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



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 by Paul Glossop

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Cost of Brisbane land lots fall 14pc as blocks shrink across the capital



Cost of Brisbane land lots fall 14pc as blocks shrink across the capital

6 & 8 Nabeel Place, Calamvale, was part of a 1,400sq m site that was split and re-split to see the development land gross profit of $500,000.Source:Supplied

THE cost of residential land in Brisbane fell a massive 14 per cent last year with lots on the Gold Coast now more expensive than the Queensland capital. But the devil’s in the detail.

New data by Oliver Hume found buying a block in Brisbane set buyers back $358,500 at the end of last year – a median price drop of 14 per cent in just 12 months.

Land on the Gold Coast was $25,700 more expensive than Brisbane, according to the latest Oliver Hume Quarterly Market Insights, with the glitter strip pulling off an 8 per cent rise in median lot price to $384,200.

But Oliver Hume senior research analyst Amanda Bittenbinder said Brisbane’s massive median price decrease was not because of a struggling market but the type of blocks that were coming to market.

“The Brisbane market is shifting towards smaller lot sizes, due to land availability and affordability,” she told The Courier-Mail.

“Our data shows that 48 per cent of project land sales in Brisbane over Q4 2017 were between 301-400sq m whereas the Gold Coast recorded 52 per cent of sales over 500sq m.”

She said the Gold Coast had a higher median lot size than Brisbane.

Broken down, the data showed “the rate per sqm in Brisbane was $899/sq m in Q4, whereas the Gold Coast recorded $513/sq m – that’s a difference of $386 per sq m”.

In the December quarter alone, 1,956 lots were sold in South East Queensland, a fall of 5.5 per cent that had more to do with stock availability than demand.

Agent Tom Zhang of Yong Real Estate said demand was outstripping supply in Brisbane.

One of his recent sales included 6 and 8 Nabeel Place, Calamvale, which was part of a larger 1,400sq m block that a developer had bought for $1.1m.

“A developer bought it, they subdivided the rear 800sq m out and further subdivided that into two 400sq m blocks. For 400sq m that was selling for over $400,000 each. Those two blocks at the back sold for $800,000 and he still has the front house that will sell for more than $800,000. So his total income of over $1.6m minus development costs still ends up a fantastic return in a short period of time.”

<a href="" title="">122 Roscommon Road, Boondall</a>, was split in two with each block on the market for over $350,000.

122 Roscommon Road, Boondall, was split in two with each block on the market for over $350,000.Source:Supplied

He said “small to medium developers are so hungry for this type of product”.

“It’s easy to sell the land. The normal homebuyer can’t afford big blocks but a 400sq m block they might be able to. The worry now is the low supply of empty blocks of land in Brisbane and in the southern suburbs like Sunnybank and Calamvale.”

Redland – which includes mainland suburbs like Capalaba and Alexandra Hills as well as island suburbs like North Stradbroke and Coochiemudlo Island – had SEQ’s third highest block cost. Its median land lot was $312,000, a figure that had dropped 3 per cent last year.

Popular Moreton Bay – which covers a large area including Caboolture and Redcliffe – saw a 4 per cent fall to $238,000, while the second cheapest land lots in SEQ came out of Logan where the median was holding steady at $230,475.

The cheapest place to buy land in the region was Ipswich ($199,500), though that’s changing rapidly with the area posting the second highest cost increase last year (4 per cent).

Despite low retail land supply and strengthening demand, the median land lot price in Queensland was fell slightly to $260,500, the Oliver Hume report said – mostly because of shrinking block sizes.

Median Retail Lot Price:

Moreton Bay $238,000 (-4%)

Redland $312,000 (-3%)

Logan $230,475 (0%)

Brisbane $358,500 (-14%)

Ipswich $199,500 (4%)

Gold Coast $384,200 (8%)

Originally published:

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The best brand new developments in south-east Queensland



The best brand new developments in south-east Queensland
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Property sales strong as Mango Hill house listed for $1.1 million



Property sales strong as Mango Hill house listed for $1.1 million

North Lakes is one of the top three outer Brisbane areas where property prices are appealing to more homebuyers, new figures reveal.

It was one of seven suburbs within the greater Brisbane region where more than 400 houses were sold in the past 12 months, according to new figures from CoreLogic.

Caboolture leads the pack with 492 houses sold, with Morayfield close behind with 452 sales.

North Lakes recorded 436 house sales during the period and all seven suburbs had median house ­prices of less than $490,000.

Amanda Pearce from Raine & Horne North Lakes said the area’s attractiveness for families was one of the main reasons people wanted to move here.

“When I’m talking to my clients and asking them why they are looking to move to North Lakes, there is usually more than one reason,” she said.

“They have heard that North Lakes is not just a community but a family and they want their kids to grow up where they can go to school with the same friends.

“More than 60 per cent of the North Lakes population are families with children.”

Ms Pearce said some of her clients were either moving from interstate to get away from city life, or because the suburb had everything they wanted nearby.

She said more than 680 houses, units and lots had been sold since January 1 last year.

“The change in the median house price in 2017 in North Lakes was at plus 3.28 per cent compared to the Moreton Bay region, which was plus 2.73 per cent,” Ms Pearce said.

Raine & Horne’s Adam Ingram said shopping and transport facilities also added to the attractiveness of the North Lakes area.

Matt Goodall from NVRE Agents at Narangba has a house at Mango Hill listed for sale for offers of more than $1.1 million.

He said as far as he knew nothing had previously sold for the magic million-dollar mark at Mango Hill.

“It is the first of its kind at the moment,” he said.

Mr Goodall said the two-storey house was a standout in the street, as it was on a slightly elevated block.

“It has a unique design and certainly won’t suit everyone that comes through,” he said.

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