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Is Brisbane the New Sydney?

Search any travel guide on Australia and chances are Sydney will be named as the best city to visit. What is there not to love about Sydney? It has two of the most iconic tourist attractions in the world in the Sydney Opera House and Sydney Harbor Bridge. The University of Sydney and the University of New South Wales are among the top 50 educational institutions in the world. Sydney is also widely regarded as the financial hub of the Pacific.These conditions plus a thriving economy, friendly interest rates and a growing population have contributed to the consistent rise of Sydney’s real estate prices. Sydney is currently ranked 4th to 7th in most surveys on the most expensive real estate properties in the world. Yet interest in Sydney real estate continues to grow particularly from overseas markets like China, the US and Singapore.But recent data suggests that property growth in Sydney has slowed down and Brisbane may be the new investment hotbed in Australia. The consensus among market analysts is that Sydney real estate prices have risen to a point that Sydneysiders can no longer afford to buy property.According to MacQuarie Research, when price housing differentials in Sydney and Melbourne have grown to nearly twice that of Brisbane (See Fig.1), it leads to shifts in demand that favor the capital of Queensland. This is because demand for properties in Sydney and Melbourne is no longer sustainable. Fig 1 House price relativities – Price differentials between Sydney and Melbourne, relative to Brisbane, have reached stretched levels, which have historically been followed by multi-year reversions.  Currently, properties in Sydney and Melbourne can purchase 2.2 times and 1.5 times properties...
3 Reasons Why You Should Invest in Brisbane Property over Sydney or Melbourne

3 Reasons Why You Should Invest in Brisbane Property over Sydney or Melbourne

If you’re thinking of buying real estate property in Australia, most likely Sydney and Melbourne are on top of your list. These 2 cities are widely recognized as the centers of business in Australia and are popular tourist destinations.But here are 3 reasons why you may wish to consider investing in Brisbane over Sydney or Brisbane: 1. Higher Population GrowthPresently, Brisbane is in a situation where it has an over-supply of dwellings. In the 3rd Quarter of 2016, Brisbane had 68,000 dwellings under construction. However, the population increased modestly by 42,000. Overall, Brisbane’s population grew by only 1.4% from 2015 to 2016.Slow population growth combined with a surplus in dwellings has dampened increases in property prices the past 2.5 years (See Fig. 2).But all of that is about to change. Fig 2 Population & migration: regional swings – After growing at a significantly faster pace over most of the last decade, Qld & WA population growth rates have slowed markedly, whilst surging net migration flows into NSW & Victoria have driven a lift in population growth in Australia’s South East.  Price differentials have increased between Brisbane and its counterparts from the South, Sydney and Melbourne. The differences in pricing have grown to a point whereby property in Sydney and Melbourne could buy property in Brisbane by 2.2 times and 1.5 times respectively (See Fig.1). Fig 1 House price relativities – Price differentials between Sydney and Melbourne, relative to Brisbane, have reached stretched levels, which have historically been followed by multi-year reversions.  Put simply, prices of real estate in Sydney and Melbourne are no longer affordable that investors and property buyers are...

The Pros and Cons of Buying a New Property as an Investment

It is human nature to prefer brand new items over used or old ones. Whether you are talking about cars, shoes, mobile phones, computers or appliances, you are almost always advised to go with brand new. But cars, shoes and the rest depreciate over time. Property on the other hand, will appreciate.If you buy an old home, it will cost you less and proper renovation will enable you to enjoy a hefty profit. But what about buying new property?According to a survey by Trulia, the ratio of people who prefer to buy new property to old property is better than 2 to 1. By definition, a “new home” is brand new or never been lived in. It can also be a home that is purchased during its pre-construction stage.So is it really better to buy a new home? Logic and a sense of pragmatism say, “Yes”. But before you decide, here are the pros and cons of buying a new property: Pros: 1. Customized DesignOne of the fun things about buying a new property is having your say in the design process. The architect or developer will surely welcome your inputs so the house can have elements that best represent your personality. It’s literally having the dream house you’ve thought about your entire life built before your eyes. 2. Ready For Move InIf you’re not the type who wants to wait one and a half to two years having your home built, you always have the option to buy newly constructed houses. There is no need to review design drawings, color palettes or debate whether the stairwell should feature stainless or...

Pros and Cons of Buying an Old Property as an Investment

There is a certain allure to buying an old property; a whimsical proposition similar to the charm offered by an antique. There is history within those walls; aged perhaps but rich in character and personality. But beyond the romanticism lies the reality that buying an old home is a decision that has its share of risk and rewards. Here are the pros and cons of buying an old property as an Investment: Pros:1. Lower Acquisition Cost Generally, buying an old home should cost you less compared to a new one. Of course, this is not always the case. While the house itself is a depreciating asset, the land on which it stands is not.The final cost of the old property would depend on the location, its overall condition and the average selling prices of similar houses within the area.If you did a comparison, you would find that a modern 3 bedroom house would be priced much higher than an older home with the same number of rooms. 2. Prime LocationMany older homes were built at a time when the area itself was in its early development stages. They are usually located closer to the commercial and business districts of the city which are key contributing factors to the value of the property.The home itself could be located within proximity of schools, small shops, supermarkets, banks and public transportation. These amenities not only provide convenience but also generate more interest in the property despite its age.  Many older homes were built at a time when the area itself was in its early development stages. They are usually located closer to the...

Housing affordability – how income to price ratios have changed

Over the past decade, there is no doubt there has been a property boom across the country, particularly in Sydney and Melbourne. This boom has spawned many heated conversations about the affordability of housing and whether it’s becoming more and more difficult for generations to enter the property market. Much of this debate is due to changes in income to price ratios. Income to price ratios is measured by average house prices as a multiple of average household income. According to Core Logic, Sydney is currently the most unaffordable with a ratio of 8.4-times, with Darwin the most affordable at 4.7-times. The Australian property market is made up of micro-hubs, meaning that each of our capital cities has their own property market. As you can see in the above graph, no two capital cities have the same income to price ratio, making some areas more affordable than others. Sydney and Melbourne, the country’s largest capital cities, are the main drivers of price where there are continued population growth and more demand than supply. Core Logic’s recent Home Value Index states house prices in Sydney are up 18.4 per cent on a year ago, making it the highest annual growth rate in 14 years. Head of Research, Tim Lawless says “The strong growth conditions across Sydney have provided a substantial wealth boost for homeowners, however, the flip side is that housing costs are becoming increasingly out of reach. This is especially true for price-sensitive segments of the market such as first-time buyers and low-income families,” (source: News.com.au, March 2, 2017: http://www.news.com.au/finance/real-estate/buying/annual-growth-in-sydney-house-prices-the-strongest-in-14-years/news-story/86990c26dd01855d2b98428ff910e6c6) If we compare these results to the income to...