Why property investment? Here is just one of many reasons

As we all know population growth is inevitable, Australia is a young fast growing country with no signs of slowing down. Population growth is a key factor when considering investment property and your financial future.

Australia’s current population is 23.9 million and climbing, we are currently seeing a new born just under every two minutes, and one death just under every 4 minutes. We are also receiving a net gain of one international migration every two and a half minutes, this is currently giving us an increase of 1 person every one and a half minutes.

When learning how to get started in property investment, knowing this information is a huge asset. Natural growth and overseas immigration has always been good news for property investment. With having this brief layout of information in mind, do you think housing will/could lose its demand?

Rental yields cannot keep up with Melbourne, Sydney price growth

Rental yields across Australia’s two biggest cities Sydney and Melbourne are currently seeing a record low due to the capital growth of those markets. Great news if you received property investment advice early on but this very low yield increases risk for property investors looking to enter into those markets at this late stage. It is a case of “you have missed the boat” I am afraid.

In the past we have seen a huge increase in price of housing in Melbourne and Sydney, on average what cost $500,000 just a few short years ago is now reaching over $1,000,000 with this price increase rental yields haven’t been able to keep up. On average, the net annual cost of servicing a property investment on a median priced three-bedroom house in Sydney funded with an 80% loan to value mortgage was $41,300 as of December 2015, up 78% from just three years earlier. In Melbourne the cost was $26,674, up 63% in the same time frame.

Rather then try and get into Sydney and Melbourne at this late stage, clever investors are looking to the north with the Gold Coast and Brisbane holding their rental yields.

House prices to go up 10%

A very positive comment was made by Christopher Joye from the Australian Financial Review recently when he referred to house prices. “House prices are going nuts again” was his comment.
Joye advised that he had uplifted his growth forecasts for 2016 based on the back of the further cut in interest rates down to 1.75%.

“..given the current yield curve expectations for a second cut in 2016, my central case is house prices run at three to five times wages, which represents growth of between 6% and 10%.”
The numbers tell the story:

  • 4% capital gain in the past quarter already
  • Brisbane and Adelaide alone have shown an increase of 7.4% and over the last 12 months another 5.6%, according to Corelogic RP Data, which Joye has noted seemingly modest, is 3.5 and 2.7 times the pace of wages growth.
  • RBA Interest rates at historical lows (1.75%)

With the predicted changes to superannuation and low interest rates, property across Australia could be in for a further boost. Especially those markets such as Brisbane and the Gold Coast that are on their upward cycles.

Why Brisbane?

There has never quite been a better time to invest in Brisbane property, unless you were lucky and smart enough to buy up 30+ years ago, not many of us had that opportunity including myself. Recently the Brisbane City Council has prepared a 118 page document outlining the overall plans for infrastructure investment through to 2031, and there is a lot happening!

A simple cornerstone of property investing is to know that you need an excess demand over supply for the values to increase above inflation.

Population in South East QLD expected to grow by around 1.3 million by 2031 to nearly 4.5 million people, roughly 14.1% increase. This will require a lot of new dwellings as you can imagine.

Currently, new house starts are lagging behind this demand. Hence we get boom years. South East QLD is currently going through one of those periods where demand is outstripping supply. That is why prices are increasing. If you would like to find out more please feel free to inquire today on 1300 148 178 or send an email through to info@rogerspropertygroup.com.au

First Home Buyer but no deposit? We can help!

If you are a First Home Buyer looking to get into the market but do not have a deposit then we may be able help you.

Did you know that the government has just increased the “First Home Builders Grant” from $15,000 to $20,000 from the 1st of July 2016? Although that may not be enough for you to enter the market, if you combine that with a cash builders rebate, it may just be enough to get you into your new home.

So, if you are tired of paying rent, have a job and want to live in your very own brand new home, then please contact us on 1300 148 178 or info@rogerspropertygroup.com.au and we may be able to help you.

Brisbane continues to impress investors

Brisbane continues to lead the country for strong capital growth rates according to the latest findings from the quarterly PPA update.

Brisbane’s constant population growth and low unemployment rate are factors that continue to make the city Australia’s number one place to invest. Residential population growth in Brisbane over the past decade or so has grown by around 27%. That’s approximately 400,000 new residents in the CBD with this number expected to double over the next 20 years. That will take the city’s population from 1.7m up to almost 3m people by 2035.

The strong population growth coupled with great affordability makes it excellent value for investors. House prices rose by a little as 15% from 2008 to 2015 while income over the same period grew 31%. Couple this with falling interest rates and Brisbane’s residential stock remains extremely inexpensive. Its affordability index is currently sitting at a very strong 27%.

If you are thinking about getting into this market, it would be advisable to get in before the market rises too much as per Sydney and Melbourne.