Property News from Queensland, Australia Winter 2008 Catch up time While house prices have increased 175 per cent since the mid-1990s, rents have increased by 60 per cent. Now is catch-up time for owners of residential property. Predictions of increases of up to 50 per cent in rent over the next four years have been made on the back of massive immigration to Australia. Vacancy rates are low at 1.7% in Brisbane and rents have risen strongly in the past year. The median rent for three-bedroom houses rose 17% while the typical rent for two-bedroom units rose 18%, with newspaper reports of tenants forced to out bid each other for vacant properties. ______________________________________________________________________________________ How a Sub-Prime Crisis and increases in the price of oil can have such a dramatic impact!! Nine months ago the article below was published -  "New investors capitalizing on rental property shortage" Early in the year we reported that "New research by mortgage lender Wizard Home Loans shows a tightening in the rental market has spurred a record increase in the number of people planning to invest in the residential property market. The latest survey in Wizard's Tomorrow's Property Investors series found the number of Australians planning to buy a residential investment property in the next 12 months has jumped by 35 per cent, and most are first – time investors. About 779,000 in the December quarter signaled an intention to buy, as opposed to 577,000 in the September quarter. "Our research indicates that borrowers are responding to, and attempting to capitalize on, increasing reports of limited supply of rental accommodation and predictions of sharp increases in rental yields," Mr Bouris said. The average household income of aspiring buyers grew to $109,500 from $104,700, according to the results. About 6,000 people took part in the study in the three months to December, 2006." Wizard must have a crystal ball, because right now the greatest problem in our industry is finding property to sell!!  And for tenants -----finding a property to rent!! AND NOW With a general slow down in owner occupied sales and a softening in the building of residential investment housing t the demand for rental property is  ever increasing. The "Weekend Bulletin" - Premium newspaper of the Gold Coast, which regularly has up to 150 pages of residential property advertising printed an article on Tuesday June 17th 2008 headed - "Home prices set to rocket again  Gold Coast house prices are tipped to rise by a nation-leading 22 per cent over the next three years as Australia's fastest population growth in two decades fuels a ferocious demand for housing. The city, along with Brisbane, the Sunshine Coast and Darwin is expected to have the strongest price growth in the country through till 2011, according to leading independent economic forecaster BIS Shrapnel. While another interest rate hike in the September quarter of this year is predicted, this would do little to slow the need for housing on the Coast thanks to continued interstate and overseas migration, "significant" pent-up demand and strong employment and wages growth  The Gold Coast's median house price is expected to rise from $475,000 to $580,000 by 2011 according to BIS Shrapnel senior project manager Angie Zigomanis.The shortage of new properties being built, the strong demand from population growth, both interstate and overseas, and the very low rental vacancy rates on the Gold caost are all the factors bubbling away beneath the surface and fuelling housing demand said Angie Zigomanis."  _______________________________________________________________________________________ Vacancy rates out the window- Fantastic, if you are the owner of the rental property Following increases to headworks (provision for instructure eg. Water, sewerage etc) charges by local Councils in July the affordability of a “home of their own” is becoming in the “too hard basket” for many Australians. This is reflected in increases to the price of bare land. Coupled with high charges from State, Federal Governments and local Councils the ownership- rental gap is widening to the point that approximately 30% of  people will never realize the Australian dream of a home of their own, All of this, together with ever higher rental prices due to the shortage of rental properties everywhere. Naturally, if you are an investor all of these factors add up to a very sound, secure investment with the risk of a vacant property becoming a distant memory. A survey of 3000 people by realestate.com.au revealed: o 41per cent of renters felt helpless in their current rental situation. o A dismal 11 per cent  of renters are happy with their current accommodation. o 34 per cent  of renters feel that given the current housing market, they will never be able to purchase a home of  their own. The majority of respondents would rather stay in sub-ideal rental properties than take their chances in the market.   What land shortage? The shortage of bare land for building has become acute. Demands on Council Planning Departments are so great that developers are waiting for development approvals for up to two years from the time of application. Previously, this would have taken six months, for instance, Property developer, Delfin have 85,000 housing blocks on the list waiting for approval -  such is the backlog of new projects on the drawing board. Queensland- "The Smart State" Increasing job opportunities and diversifying economies now mark the huge continuing growth of the Gold Coast and Brisbane. Employing strategies to make itself “Australia’s Smart State,” the Queensland government says it has now expanded on its traditional tourism and mining industries and is increasingly becoming a central hub for the Asia-Pacific region. Many industries from aquaculture andbiotechnology to pharmaceuticals and major aviation organisations like Boeing and Virgin now call Queensland home. The government says the State’s economic growth rate of 3.8 per cent is 35 per cent higher than the Australian average, its employment growth 38 per cent higher and its population growth 46 per cent higher. It claims it will become Australia’s second largest state in terms of population within the next 30 years. Some 1,500 people a week are moving there each week, including 1,000 to the southeast corner which embraces the capital Brisbane, the Gold Coast, the Sunshine Coast and the areas in between. Meanwhile the Gold Coast is going beyond its tourism capital tag – which still attracts 6 million international and Australian visitors a year – to a wider economic base. Analysts say construction and property services now represent the largest industry contributors to the region, but it is also heavily involved in education, sport, health and medical, environment, creative, information and communications technology. Resolution Research estimates the Gold Coast economy is now wroth about $37 billion a year. The Alberi Park suburb of Holmview is located within The Pacific Innovation Corridor, which is one of Gold Coast City Council’s signature economic developments in its vision to transform the city into a globally connected innovation and technology ‘hot spot and knowledge economy.’ PIC runs from Beenleigh in the north to Coolangatta in the south, taking in 10 Innovation Centres. It employs thousands of people and is a key contributor to Queensland’s economy. Part of the Pacific Innovation Corridor is great transport options. An electric rail service links Brisbane with Robina on the Gold Coast and Holmview Station is part of that service. The billion-dollar M1 provides easy road access to both Brisbane and the Gold Coast. Gold Coast International Airport services the region with frequent domestic services from Melbourne, Sydney, Adelaide and Hobbs and international services from New Zealand, Japan and Asia. Brisbane’s International Airport also provides links to the USA and Europe. What does a football team have to do with property? When the Gold Coast finally won a long battle to have it’s own team in the National Rugby League, everybody on the Gold Coast was ecstatic. Their first year in the competition was amazing. They finished in the middle of the ladder. So…..? Anew $160 million stadium, “Skilled Park” is now completed as is the  transport hub adjoining  and they have unveiled plans to build Australia’s best training facility for professional sport. The $20million, 5 storey luxury training facility will be a major attraction for players to want to join the Titans and also enjoy the best facilities available anywhere as well as enjoying the beauty of our beaches, the cost of living and low land prices. The amount of employment created by the Titans is astounding. Building of  the stadium, training facility, transport hub, the projected Leagues Club, creation and  building of “Skilled Park” next door with commercial and residential buildings creating both employment and accommodation. In the next two years 100,000m2 of office space will be built in Robina. On average,  every 15m2 of office space equates to one new job! Any wonder the demand for residential investment property in Robina is so high- and- the amount of available  stock  for sale  is so low. Footnote: apartments have been increasing in value by an average of $1000 per week for the last two years in Robina. Queensland and New South Wales long suffering motorists nw see light at the end of the tunnel The much-anticipated Tugun bypass opened on 2nd June 2008 thus easing the commute time for residents and tourists travelling between the Gold Coast and Northern New South Wales by at least 20 minutes. The $543 million road, designed to end a chronic bottleneck at the intersection of the M1 and Gold Coast Highway at Tugun was completed six months ahead of time. The Tugun bypass is the most expensive four-lane freeway road built in Australia, costing an average of $72,800 a metre. SUN, surf and cheap beer – it is no wonder 209 people migrate to Queensland each day. According to new figures released by the Australian Bureau of Statistics, Brisbane residents pay less for the average trolley of grocery staples than shoppers in any other capital city across the country. Add beer to the list as well - PLUS by far the cheapest petrol. Impressive figures always a feature on Queensland’s Gold Coast Notwithstanding Beach Babes who loll around on our 52 kilometres of beautiful beaches, check these figures out: Throughout the Gold Coast there are 2194 Council parks covering more than 30,000 hectares, 110 playing fields, 492 barbecues and 2250 pieces of play equipment for the children!  Foreign buyers spent almost $1billion buying Queensland property in the last year. Buyers from Britain own the largest share, together with people from 126 countries Peace of mind insurance Only 10 per cent of the two million investment properties in Australia have some form of rental insurance product. For less than a week’s rent Landlord Protection covers disappearance of a tenant, losses caused by vacancy, damage by tenants, repair of same and rent replacement payable to the owner while said damage is repaired. Easy to arrange- a well worthwhile investment towards a good night’s sleep! fittings – (CHECK have you got a depreciation schedule in place prepared by a quantity surveyor? If needing assistance, give us a call) Interest Legal expenses Accounting fees Maintenance Postage Saving Tax Got your attention? Good. Don’t leave it till the last minute. As an investor, now is a good time to begin  working out your expenses and tax deductions prior to June 30th. You can reduce the amount of your personal tax payable this year by offsetting expenses against your properties. Here are some tips: Attend to maintenance issues before 30th June each financial year Prepay insurance Prepay interest on your investment loan Purchase another investment property (Great thinking!) Maximize your borrowings on rental properties and minimize your family home borrowings Ensure that you claim all deductions possible; Management fees Advertising expenses Body Corporate levies Insurance premiums Rates Bank charges Borrowing costs Depreciation (building, goods, chattels and  faxes Travel expenses to inspect property/ies  Also check www.depreciator.com.au for some more tips.  Bulldozers clearing new Town Centre at Coomera One of the fastest growing areas in all of Queensland, Coomera, is to finally have it’s town centre. After much discussion and delay by Council, major developers and the State Government etc are really "putting in the groundwork" Roads are being re-located, detours abound and millions of tonnes of earth are being moved at a frantic pace. The $200 million centre will have major retail, commercial and residential areas along with a Technical and Further Education College, Library, Town Pool and a bus depot. It will be located adjacent to Dreamworld- one of the Gold Coast’s theme parks So, with rents rising and predictions of increases of up to 50 per cent over the next  4 years, which would certainly take care of any interest rate increases NOW would have to be a fantastic time to be investigating the purchase of your next investment property. Just give us a call - or send an email to ian@realisticproperty.com.au we wil do the rest !  Happy Investing IAN BEGAUD www.realisticproperty.com.au Investing in property should be treated as just that, an investment - it is not an emotional decision and it needs to be based on many criteria – tax and depreciation, demographics, infrastructure planning, changes in Government planning, availability of schools, Universities, medical facilities, leisure and sporting facilities among them. To be assisted with those aspects of your investment, you can be assured of receiving the correct information from our organization and partners.   Disclaimer: The author has collected and collated the information contained herein from third party sources and does not warrant that it has been checked for accuracy. Accordingly, the author takes no responsibility for the consequences of any person relying upon any information contained herein. Anyone considering taking action is directed to discuss any proposed actions with a professional financial consultant.