Thinking of investing in property on the Gold Coast?
Local agent Michael Kollosche has some sage advice.
“Throw a dart at anything at the moment, and it’ll do pretty well,” he said.
“The fundamentals of the Gold Coast market are just so strong; there’s probably never been a better time to invest here.”
While prices have been rising steadily – houses in Broadbeach-Burleigh chalked up a remarkable increase of 27.1 per cent last year – everything points to such sterling capital growth continuing.
A raft of ageing baby boomers is now buying second homes on the Gold Coast, cashed-up ex-pats are purchasing in advance for when they’re allowed to return home, and interstate migration is currently at the highest level of the past 15 years, with many Sydneysiders and Melburnians able to work remotely.
Business, in short, is booming.
“And it sounds as if we’re very likely to get the 2032 Olympics; we’re the hot favourites,” says Mr Kollosche of his eponymous agency.
“Of course, we’re also running out of land in the central part of the Gold Coast, so that will force up prices higher still.
“The future is going to be very bright for the Gold Coast, regardless of what happens nationally, and we’ll see strong growth for at least the next five years, possibly 10.”
Prices have certainly been increasing in leaps and bounds, with those for houses in Surfers Paradise growing 13.9 per cent in the year to March, and units by 13 per cent, according to the latest Domain Group figures.
In Coolangatta, houses are up 11.9 per cent and units only a shade less at 11.3 per cent, and apartments in Broadbeach-Burleigh rose by 8.3 per cent.
Such a shiny outlook is now luring investors back to the Gold Coast.
Buyers’ agent Tony Coughran of Gold Coast Property Advisors recently bought a five-year-old, four-bedroom house on 650 square metres in Gilston, at 4 Moondani Drive, for $735,000 for an international investor.
He rented it out four days after settlement for $780 per week, a 5.5 per cent yield.
“I think the sweet spot for investors at the moment are houses up to $800,000, which are renting out well, and duplexes – with much lower body corporate fees than apartments – for around $500,000,” says Mr Coughran.
“Good locations closer to the water and amenities are a great option, but, in this market, you’ve got to be quick when you find something. We’ve got a lot of people from Sydney and Melbourne now buying properties to rent out, planning to move into them later.”
On the northern boundary of the Gold Coast, Jason Read of Raine & Horne Coomera says family houses are a great bet with parents commuting to Brisbane.
At Broadbeach, Jane Lofthouse at Harcourts says the only hurdle is supply.
“So many investors are looking for somewhere to stay eight weeks a year and rent them out the rest of the time either for full-time rentals or short-stays,” she said.
“Everyone, post-COVID, is now looking for lifestyle.”
Article Source: www.domain.com.au
Three out of four mortgage holders who asked for a rate cut, got one: RateCity
While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market
Almost three-quarters of variable borrowers who asked for a rate cut, got one, a new survey has found.
In a RateCity.com.au survey of over 1,000 mortgage holders, of those on a variable rate, 52 per cent haggled with their bank for a lower rate. Over 73 per cent of these people were successful in getting at least one rate cut.
A rate reduction of 0.25 per cent could save the average mortgage holder $1,241 in interest after one year and $3,656 after three years. This is based on a $500,000 loan balance with 25 years remaining.
While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market.
RateCity.com.au home loan database analysis:
- 49 lenders have cut at least one variable rate in the past two months.
- 10 lenders have hiked variable rates in that time.
- The vast majority of variable rate cuts are reserved for new customers, not existing ones.
RateCity research director, Sally Tindall, said while the RBA is not expected to move the cash rate tomorrow, one phone call could potentially save the average variable rate mortgage holder thousands.
“Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,” she said.
“A lot of people think a handful of basis points won’t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years.”
Article Source: www.urban.com.au
Don’t let FOMO rush you into the property market
Hi Nicole. My partner and I are watching what is happening in the property market and I’m starting to feel desperate. It seems like things are crazy. We have been saving hard for three years for a home deposit but prices are increasing faster than we can save. Should we take the leap now and how can we do it without over-committing? Is there any help – or even just guidance – for people like us? It all seems quite scary. Many thanks, Lauren
It is a little tricky without knowing your deposit amount, target property price or location. However, there are certainly a few concessions and strategies that might help.
A couple of these were courtesy of the May federal budget.
The first is that the First Home Loan Deposit Scheme has another year to run.
A further 10,000 places were announced for the 5 per cent deposit scheme, for which the government guarantees another 15 per cent. That means you can borrow 95 per cent of a property’s value but what the guarantee does is avoid the cost of extortionate lenders’ mortgage insurance. This can be tens of thousands of dollars.
The scheme will apply if your household income is less than $125,000 a year. But you should get in quick as the concessional loans have been going fast.
The other newer initiative of note is the expansion of the first home super saver scheme.
With this one, you can tip extra money into your superannuation fund that is allocated specifically for a house purchase.
You can already pay in up to $30,000 but from July, 2022, the allowable amount will rise to $50,000. You can save this over two years and then withdraw it, plus earnings and less tax.
Inside your super, the tax is lower than your marginal tax rate, so you would amass money for a deposit more quickly.
The above measures add to first-home buyer grants and stamp duty waivers that are available, which differ by state, but can apply to homes you build or buy new. For more information, visit your relevant Office of State Revenue website.
The market is rather manic and you must guard against letting that pressure you into borrowing more than you can afford.
Ordinarily, I would advocate saving a 20 per cent deposit to avoid lenders’ mortgage insurance.
However, in capital city markets, where prices are rising by as much as $400 a day, that looks unrealistic. A more reasonable deposit is probably 10 per cent of the purchase price.
Still, make sure borrowing that amount would not put you into mortgage stress – defined as committing more than one-third of your before-tax household income to housing.
Be aware that under bank lending restrictions, a lender may “stress test” whatever you borrow for 2.5 percentage points of interest rate rises. That could reduce your capacity to borrow.
To make sure you are relaxed and comfortable with what you borrow, just calculate one-third of your after-tax income. You could then jump on an online mortgage repayment calculator and play with what loan size that amount of monthly repayments would cover.
Perhaps use an interest rate of 2 per cent, although the best quality loan in the market with a mortgage offset account is just 1.89 per cent.
Do your utmost to limit your borrowings. And, most importantly, remember that the time to buy is when you are ready – not when rushed.
Article Source: www.brisbanetimes.com.au
What does the return of investors mean for the property market?
Throughout the first half of this year, much of the talk of this property boom has been focused on owner-occupiers and especially first home buyers.
Record-low interest rates, a suite of government incentives and a burst of consumer confidence after last year’s dire economic forecasts were proved wrong helped usher in one of the biggest years of growth the Australian housing market has ever seen.
Over the past few months, though, affordability pressures have put the squeeze on those new market entrants, and it’s made way for a fresh wave of investor activity.
Will that shift continue to propel the market to greater gains, or is the heat set to die down? We spoke with Michael Yardney, one of the country’s leading property experts, to get the state of play.
What are the signs that investor activity is on the rise—and why now?
The latest data from the Australian Bureau of Statistics, which tracks new loan commitments for housing, shows a substantial uptick in lending to investors in recent months.
May especially saw a substantial jump in loans to investors of +13.3 per cent, or $9.13 billion for the month. That’s +116 per cent more than the same period last year.
Mr Yardney, a best-selling author, founder and director of Metropole Property Strategists and the name behind one of the world’s leading real estate blogs, Property Update, says lending indicators are all pointing to a resurgence in investor activity.
“In my close to 50 years in the property market, I’ve never seen all the markets coordinate and grow as strongly,” Mr Yardney explains.
“Throughout Australia, investors are reading in the media that properties are going up in value, they’re seeing the value of their home going up, and so they’re also getting confidence to take on a commitment and get into the market.”
“In fact, more are experiencing FOMO, because they think ‘Hey, I’m reading that overall the markets have increased +13.5 per cent this year according to CoreLogic in the last financial year, and most of that’s occurred in the last half of that year.'”
In Mr Yardney’s view, the smartest investors would have already jumped on the rising market in the months prior, but with his forecast of a further +10 per cent growth nationally for the year, there are still big upsides to making a move now, even while rents are still recovering.
“Informed investors have always invested for capital gains rather than cash flow. They recognise that while cash flow keeps them in the game, it’s their capital growth that will get them out of the rat race.”
Many investors are also choosing to sell while the market’s hot. Is that wise?
While plenty of investors are making a fresh leap into the buoyant property market, others are choosing to list their assets and cash in on this year’s staggering growth.
“Yes it’s a trend, and it’s a silly trend,” Mr Yardney says.
“We’re seeing that because they’re seeing the market’s going up and saying ‘I’m making a profit, I’m going to sell.’ But most investors are in it, or should be in it, for the long term.”
As he sees it, acting on emotion rather than being patient and reaping the rewards over the decades is a more sound approach to investing.
“Property investment is the vehicle they’re using to get financial independence and choices in life in the future. For most of the investors we deal with at Metropole, they don’t ever sell. They’re wanting to create intergenerational wealth.”
The conditions now, however, present a good opportunity to capitalise on a hot market and offload any investment properties that aren’t A-grade.
“If they’ve got a secondary property, a dud property, one that’s not very good, this is a good time to sell and buy something better to see you through because you don’t want to be left with a dud property when the cycle finishes,” he says.
How will increased investor activity affect the market?
Investors swooping into an already booming market will no doubt have an impact on other buyers and sellers.
The first half of 2021 saw an influx of first home buyers breaking into the market, and the surging rates of growth have stimulated a lot of conversation around the topic of housing affordability.
Mr Yardney feels this concern is overblown to a degree, though, and it’s more an issue of desired location.
“First home buyers have always had difficulty with affordability,” he says. “I bought my first property for $18,000 in the early 1970s, and I could only go halves with my parents because I couldn’t afford it, and I took out a 30-year loan. We got $12 rent and we were excited.”
He points out that first homeowner activity has reached record levels in the past year, but many of them “want to live in the sort of property it took their parents 40 years to buy. So they’ve got to become more realistic.
“Having said that, moving forward first homeowners are going to have difficulty, and it will take a while. It’s not the level of the mortgage that’s the issue for first homeowners; they don’t bring a trade-in to the market like established home buyers do, so it’s saving the deposit that’s the biggest issue for first home buyers.”
Sellers, meanwhile, have been presented with a golden opportunity thanks to huge demand driven in part by record-low interest rates.
“Sellers are able to take advantage of the biggest property boom in a couple of decades,” he says. “This sort of property boom is a once in a generation thing where you’re going to get all the banks, all the big economists agree this cycle, property values will go up 25 to 30 per cent.”
With investors picking up where some first home buyers have left off, unable to keep up with such rapid growth, it looks like sellers will continue to benefit from a thriving property market.
Mr Yardney does caution, though, that high-density units in inner-cities are still an unattractive option.
“Investors are currently shunning CBD high-rise Legoland apartments which are proving to be poor investments and are being very cautious about buying off the plan,” he says. They seem to be more informed and not lured by unrealistic promises from developers and project marketers.”
So what comes next?
With first home buyers pulling back, investors upping their activity and a fresh coronavirus outbreak throwing the country into varying states of disarray, what could be around the corner for real estate?
“I believe in the second half of 2021, overall property values are going to go up 10 per cent,” Mr Yardney predicts.
“The investors and homebuyers have worked their way through Covid. They’re used to it now. It’s a nuisance, it’s a setback, but it’s not stopping them.”
He notes that, while the economy is likely to take a hit as a result of prolonged lockdowns, “we’ve seen what happened after Melbourne—once the gates are opened up, people are going to get going again.”
He characterises the current market as a “cycle of upgraders,” saying tenants are buying their first homes while homeowners are upgrading their properties or moving to better locations, all as a result of low interest rates.
“Why are property values going up? Because people can afford it. Despite people saying it’s unaffordable—if it wasn’t, there wouldn’t be so many people taking loans and buying properties. Because the banks are still very strict with their lending criteria.”
Ultimately, it looks like there’s plenty more action to come in this year’s property boom.
Article Source: www.openagent.com.au
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