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Property Experts Reveal Surprising Areas Investors Are Snapping Up

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Property Experts Reveal Surprising Areas Investors Are Snapping Up

We all know Sydney’s property market has taken hit after hit recently — but there are other lesser-known areas that are experiencing a sudden property boom.

That’s according to Australian real estate experts, who claim that while investors may have deserted Sydney and Melbourne, their attention has turned to other regions across the country.

According to Daniel Walsh of investment buyer’s agency Your Property Your Wealth, investment activity has now firmly shifted to Queensland.

“Net migration has now overtaken Melbourne due to the affordability that Brisbane has to offer,” he explained.

“We’re also seeing rising demand particularly in the housing sector in southeast Queensland where yields are high and jobs are increasing due to the amount of government expenditure around infrastructure which is attracting families to the Sunshine State.

“With Brisbane’s population growth at 1.6 per cent and surrounding areas like Moreton Bay at 2.2 per cent, the Sunshine Coast at 2.7 per cent and Ipswich at 3.7 per cent, we are forecasting that Brisbane will be the standout performer over the next three to five years.”

Realestate.com.au chief economist Nerida Conisbee agreed, saying Sydney investors especially had started to turn their attention north.

“Interest is strong in the Gold Coast across the board although there’s more action on the south side in places like Tugun and Burleigh Heads,” she said, adding there was also a notable trend towards Tasmania, Adelaide and pockets of NSW.

“In Tasmania, most activity is definitely taking place in Hobart, but it has shifted — a lot of the action was in the inner city, but it’s now happening in the middle and outer ring suburbs, as well as in Launceston.

“Tweed Heads and Byron Bay (in NSW) have also had strong price growth at the moment,” she said, adding that in Sydney, trendy inner-city suburbs like Paddington, the premium end of town and areas like Winston Hills in the city’s west were defying the downward trend.

Ms Conisbee said long-neglected Adelaide was also finally booming after recently hitting the highest median house price ever recorded, largely driven by jobs and economic growth off the back of defence contracts, the announcement of the new Australian Space Agency and other investment in the area.

“Inner Adelaide, beachside and the Adelaide Hills tend to have the most activity but there’s also quite a lot of rental demand in low-cost suburbs so we’re expecting to see a bit more investment there in those really cheap suburbs over the next 12 months,” she said.

“There you can get houses for $250,000 so for an investor, it’s a relatively low cost in terms of outlay and the area is seeing really strong rental demand which means you’re more than likely to get tenants, so for investors it’s a really attractive area.”

Mr Walsh said Sydney still remained a solid investment option in the long term — but stressed it was just not the right time to buy in the city due to its market cycle as well as lending constraints.

“While property prices in Sydney have softened by about 9 per cent this year, they are still high, which means it’s not an affordable option for many investors,” he said, noting the city’s high buy-in prices coupled with relatively low rents made the yields quite unattractive.

“At this point in time, the high costs of entry as well as holding costs make it a location that should be avoided — but not forever,” he said.

“The thing is, Sydney is still Sydney, which means that it will always be in demand.

“Its population is forecast to grow by some three million people in the decades ahead, plus it remains our nation’s economic engine room.”

He said the entire NSW economy remained “robust” with unemployment falling to 4.4 per cent last year, with Sydney’s major infrastructure program also proving there was “much to be positive about” in Sydney.

“Sydney homeowners and investors who bought a number of years ago are still well ahead because they chose the optimal time to buy and they remain focused on the future,” he said, adding the optimal time to re-enter the market probably wouldn’t be for at least another year or two.

Source: news.com.au

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Opinion

Perth and Brisbane top choices for property investors

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Perth and Brisbane top choices for property investors
  • Perth and Brisbane considered the best capital cities to invest in
  • 70% of WA property investors believe it’s a good time to buy in WA
  • Lending restrictions causing concern amongst investors
  • Negative gearing set to impact over 60% of investors

Perth and Brisbane have emerged as new property investment hotspots as investor interest continues to shift from the declining Sydney and Melbourne markets.

A survey of 483 investors across Australia by property investment consultancy Momentum Wealth showed that Perth and Brisbane were leading the pack when it comes to investor preference, with 36% and 33% of survey respondents highlighting the respective capital cities as the best places to invest.

Team Leader of Momentum Wealth’s buyer’s agents, Emma Everett, said a combination of affordability and potential growth opportunities had likely contributed to higher levels of investor interest in the capital city markets.

“Whilst both markets offer strong levels of affordability compared to Sydney and Melbourne, they also hold promising opportunities for long-term growth, with Brisbane already experiencing overall price growth and areas of Perth performing strongly as the market enters its recovery,” she said.

Ms Everett said that investors looking to take advantage of current conditions will need to remain vigilant in their property research and selection.

“In these early stages of recovery, it’s not uncommon for different areas of the market to experience price growth at different times, so investors will need to remain diligent in their research to ensure they are selecting an area that aligns with both their investment strategy and growth expectations,” she explained.

The survey also showed that professional service firms were regarded as the most credible source of information when researching the property market, compared to only 1% of investors who ranked friends and family as the best source of property research.

Hometown confidence hits a high in WA

Whilst Perth was considered the best place to buy amongst overall respondents, the survey also highlighted a considerable rise in home confidence, with an overwhelming 70% of WA investors finding Perth to be the most appealing capital city to invest in.

This marks a further 4.5% increase from last year’s survey, when the proportion of WA respondents preferring Perth spiked a staggering 29% from the year prior.

Ms Everett said renewed confidence is already leading to price growth in some areas, but warns investors need to act fast to avoid rising levels of buyer competition.

“Perth is offering some great buying opportunities for investors looking to take advantage of current levels of affordability, but those looking towards high-demand suburbs will need to move quickly or risk entering the market when competition levels have already picked up.”

“We are already seeing significant evidence of this in some areas of the market, with increased activity from trade-up buyers resulting in significant price growth in Perth’s central sub-region across the past 18 months,” she said.

Lending restrictions still a barrier

Whilst investors are recognising the potential benefits of entering the market, lending restrictions continue to pose a barrier for some, with a number of investors finding increasing difficulty in securing finance in light of recent APRA changes and the Banking Royal Commission.

The survey showed that 67% of respondents had reviewed their loans in the 12 months to November 2018, up 8% on the previous year’s results.

Team Leader of Momentum wealth’s mortgage broking team, Caylum Merrick, said the challenging lending conditions highlight the importance of regular loan reviews in ensuring investors continue to receive the support they need.

“In today’s lending environment, and in any lending environment for that matter, it’s vital that investors conduct regular loan reviews to ensure they are still receiving the best rates and products to support their investment goals.”

“Whilst we’ve seen record low interest rates in recent years, we’ve also seen a number of buyers impacted by changing lending restrictions. With many banks now raising their interest rates outside the RBA cycle, it’s more important than ever that investors keep their finger on the pulse,” he said.

Negative gearing set to impact majority

The potential changes to negative gearing proposed by the Labor government pose a further source of uncertainty for some investors, with 61% of survey respondents revealing they have a negative cash flow portfolio.

Ms Everett said that whilst investors who rely heavily on the tax benefit will need to be mindful of the impact of such changes, it’s important they remain focused on the fundamentals during the property selection process.

“Whilst negative gearing provides a useful tax benefit for those with a negative cash flow portfolio, investors need to remember that tax offsets only form a small portion of a property’s overall returns, and that factors such as land value, location and tenant appeal remain critical to a property’s performance.”

“Investors who get these fundamentals right from the start will be better placed to weather potential changes and short-term volatilities in the market,” she said.

Ms Everett said that any investors who are unsure or concerned about the potential impact of recent changes, including shifts within the lending environment, should seek advice from an independent investment advisor.

“It’s been a challenging and at times confusing period for investors trying to navigate through these complexities themselves or relying on unreliable sources to guide them, so it’s important that they seek professional and independent advice to ensure they fully understand the opportunities and risks specific to their situation,” she said.

 

Source: miragenews.com

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Opinion

Is this property hotspot making a comeback?

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Is this property hotspot making a comeback

Investors in search of stability and yield amid the market downturn could find solitude in an old favourite this year.

The February issue of Herron Todd White’s Month In Review report found that the Brisbane property market will see some growth in 2019, and overall will continue to see consistency in its property market.

“Brisbane in the coming 12 months will, generally speaking, see a stable market across most locations,” the report noted.

“Brisbane has been on the cusp of substantial price rises for about six years now.”

What could indicate those looming price rises is an influx of infrastructure projects, which are expected to drive employment up, a factor which the report stated is “sorely in need of improvement in Queensland”.

“Some of these major projects will have national and international appeal – the Howard Smith Wharves project and the Queens Wharf complex in particular – which have a flow-on for boosting our tourism and services sector,” stated the report.

Also of importance is the capital city’s more affordable property when compared to Sydney and Melbourne and high levels of interstate migration figures.

Tips for buyers

The report noted the inner and middle rings, particularly around 3 kilometres of the CBD, is unlikely to produce any bargains, but provide investors with some long-term investing opportunities.

“This is solid real estate where our population likes to live and play. For example, this would include Enoggera out to Stafford in the north and Annerley through to Moorooka in the south,” the report stated.

For Brisbane property, the report also mentioned to look for growth creation factors, such as renovatable properties on sizable blocks of land, larger allotments with solid long-term redevelopment potential and subdivisible land.

Exercise caution 

Investors looking for where not to invest should be careful in the northern and western corridors pictured more so towards property investors, the report warned.

“If there’s a predominance of dual occupancy and duplex structures or generic townhouse designs on offer, tread warily if your goal is capital gains,” the report stated.

“Credit restrictions have not helped the demand side of the equation in this sector either and with plenty of supply on hand, the result seems to be subdued growth if any for this real estate.”

Despite the oversupply of apartments, those aimed at home owners have performed well, according to the report, and further supply has been predicted to slow down.

“We aren’t recommending anyone rush back into this type of investor accommodation, but the future is looking less dire than it did a couple of years back,” the report noted.

“2019 will be a year to watch in Brisbane. If we can accentuate the positive and eliminate the negatives, then property owners should do fine by annum’s end.”

The big picture

Although the broader Australian residential property market is in a down cycle, data experts and research houses are quick to point out that the long-term trajectory is positive for property investors.

You can read more about how the property market has been performing since 1999 here.

 

Source: nestegg.com.au

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Opinion

Negative gearing changes will affect us all, mostly for the better

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Negative gearing changes will affect us all, mostly for the better

Don’t have a negatively geared investment property? You’re in good company.

Despite all the talk about negatively geared nurses and property baron police officers, 90 per cent of taxpayers do not use it.

But federal Labor’s policy will still affect you through changes in the housing market and the budget. Here’s what you should know.

Labor’s negative gearing policy will prevent investors from writing off the losses from their property investments against the tax they pay on their wages. This will affect investors buying properties where the rent isn’t enough to cover the cost of operating the property, including any interest payments on the investment loan.

Doesn’t sound like a good investment? Exactly right: negatively gearing a property only makes sense as an investment strategy if you expect that the house will rise significantly in value so you’ll make a decent capital gain when you sell.

The negatively geared investor gets a good deal on tax – they write off their losses in full as they occur but they are only taxed on 50 per cent of their gains when they sell.

Labor’s policy makes the tax deal a little less sweet – losses can only be written off against other investment income, including the proceeds from the property when it is sold. And investors will pay tax on 75 per cent of their gains, at their marginal tax rate.

Future property speculators are unlikely to be popping the champagne corks for Labor’s plan. But other Australians should know that there are a lot of potential upsides from winding back these concessions.

Limiting negative gearing and reducing the capital gains tax discount will substantially boost the budget bottom line. The independent Parliamentary Budget Office estimates Labor’s policy will raise about $32.1 billion over a decade.

Ultimately, the winners from the change are the 89 per cent of nurses, 87 per cent of teachers and all the other hard-working taxpayers who don’t negatively gear. Winding back tax concessions that do not have a strong economic justification means the government can reduce other taxes, provide more services or improve the budget bottom line.

Labor’s plan will reduce house prices, a little. By reducing investor tax breaks, it will reduce investor demand for existing houses.

Assuming the value of the $6.6 trillion property market falls by the entire value of the future stream of tax benefits, there would be price falls in the range of 1 per cent to 2 per cent. Any reduction in competition from investors is a win for first home buyers.

Existing home-owners may be less pleased, especially in light of recent price falls in Sydney and Melbourne. But if they bought their house more than a couple of years ago, chances are they are still comfortably ahead.

And renters need not fear Labor’s policy. Fewer investors does mean fewer rental properties, but those properties don’t disappear – home buyers move in, and so there are also fewer renters.

Negative gearing would affect rents only if it reduced new housing supply. Any effects will be small: around 90 per cent of investment lending is for existing housing, and Labor’s policy leaves in place negative gearing tax write-offs for new homes.

All Australians will benefit from greater stability in the housing market from the proposed change. The existing tax breaks magnify volatility. Negative gearing is most attractive as a tax minimisation strategy when asset prices are rising strongly. So in boom times it feeds investor demand for housing. The opposite is true when prices are stable or falling.

The Reserve Bank, the Productivity Commission and the Murray financial system inquiry have all raised concerns about the effects of the current tax arrangements on financial stability.

Negative gearing would affect rents only if it reduced new housing supply.

 

And for those worried about equity? Negative gearing and capital gains are both skewed towards the better off. Almost 70 per cent of capital gains accrue to those with taxable incomes of more than $130,000, putting them in the top 10 per cent of income earners.

For negative gearing, 38 per cent of the tax benefits flow to this group. But people who negatively gear have lower taxable incomes because they are negatively gearing. If we look at people’s taxable incomes before rental deductions, the top 10 per cent of income earners receive almost 50 per cent of the tax benefit from negative gearing.

So you shouldn’t be surprised to learn that the share of anaesthetists negatively gearing is almost triple that for nurses, and the average tax benefits they receive are around 11 times higher.

Treasurer Josh Frydenberg says aspirational voters should fear Labor’s proposed changes to negative gearing and the capital gains tax.

But for those of us who aspire to a better budget bottom line, a more stable housing market and better opportunities for first home buyers, the policies have plenty to find favour.

 

Source: brisbanetimes.com.au

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