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What’s in store for the property market for the 2016/2017 financial year?

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What’s driving the market at the moment?

At this stage there are several factors affecting each of the big three east coast markets currently.

Melbourne: Melbourne is in a bit of a fluctuating period from the data we see. There is a large amount of supply both in approval and construction phases all the way from Docklands to Werribee. The next three to five years are going to be very suburb specific for growth. Pure Property Investment (PPI) is still looking for established property under the $400,000 market in the north and south-west within 25 kilometres of the city.

Sydney: Similar story, still a large undersupply issue in certain pockets of the greater metropolitan areas and the demand looks set to continue into the next decade. Affordability and wage growth are the major limiting factors we see in general. We do see some value in the established pockets of the middle ring (20 kilometres from the city), however cash flow is not attractive at this stage. We see more value coming to hand in the next three to five years.

Brisbane: Our data suggests that Brisbane will continue to show a nice period of sustained growth into 2020. Its limiting factor in the past has been state government commitment to large-scale infrastructure projects, however, we are starting to see some stronger and more stable jobs figures and in the pockets of Ipswich, Lower Logan/Beenleigh and Moreton Bay. We see (and have seen for the past 24 months) some excellent opportunities to pick up properties around the $300,000 mark in areas which are seeing large scale gentrification and great yields.

Hobart: The east coast’s sleepy cousin is stirring a little and there are some good signs in the short-to-medium term for jobs growth. With the rise of the tourism dollar (specifically China) there is a very tight vacancy rate and demand is building. I see a good couple of years with good cash flow opportunities up to the year 2020.

Adelaide: PPI are a bit bearish in the next two to three years, with some of the large scale manufacturing plants closing over the short term. The announcement of the $50 billion submarine project will provide a great boost with an additional 3,000 or so high paying jobs flowing from this. However this project has a 15-year horizon and as such we don’t see the benefits coming in until around 2019 to 2022.

Perth: Well, it’s a bit of a tale of ‘if you can’t say anything nice, don’t say anything at all’. Perth has some very depressed markets which are getting more depressed by the day. The only saving grace for Perth property investors at this stage are the historically low interest rates. They are not showing any real sign of transitioning their economy from iron ore and gas to mainstream economic drivers. If the state federal government can’t drive jobs growth in the next one to two years before the interests rates start to rise, I do see a blood bath in the short term as investors will not be able to hold their investments once interest rates start to rise. However, the savvy investor will most certainly keep a distinct eye on this market and if we see a turnaround in the days on market, jobs growth and buyer sentiment there will be some distinct bargains to be had.

Darwin: Similar to Perth, we see some distinct challenges in jobs growth and economic diversification. If the new gas project gets off the ground we may see some prolonged price stability, however PPI are bearish on Darwin at this stage.

Canberra: The little engine that could, Canberra continues to deliver investors a solid and stable return. With the Q4 2015/2016 data showing Canberra has delivered the country’s best growth (at over 3 per cent) for the quarter, a stable government and jobs market will continue to provide a safe return for investors. Cash flow is a little slim and entry point is a bit higher (around the $450,000 to $550,000 mark).

So what’s the cash flow situation in general for each state?

Melbourne: Supply on the market and coming to the market is looking very high, and we believe this is going to depress yields for the next three to five years.

Sydney: The more tightly held (non-developable) areas have seen a slightly higher yield albeit a small bump. Sydney is expensive and that is still keeping many Generation Y’s in the rental market as they can’t afford to enter the home buyers/investor market. However the data suggests yields are around the 3 to 4 per cent depending on the area and we don’t see that changing. Creative investors are always looking to add cash flow (granny flats, share accommodation, developing blocks, etc).

Brisbane: One of the better cash flow markets across the country with strong yields and good demand. Stick to the growing areas of Ipswich, Beenleigh/Logan, Moreton Bay where we are buying 6 per cent plus yielding (sub 15-year-old) properties in growth areas. Be sure to understand the vacancy rates and unemployment situations however as they can prove to be very important in these markets.

Hobart: Very tight supply (sub 2 per cent) which is providing great return for cash flow investors. Stick to the middle/outer suburbs (10 to 25 kilometres from city). We are picking up properties which are providing 7 to 8 per cent yields regularly.

Adelaide: Stick to the middle/inner rings. Cash-flow is okay in Adelaide at the moment, and we see that continuing into the next two to three years. Though 5 per cent gross yields are readily achievable, I would steer clear of the outer rings until we see the true fallout of the manufacturing sector.

Perth and Darwin: Cash-flow is okay, but the big caveat is the demand factor. On paper, the properties are achieving 5 per cent gross but the vacancy rates are increasing by the day and this will be a big issue in the long run.

Canberra: With low vacancy rates within the 15 kilometre ring of our capital we see an even keel return of around the 4 to 4.5 per cent gross mark. This is not lighting anyone’s socks on fire, however it’s pretty consistent and looks to remain that way.

So which regions have the most potential for capital growth under $450,000? Which regions have limited potential?

Brisbane: Still our number one pick at the moment, specifically out towards Ipswich, Lower Logan suburbs and Moreton Bay. Price point is still extremely affordable, yields are excellent and demand/jobs creation is building.

Perth and Darwin: In the short term we don’t see any data that is going to help its situation. Perth has seen a doubling of the properties on the market between 2014 and 2016 and they have a long way to go to show signs of growth. It is relatively cheap buying in Perth at the moment but you need to pick the start of the next growth cycle and not just the bottom to ensure you are achieving capital growth.

So that’s our around the grounds for financial year 2016/2017. As you can see, its most certainly not a ‘one market’ approach and where you invest will most certainly dictate your returns in the lucky county.

Original article published at www.smartpropertyinvestment.com.au by Paul Glossop

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Real estate market in southeast Queensland has made a comeback since the GFC

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While the property market has come back on the Sunshine Coast, there are still some bargains to be had. Picture: Lachie MillardSource:News Corp Australia

LAST week with the family in tow, we ventured up the Bruce Highway to the Sunshine Coast.

I was calling auctions at Maroochydore for a number of offices on the coast, so we decided to mix business and pleasure and make a holiday out of it.

It was no small auction event either. The offices had amassed 66 properties from entry level units, canal front homes and even beach front penthouses!

I was calling the auctions with my regular coastal auctioneering partner Dan Sowden, principal at Ray White Maroochydore and the day was decorated with highlights.

But the value on the Sunshine Coast, and again the Queensland market, for me was an absolute stand out.

Bidding on one apartment in particular, 119/223 Weyba Rd, Noosaville, paused at $85,000. It’s a studio apartment and while it wasn’t sitting next to, Sails, on Hastings Street, it’s not in the middle of nowhere either.

I couldn’t believe the numbers I was calling out. When no one pushed beyond $85,000 we made the recommendation to pass the property in and I see it’s now listed at $102,000. Unbelievable!

queensland tourist

119/223 Weyba Rd, Noosaville is now listed for $102,000. Picture: realestate.com.auSource:Supplied

We also sold the million dollar plus penthouses and the glamour properties too. It took us about six hours and the event was filled with excitement and drama.

But it’s the value story that I think will surprise many people, it certainly surprised me.

The Sunshine Coast has a relaxed holiday lifestyle, it has amazing beaches and world class restaurants.

So with all that on offer there will always be multimillion-dollar homes on the Sunshine Coast, but sub $100,000 properties, even sub $300,000 properties are a genuine reality for the discerning buyer

Every school holiday, and as we step closer to Christmas, many Aussie’s will do what we did this week and head to the beach. They will likely have had to pay a peak season rate for their accommodation and quite often that can spark the idea of buying a holiday house.

The Sunshine Coast was one of the hardest hit markets in the GFC, this impact is still showing value today. If the dinner table conversation involves a coastal retreat, before you squash it on account of affordability, I’d head to realestate.com.au or grab a copy of the Sunshine Coast Daily, you too might be surprised by the value, there appears to be property for all budgets.

Originally published as Coast tourist hot spot where bargains can be found

Source:www.news.com.au

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Where you can rent in Brisbane for only $400 a week

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While renters in southern capitals such as Sydney and Melbourne worry about how to pay each week – let alone how to save a home deposit – Brisbane tenants can affordably rent within cooee of the city.

Domain Group data shows that there are 14 suburbs in the Brisbane City Council area with median rental prices of just $400 per week.

While renting an affordable unit can see you living within a couple of kilometres of the CBD, middle-ring houses in suburbs such as Upper Mount Gravatt and Oxley can also be leased affordably, according to the data.

brisbane rent
Mount Gravatt, on Brisbane’s south side, is one suburb where you can rent a house for $400 a week.

Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said Brisbane offered tenants the “best of both worlds” due to the affordability of desirable rental locations.

“Probably one of the strongest benefits is that you don’t have to go very far from the CBD to reach an affordable price point,” she said.

“Suburbs such as Bowen Hills, Cannon Hill, Kelvin Grove, Morningside and New Farm are all well serviced by public transport and are all within five kilometres of the CBD – you would never get that in Sydney or Melbourne.”

Some of the suburbs have more than just proximity to the city to offer, she said.

rent in brisbane
Morningside, in Brisbane’s east, offers great value for tenants.

Kelvin Grove has some of Brisbane’s best schools and is very well serviced with public transport options, Ms Mercorella said.

“Springfield Lakes is one of the most popular new areas, and at the last Census was one of our fastest growing regions in Australia,” she said.

“It is a master-planned community that offers families a lifestyle option – lakefront living with a community feel.

“Morningside is a suburb in transformation, with a number of new small-lot developments renewing the area. It is also a suburb in close proximity to the prestige Hawthorne and Bulimba pocket at more affordable prices.”

Ray White New Farm’s Haesley Cush said inner-city tenant demand continued to grow strongly, with unit rental prices softer due to the ample supply of new apartments that had hit the market.

rent in brisbane
Tenants have the upper hand these days in Brisbane – a positive side effect of the apartment oversupply.

“Developers were so intent on letting out their properties because they had rental guarantees … that incentives came into the rental market for residential property for the first time in as long as I can remember,” he said.

“That put downward pressure on mum and dad investors with older units to compete with a brand-new unit where the developer not only has a better product in a lot of ways, but they were also offering incentives.”

Mr Cush said the new competition resulted in rents falling by about 30 per cent in New Farm. Lower interest rates were lessening the financial impact on landlords, however.

With supply of new units still high, most landlords were opting to retain their existing tenants and slowly increase the rent over time rather than take a punt on the open market, he said.

rest in brisbane
Brisbane’s median rent price is $400 a week.

Mr Cush said southern buyers and renters were starting to stake their claim on the Brisbane rental and sales markets.

“I do think they won’t return once they get up here. The weather is better, school fees are cheaper, and it’s not the compromise in lifestyle for the difference in price,” he said.

“It does have less people, you don’t get as good a meal on a Monday, Tuesday or Wednesday, and you can’t dine after 9.30pm still in most places, but for what is in some cases half the rent and sales price, we’re not talking about half the lifestyle.”

Source: www.domain.com.au

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SEQ begins big push for a billion-dollar City Deal

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SEQ begins big push for a billion-dollar City Deal

Queensland Premier Annastacia Palaszczuk (left) and Treasurer Jackie Trad are pushing for a City Deal for south-east Queensland.

Photo: AAP/Dan Peled

Political delays dogging infrastructure projects will be history if talks on Tuesday morning cement a new billion-dollar 15-year City Deal for south-east Queensland between all three levels of government.

Such a deal could benefit 3 million people catching trains and buses, driving on highways, building businesses, looking for housing, and finding school and universities between the Sunshine and Gold coasts and west to Toowoomba.

Deputy premier Jackie Trad and Brisbane’s lord mayor Graham Quirk will on Tuesday morning outline how close the 10 south-east Queensland councils – Brisbane, Ipswich, Logan, Moreton Bay, Redland, Scenic Rim, Somerset, Sunshine Coast, Toowoomba and Lockyer Valley – are to signing Australia’s largest City Deal with the federal government.

Australia now has three City Deals backed by the federal government: Townsville (2016), Launceston (April 2017) and Western Sydney (March 2018).

Cr Quirk, the chairman of Council of Mayors (SEQ) that represents the region’s local governments, described a City Deal for the area as “a dramatic change”.

“The power of aligning the efforts of all levels of government and securing a long-term program of investment in our region will be a game changer,” Cr Quirk said.

“For the first time, all levels of government will be working in unison to protect and enhance the prosperity and liveability of south-east Queensland.”

SEQ begins big push for a billion-dollar City Deal
Brisbane’s lord mayor Graham Quirk begins a campaign for a City Deal funding package for 10 councils on Tuesday morning.
Photo: Fairfax Media

A City Deal binds the three levels of government — federal, state and local — as a group to agree to a 15-year rolling funding program of infrastructure projects that a fast-growing region needs.

As projects provide a lift in land value, that financial uplift is identified, captured and then re-invested into the infrastructure funding pool, under a model first identified in Manchester in 2012 and then in Brisbane in 2014.

In April 2018, Cr Quirk and Ms Trad met the federal government’s new Cities and Urban Infrastructure minister Paul Fletcher, when they first put forward the SEQ City Deal.

All parties described those 2018 talks as “positive”.

Cr Quirk and Ms Trad will begin the public push for the SEQ City Deal at a business breakfast at Brisbane’s Convention and Exhibition Centre on Tuesday.

“We secured Australia’s first ever City Deal in Townsville, which is paying dividends with projects like the North Queensland Stadium, delivered through the City Deal,” Ms Trad said.

“That is under construction and on track to be open for the start of the 2020 NRL season.”

Townsville’s City Deal is a 15-year arrangement, while Launceston’s is a five-year deal and Western Sydney’s is a 20-year deal.

The federal government is tipped to announce City Deals for Geelong and Darwin by September 2018, allowing planners to work on Hobart, Perth and south-east Queensland over 18 months.

How could it help?

It locks in project funds over 15 to 20 years, moving them away from political promises, which are subject to election outcomes. It could remove election squabbling over the same project.

It sets out a timetable for  projects allowing the private sector to invest more confidently.

It could help the next generation of infrastructure projects, after the Pacific Motorway, Cross River Rail and Brisbane Metro projects were all delayed by politics, angering voters.

It has also been mentioned as a way of funding Moreton Bay’s new university campus at Petrie and breathing life into the Brisbane River’s Resilient Rivers proposal.

What is Townsville’s experience after 18 months?

The Townsville City Deal was signed on December 9, 2016. It is a 15-year agreement.

Work has begun on stage two of the 25,000-seat $250 million North Queensland Stadium. It will be finished for the 2020 rugby league season. It is funded by the federal and state governments, and Townsville City Council.

The Queensland government has promised $250 million for new water supply for Townsville.

A business case for new Townsville Port facilities is almost finished and the Queensland government has pledged $75 million for port upgrade.

Townville mayor Jenny Hill said choosing the right projects was essential to make a City Deal effective.

“The City Deal provides a roadmap for delivery that breaks the political cycle so it is very important to choose the right projects or areas for reform that will make the biggest difference to a city or region,” Cr Hill said.

“All three levels of government also need to buy into the key priorities of the local area that are included in any City Deal.”

SEQ begins big push for a billion-dollar City Deal

Townsville Mayor Jenny Hill on top of Castle Hill with Townsville in the background.
Photo: supplied

SEQ City Deal – the background

  • May 2012Co-funding model idea began in United Kingdom.
  • June 2015: Queensland prepares its own case for City Deals after Ms Trad looked at the UK City Deals idea in Manchester.
  • 2016: Council of Mayors (SEQ), Queensland Property Council and the Queensland government put a plan together.
  • November 2016: Queensland Premier Annastacia Palaszczuk signed a memorandum of understanding with prime minister Malcolm Turnbull in November 2016 to develop “tailored City Deals” for Queensland.
  • February 2017: Ms Trad and Cr Quirk wrote to then-federal cities minister Angus Taylor, agreeing to a joint submission.
  • Late 2017: A Cities Transformation TaskForce established in Brisbane.
  • June 2018: Queensland’s major contractors called for a City Deal.

Source: brisbaneinvestor.com.au

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