. As Queensland’s biggest ever tourism project it will be a game-changer for Brisbane, attracting overseas as well as local visitors.  Estimated to contribute $1.69 billion annually to the economy, it will employ more than 2,000 people during construction and an estimated 10,000 once operational.

The Queensland Government’s number one infrastructure project, the $5.4 billion Cross River Rail, comprises a new 10.2km rail line between Dutton Park and Bowen Hills, which includes a 5.9km tunnel under the Brisbane River and CBD. It’s the first major rail infrastructure investment in the inner city since 1986 and is set to generate urban renewal, economic development and the revitalisation of inner-city precincts.

Outlook for commercial office property investment

These factors indicate a region poised for growth – and for growing commercial property demand. CMA’s portfolio has a significant exposure to the area in general (six SEQ assets with a combined book value of over $480 million), with many of the individual assets located in those parts of Brisbane set to benefit most from these developments.

Our view is that Brisbane office markets, where five of CMA’s assets sit, are continuing to improve, with vacancies hitting a five-year low – indicating increasing tenant demand – and continued yield compression, demonstrating strong investment demand. Office sales hit the highest level in a decade during 2018 (at $2.35 billion), increasing 60% from 2017.

With the strong outlook for SEQ, we expect the region will continue to attract tenants and investors alike.

Source: brisbaneinvestor.com.au

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Opinion

Queensland’s 100,000-property public housing shortfall revealed

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Queensland's 100,000-property public housing shortfall revealed

Queensland has a severe shortage of social and affordable housing, an issue that is projected to get worse by 2036 according to new research.

More than 102,000 additional social houses are currently needed across the state, and 54,700 affordable houses are also needed with nearly 13 per cent of Queenslanders spending more than 30 per cent of their income on rent.

By 2036, Queensland is projected to need 254,300 more social and affordable houses – the second-highest unmet need behind NSW, the report found.

The new figures come from a UNSW City Futures Research Centre report on social housing shortfall across Australia.

Regional social housing shortfalls are higher than in Brisbane, the data shows, but Brisbane residents are slightly more likely to be spending more of their income on rent.

Housing Minister Mick de Brenni said housing affordability was a “big issue” for Queensland.

“Through the Palaszczuk government’s $1.8 billion Queensland Housing Strategy, Labor is driving key reforms and targeted investment across the housing continuum,” he said.

“The Strategy commits us to build more than 1000 affordable homes for Queenslanders, as well as a further 4522 new social homes to help ensure everyone has a safe, secure and stable place to live.”

Lead researcher Laurence Troy said 22.5 per cent of Australia’s entire housing growth must go to social housing to meet demand into the future.

“Our analysis shows that the sheer number of households in rental stress across the country means that if we’re going to meet the need, at least 12 per cent of all our housing by 2036 will need to be social and affordable housing – which is a very reasonable ambition in global terms,” Mr Troy said.

“To cover the backlog of unmet need and future need in Australia two in 10 new homes will need to be for social housing over the next 20 years, and a further one in ten for below-market affordable rental housing.”

Mr Troy said the research’s financial modelling found the “best and cheapest way” for governments to meet the need for social housing was to fund it through upfront grants and low-interest government financing.

“Delivering below market rental housing through the not-for-profit sector, as opposed to the private equity model, will save $3 billion a year by removing developer mark-ups and shareholder returns,” he said.

The financial modelling was commissioned by the NSW community housing sector.

Mr de Brenni said the state government was “listening” through its recent public consultation on rental reform and was committed to investing in affordable housing in partnership with community housing, to provide more subsidied homes for low income earners.

“We heard Queenslanders are struggling to afford rental properties in the suburbs close to where they work,” he said.

“Through our Build-to-Rent pilot project, we are seeking to work with the private sector to increase the number of long-term, affordable rental properties for low to moderate income earners, including key workers in health, early childhood and hospitality.

“Internationally, the Build-to-Rent model is delivering fantastic outcomes and facilities for tenants and we’re looking to see what the market is open to delivering here.

“The pilot, if it proceeds, will see $70 million invested towards delivery of hundreds of affordable rental properties for key workers in inner-city areas where affordability has been identified.”

Mr de Brenni said the registrations of interest for that pilot had seen strong market interest, and the department was considering the responses before calling for expressions of interest.

Source: brisbaneinvestor.com.au

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Opinion

Treasury: Negative Gearing Reforms Will Have ‘Little to No Effect’ on House Prices

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Treasury Negative Gearing Reforms Will Have ‘Little to No Effect’ House Prices

Federal Treasury has delivered a serious rebuke to the Coalition for exaggerating the impact of Labor’s negative gearing and capital gains changes.

In emails released under freedom of information, acting treasurer Kelly O’Dwyer requested the department fact check the Coalition’s claims that Labor’s policies would cause house prices to fall.

In response, Treasury issued a correction: “The [s]tatement is not consistent with our advice.”

“We did not say that the proposed policies ‘will’ reduce house prices,” the email reads.

“We said that they ‘could’ put downward pressure on house prices in the short-term depending on what else was going on in the market at the time.

“But in the long-term they were unlikely to have much impact.”

Labor has jumped on the release, with shadow treasurer Chris Bowen saying that the government had been “caught red-handed” misrepresenting Treasury’s advice.

For his part, treasurer Josh Frydenberg denied that the government was misrepresenting Treasury, pointing to the Financial Review’s take on the release that changes “could” put downward pressure on house prices in the short term.

Frydenberg quoted building industry group the Masters Builders Association figures.

“If Labor’s policy is in place you’ll see 32,000 fewer jobs and 42,000 fewer homes being built.”

Treasury Negative Gearing Reforms Will Have ‘Little to No Effect’ on House Prices

House prices hit spending

It has been a difficult week in economic policy, with GDP figures released on Wednesday revealing that the economy has slowed significantly, entering a “per capita recession” for the first time in 13 years.

Retail trade figures for the March quarter were also sluggish, with falling house prices impacting wealth and spending.

RBA governor Philip Lowe highlighted the link between the two at the AFR annual business summit on Wednesday.

“The evidence is that a tightening in credit supply has contributed to the slowdown in credit growth,” Lowe said.

“The main story, though, is one of reduced demand for credit, rather than reduced supply.

“When housing prices are falling, investors are less likely to enter the market and to borrow. So too are owner-occupiers for a while.”

Source: brisbaneinvestor.com.au

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