The word “research” is thrown around willy-nilly in the property investment field. But what do “true” researchers look for when they investigate whether a suburb or region is primed for growth?
I’m not sure what they research, as I have never run into any other buyer’s agents or property companies when I’m buying in an area. After I have finished buying there, I talk to many real estate agents ongoing and they often tell me that buyer’s agents and property companies are buying there now, after all the great deals are gone. Doesn’t make sense to me. Well anyway, it’s about time I tell all!
I think the best way to point this out is through some real life examples on suburbs I have invested in recently. Note: I am not investing here anymore as the suburbs have seen significant recent growth and all the bargains are gone:
The suburbs are located between 25 kilometres and 35 kilometres north of Brisbane CBD.
I was investing in these suburbs between March 2014 and February 2016. Now as you know, I hold my cards very close to my chest in relation to where I invest. I only disclose where I was investing for myself and my clients after I have stopped buying there. Competition from other buyers only comes when I cease to invest in any location. The buyer competition means we cannot secure bargains anymore; and I won’t compete for a house. It simply doesn’t make sense to pay more for a house to simply secure it.
My initial interest in the above areas was due to a poor performing property market in that region for many years. The GFC started this downfall but another kick in the teeth came in January 2011 with the Brisbane floods. That’s not to say that this region experienced flooding, but consumer confidence went out the window for all of Brisbane when the floods occurred, along with the years to follow.
Combining that with house prices under the $400,000 mark in a capital city, meant that these suburbs made my four main criteria:
- Houses, not units, nor townhouses nor subdivided blocks
- Poor performing region, significantly reduced prices since last boom meaning zero competition
- Ability to secure under $400,000 ($390,000 actually)
- Capital city suburbia or large regional
Notice how I haven’t mentioned one single infrastructure project going on, yet I have made the decision to visit these suburbs and spend time on the ground. Even with the best infrastructure projects in motion, the property market can still be dead. And Kallangur is a prime example of this. The infrastructure projects listed below have been approved and in motion for years, yet the property market was dead? Now don’t worry, we will go through these but honestly, they faired very little in my decision-making process to invest there.
Gut feel is my last main criteria for making a decision on whether this location is worthy of my money or not. I have walked away from many locations due to gut feel. Places like Whyalla, Midland WA and Elizabeth SA and more recently Logan (Logan Shire) Qld.
Inspecting houses on the ground allows me to work out what type of property we should be buying. And it varies a little between each suburb. In Lawnton, Petrie and parts of Kallangur there were some great older, three bedroom houses that offered opportunities to value add through low cost renovation. In Narangba, Griffin and Dakabin, I only purchased four-bedroom, two-bathroom houses with double garages that were 8-12 years old. Kallangur had some of these houses too as there is an old section plus a new section to the suburb. Murrumba Downs were more three-bedroom, two-bathroom houses built in the early 2000’s.
So, let’s get to the infrastructure part and talk about what’s going on in the area.
Employment: All these suburbs, with the exception of Griffin, are located on the western side of the M1 Bruce Highway. On the eastern side is a suburb called North Lakes. Following the highway north on the eastern side is the North Lakes Business Park. This sits right next door to North Lakes Westfield. Once complete, the North Lakes Business Park will employ over 13,000 people (excluding Westfields). The likes of Ikea, Costco and Bunnings sit next door to car yards and many other large retail outlets that are already open. Westfield itself is undergoing a $220 million upgrade, allowing the suburbs on the western side of the M1 to gain access to this area as there was only one over pass. Now, there are three major overpasses making it very easy for all suburbs to get across.
To the north, and only 15 minutes away, is Caboolture. The drive in on Morayfield Rd, which is kilometres long, is filled both sides with retail and commercial businesses. The short drive north makes this very accessible for many employees.
The same occurs on the southern side in Strathpine, which again is only a 6 minute drive from Kallangur.
Currently under construction is Petrie University, due for completion in 2020 and employing 2,800 people ongoing.
One of Brisbane’s biggest employers is Brisbane Airport (BAC). Currently employing 20,500 people, the airport has major expansion programs in place, resulting in employment of over 50,000 people by 2029 – that’s only 12 years away. Given it’s only a 20-minute drive from Kallangur to the airport, this means many employees will be living in this region.
And let’s not forget Brisbane CBD, being a 35-minute drive from Kallangur, making it very accessible for employees.
Transport: With so much going on in and around this region, it’s no wonder the population growth is around 2.5%. That many people moving to a region can put a lot of pressure on the transport system very quickly. And I’ve always said, train lines and highway expansions are only built when congestion becomes a problem. They don’t build a highway to nowhere and hope everybody moves out there, they wait until everybody is pulling their hair out in frustration, then they expand the highways by one lane each way etc. Well, that’s what’s happened here.
The M1 has been going through many stages of expansions from the airport right through to Caboolture. These expansions are still continuing but the highway is much better than previous years.
For those working in Brisbane CBD, the existing train line works a treat with stations at Narangba, Dakabin, Petrie and Lawnton. But for those Kallangur property owners, the new line from Petrie to Kippa Ring opened early October 2016. This will make things easier for the Kallangur residents to work in Brisbane.
Education: Throughout the region there are many public primary and high schools.
One of the private schools in North Lakes is the Lakes College, which made it in to the top 50 schools for Qld in NAPLAN results. Another private school is in Dakabin, the Northpine Christian College. These are both schools from Prep through to Year 12.
For younger students, the Caboolture Montessori School offers private schooling for kids from three years old to 12 years old.
Now, for university education, Petrie University is currently under construction. The local council purchased the Old Paper Mill for $50 million and the University is due to take on its first 10,000 students in 2020.
With so much going on, why not invest in new houses in North Lakes, Deception Bay and Mango Hill?
Simply because the blocks are tiny. Many are built on 250-380 square metres. With four-bedroom, two-bathroom, single garage houses that left no room for any yard. Most were built with 9-foot ceilings so that you felt the sense of space, but as the roof tops were so close together it blocked any sun light filtering into the house. As a result, almost every house I inspected there, was very dark and had a mildew smell. And with tiny blocks and single garages, the streets were full of cars. Not appealing at all. Now, Mango Hill has a separate issue, flooding. I honestly don’t know how some of the new developments are being approved here because flooding is not an ‘if’, but a ‘when’. The lower part of Griffin also falls into this category.
But to re-iterate my point on infrastructure, it’s not the only driver of a property market. All of the above infrastructure projects were approved and underway when the property market was dead. Not even the volume of projects with all those benefits to investors and home buyers, made an ounce of difference to consumer confidence in the dead part of the property cycle. Sure, they are a great selling point now for many buyer’s agents and house and land package companies, but by investing there now, they have all missed the boat.
To secure volumes of properties in any area, real estate agent relationships are paramount. And this location was no exception. Although I had many agents keeping me in the loop, there were two relationships I had in this area that meant that the public and other investors never stood a chance in getting the best houses in the area. As an example, one of my key agents there worked for a house and land package company before the GFC, selling H&L packages to hundreds of interstate investors. When the GFC struck and the investors disappeared, he changed his job and became a real estate agent. This worked fantastically for me as he was contacting these same investors and telling them he had a buyer’s agent looking to buy similar houses to what they owned and we were willing to pay a certain figure for their house, then asking ‘would you like to sell’? As many paid way too much for these houses in the peak, along with giant hidden kickbacks to property companies when they were sold, they were now willing to sell at a huge loss, to simply get that bad investment out of their life. Their mistake wasn’t investing in the wrong location; it was simply wrong market timing.
So this meant we were buying under market value and buying lots of houses that never made the market. Allowing us to see significant growth even though the stats show less.
Let me explain:
These H&L packages were being sold for around the $440,000 mark 8-12 years ago. I was buying them for between $365,000 – $385,000. That’s 20 per cent less than what they paid all those years ago! These houses are now selling for $430,000+
If you read the latest CoreLogic suburb July growth stats you will see:
Three year growth – 7.26 per cent
Three year growth – 13.72 per cent
Yet we have achieved growth of 15 per cent in a little over one year, not three. And the good times have only just started. The next two years will see double digit growth each year, taking these houses to the $500,000 mark in value.
Research is knowing where to invest along with when, but you also need to know what to avoid. Without going into specifics, there are a few no-go neighbourhoods in this area. Avoid high sets as they are too much maintenance, unless you live nearby and can do the renovations easily yourself. Townhouses are definitely to be avoided at all costs as there are way too many being built and will sit vacant without a tenant for some time. And lastly, Griffin should be only for those investors who know the suburb very well. Given the much higher risk of flooding, it’s probably best to avoid completely.
Another positive to the area is the ever increasing family wealth moving into the region. This is simply the suburbs closer to the city moving outwards due to affordability. We’ve seen this in Sydney and Melbourne and this is already underway in Brisbane. Higher family incomes means rents are able to increase along with house prices. And that’s exactly what we are after.
The past six months have seen an immense amount of available houses to buy, where real estate agents are fighting for every listing and buyers are ready in droves. As a result, vendors are pushing the boundaries with increasing list prices of their properties and buyers already are, and will continue to, keep paying higher and higher prices.
Originally Published: http://www.smartpropertyinvestment.com.au/
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.”
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.”
Townsville Mayor Jenny Hill on top of Castle Hill with Townsville in the background.
SEQ City Deal – the background
- May 2012: Co-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.
Where you can still invest by the water in QLD for less than $700k
IT’S unheard of in Sydney and a distant memory in Melbourne, but for under $700,000, it’s still possible to buy a house by the water near Brisbane.
In the sleepy beachside suburb of Margate, a four-bedroom house only a block back from the beach is up for grabs for offers over $599,000.
Down the road in nearby Scarborough, another four bedder just 200m from the water is available for $595,000 — little more than the cost of a Sydney car park.
Even in the popular family holiday spot that is Coolum Beach, a cute three-bedroom pad is going for $695,000.
New data provided exclusively to The Courier-Mail by RiskWise Property Research has identified the 10 best suburbs by the water in southeast Queensland to invest in.
Woody Point, 25km north of Brisbane in the Moreton Bay region, is the top pick, with a median house price of $490,000, followed by the neighbouring suburbs of Margate and Scarborough.
The coastal suburbs of Thorneside, Birkdale and Wellington Point, about 20km southeast of Brisbane, are also ripe for investment, according to RiskWise.
And what better time to scope these areas out for holiday homes than during school holidays.
RiskWise chief executive Doron Peleg said the suburbs were ranked based on affordability, proximity to water and distance from working hubs.
“Deception Bay is a great example because the prices there are significantly cheaper than what you see in alternative suburbs,” Mr Peleg said.
“Overall, anything that starts with a four or is below $500,000, when you get proximity to water at that price tag, it is extremely affordable.”
Mr Peleg said Coolum Beach was another good example because it was possible to work in Brisbane and commute.
“It’s also not far from Noosa, but a fraction of the price of Noosa Heads,” he said.
Mr Peleg’s only advice to investors looking in these suburbs was to think long term.
“The only thing you need to do is to buy and hold because of the nature of the real estate market and transaction costs in Queensland,” he said.
“Regardless of these specific areas, southeast Queensland currently represents outstanding value.”
James and Jasmine Campbell are selling their three-bedroom house at 1 Westbrook St, Woody Point, for just $485,000.
They bought the house almost six years ago as their first home and it has achieved solid capital growth in that time.
Mr Campbell said they loved being just 500m from the water and being able to stroll along the boardwalk of an afternoon with their two-year-old daughter, Pippa.
“The house is close enough that you still get that smell of the ocean,” he said.
Selling agent Brendan Philp of Abode Properties said Woody Point and Margate were becoming popular with owner-occupiers, either families, retirees or interstate buyers relocating from Sydney and Melbourne.
Mr Philp said the area’s sandy beaches and affordability — with the average house selling for around $500,000 — made it one of a kind.
“Geographically, you are 25 minutes to the airport, 30 minutes to Brisbane CBD, an hour to the Sunshine Coast — you can’t find another suburb for that sort of money,” he said.
“In Wynnum or Manly, you’re paying at least a third more.”
TOP 10 EMERGING WATERSIDE SUBURBS
Suburb Property type Region Median sale price
1. Woody Point House Moreton Bay $490,002
2. Margate House Moreton Bay $453,820
3. Scarborough House Moreton Bay $550,719
4. Thorneside House Brisbane – East $523,177
5. Birkdale House Brisbane – East $541,048
6. Wellington Point House Brisbane – East $589,185
7. Wynnum House Brisbane – East $639,622
8. Lota House Brisbane – East $635,082
9. Deception Bay House Moreton Bay $352,245
10. Coolum Beach House Sunshine Coast $637,984
(Source: RiskWise Property Research, CoreLogic)
Interstate migrants are moving to QLD … but they’re not coming to Brisbane
Less than 5 per cent of interstate migrants during the 2016-2017 financial year settled in Brisbane, according to data from the ABS. Photo: Glenn Hunt
Interstate migration to Queensland is booming but analysis shows most new residents are bypassing Brisbane for other regions in the Sunshine State.
Buyers’ agency Propertyology analysed ABS data, which showed there were 17,246 internal migrations to Queensland in 2016-17. But out of those, only 846 relocated to Brisbane, which equates to less than 5 per cent.
Propertyology managing director Simon Pressley said the lion’s share went to the Gold Coast, Sunshine Coast, Moreton Bay, Cairns, Ipswich and the Scenic Rim.
“We’ve read a lot about interstate migration to Queensland lately and it’s been growing each year, which is great,” he said.
“The thing is, people automatically think Queensland means Brisbane but when you actually look closely at the numbers, they tell a very different story.”
As a proportion of total population growth over 2016-17, the biggest beneficiaries of interstate migration were Tasmania (22.5 per cent) and Queensland (21.9 per cent).
House prices in the regions with the most internal migrations have mainly increased — house prices on the Sunshine and Gold Coasts have increased by 7.9 per cent and 3.3 per cent respectively over the past 12 months — although Mr Pressley said the correlation between population growth and house price growth was often overstated.
“I know logically it makes sense — if an area has a big surge in population, house prices should go up — but there’s much more to it than that,” he said.
“Jobs growth is a lot more important than population growth, so is wage growth, [and] affordability is also extremely important.”
REIQ Gold Coast zone chair Andrew Henderson said each of those factors was connected and all had contributed to the Gold Coast’s house price success in recent years.
“Our local economy is strong but it’s also changed. We’re no longer solely reliant on the tourism industry. The diversity of our job offering has changed,” he said.
“With new infrastructure like universities and hospitals, we’ve got people moving here from interstate into jobs who would have never been able to move here 10, 20 years ago.
“So the age of the people we’ve got moving here has also changed. We’ve always had a lot of retirees but we’ve noticed a surge in people in their 20s, 30s and 40s – people moving their whole families up here. Around Mermaid Waters and Clear Island Waters there’s a really strong southern presence.”
Andrew Campbell of Ray White Redcliffe said the influx of interstate migrants buying up locally in the Moreton Bay region had become apparent more recently.
“We noticed a dip in the interstaters for a while but recently they’ve started to come back and it’s about affordability. All the properties around that median price are really moving so quickly,” he said.
Domain Group figures show the median house price in Moreton Bay is $456,000.
“There’s a lot of first-home buyers who fly up here for the weekend from Sydney. They know they can’t afford to buy there so they’re moving here because they see you can buy a house for under $500,000, get the lifestyle and still only have to drive 40 minutes to work in Brisbane,” Mr Campbell said.
But Mr Pressley said interstate migrants were being “pushed” to Queensland, rather “pulled” as they were during the mining boom.
“People have always wanted to come to Queensland because of the good lifestyle, weather and affordable housing,” he said.
“In the past they came for those things but also because we created more jobs year after year than everyone else. Now, we’re not dragging here through job growth, they’re coming here by default.
“To me, that’s why interstate migration hasn’t translated into property prices yet … and that’s why only minimal people have gone to Brisbane.
“I anticipate that in the next 12 months we’re going to see another really strong year of interstate migration into Queensland; if our economy improves, then it could translate to property prices for Brisbane and all over Queensland. Overall though, this is a good news story for Queensland and Brisbane as well. It’s looking positive.”
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