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Australia Faces Major Housing Undersupply

Experts are predicting that Melbourne is heading for a housing undersupply due to the increase in population.

Not enough houses being built to tackle Australian housing undersupply

Just this week, data released from the Australian Bureau of Statistics (ABS) illuminated the dire undersupply of housing currently besetting the nation. New figures show an unsettling lack of houses, especially where they are needed most — cities such as Melbourne (specifically Melbourne CBD), Sydney, Brisbane and Hobart, all home to impressive population growth rates, are expected to depend greatly on new residential constructions to meet high demand.

The ABS figures showed a 3.3 per cent decline in residential construction in trend terms, with the last quarter of 2017 recording a 0.7 per cent decline — such trends still occur despite population growth, immigration and interstate migration which continue to push Melbourne, Sydney, Brisbane and Hobart well into a more populous future!

AMP Capital’s Shane Oliver told The New Daily said that, for the most part, Australia was near equality in construction versus population growth, but that the last decade of construction had failed to keep up with Australia’s record population growth.

Housing Undersupply in the face of population growth

“If you look at Melbourne there’s 120,000 people moving to it per annum, but only 75,000 houses being built,” said Commsec Senior Economist Ryan Felsman, echoing Oliver’s observation.

The same concerns about Melbourne, specifically Melbourne CBD, have been heard before, the Urban Development Institute of Australia warned last year that the city could have a shortfall of 50,000 houses by 2020.

New-build apartments like the upcoming Palladium Tower in Southbank, are being constructed to address the severe lack of housing in Melbourne. Palladium Tower is strategically located in the Melbourne CBD area, right next to Fishermans Bend, Australia’s largest urban renewal project covering 485 hectares in the heart of Melbourne. By 2050, the area is expected to provide housing for up to 80,000 people, and employment for 40,000.

And yet, experts from BIS Oxford Economics who had gone on record to reverse its initial predictions about the surplus of apartments in the city centre, are stating that Melbourne is headed for an undersupply based on the increase in population.

If we zoom in on Melbourne’s astounding population growth, the shortage of houses will begin to hold even more weight. As of 2016, the estimated residential population in the municipality of the City of Melbourne was 151,176. This figure, when added to the colossal 903,000 people who were recorded to have travelled to or be present in the municipality on an average weekday, produces a whopping 7-digit figure the housing market is not currently prepared for.

Even more surprising is the population growth in Melbourne CBD. The district, which spans only 6.2 km^2, is expected to have a population of 76,982 in 2037, 44% higher than the population in 2017 — this growth forms 29% of the total projected population growth of the City of Melbourne within the same time frame!

To illustrate the critical undersupply in Melbourne, is a recent story of regarding a property developer, Tim Gurner, whose launch of rental apartments at 74 Eastern Road , South Melbourne, amassed a queue of people who snaked around the block to inspect the 47 newly completed units.  

The Australian Financial Review Rich Lister said his 74 Eastern Road apartment development attracted more than 500 inquiries and 150 rental applications without a single advertisement. All the apartments were subsequently leased within a few hours.

“We have been absolutely blown away by the response to the first inspection, which we only advertised with a single sign board on the front facade. Half an hour before the inspection time we already had a line out the door and around the corner,” Mr Gurner told The Australian Financial Review.

Gurner closes his account by declaring that operations that further restrict housing supply, such as increasing taxes on new constructions, will only exacerbate the issue for the house-hunting population.

As expected, high demand for houses will continue to propel Australia’s property market forward. Melbourne, especially, Melbourne CBD, is expected to take the brunt of this undersupply following its high population growth rate.

By Nimue Wafiya

Sources:

https://csiprop.com/the-spiraling-growth-of-melbourne-cbd/

http://melbournepopulation.geografia.com.au/

http://www.afr.com/real-estate/residential/lack-of-apartments-to-rent-will-hurt-in-18-months-says-tim-gurner-20180131-h0r401

https://thenewdaily.com.au/money/property/2018/02/24/australia-not-building-enough-future/

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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The University of Melbourne’s New World-Class Campus

An artist’s impression of the University of Melbourne’s new Fishermans Bend campus (Image credit: The Age)

The University of Melbourne is building a new campus in Fishermans Bend as part of an ambitious A$1 billion plan to create a world-class engineering school in Victoria.

The university’s 2025 Engineering Strategy plan also includes upgrading the engineering facilities at its main Parkville campus site and developing the former Royal Women’s Hospital site. The plan is expected to provide an A$8 billion boost to Victoria’s economy and generate over 15,000 new jobs by 2035.

University of Melbourne’s new campus a catalyst to innovation 

The new campus — the institution’s eighth, to date — is located within Australia’s largest urban renewal project, right in the heart of Melbourne. Construction begins this year and it is expected to be ready in the early 2020s.

Vice-Chancellor Professor Glyn Davis said: “The university will be a catalyst for new collaborations and investments, connecting industry and research in the precinct.

“We have a proud history of innovation in this country. The new campus will give our researchers and students opportunities to work alongside industry, and pursue rich careers right here in Australia.

“When surrounded by start-up accelerators, business incubators, cutting-edge research, development and manufacturing facilities, and test sites, our students can immediately put ideas into action,” he said.

The move to Fishermans Bend will expand the University of Melbourne’s capabilities to undertake large-scale research and innovation, such as autonomous vehicles and smart grid technologies, with the inclusion of on-site facilities such as wind and water tunnels.

University of Melbourne School of Engineering Dean, Professor Iven Mareels said that the new campus would help to create entrepreneurial leaders and transformative technologies of the future.

“The Fishermans Bend campus will initially enable 1,000 engineering and IT students and academics to collaborate with world-leading local and international companies across industrial sectors as diverse as transport, energy, food, mining, infrastructure and water,” he said.

Fishermans Bend is Australia’s largest urban renewal project covering 485 hectares in the heart of Melbourne. It will consist of five precincts across two municipalities – the City of Melbourne and the City of Port Phillip – and connect Melbourne’s CBD to the bay. By 2050, the area is expected to provide housing for up to 80,000 people, and employment for 40,000.

The population growth rate of Melbourne has increased to 2.4%, which means 110,000 people are moving to the city every year. Vacancy rates in Melbourne continue to fall due to the severe undersupply of housing. New-build apartments like the upcoming Palladium Tower in Southbank, are being constructed to address the lack of housing, which is less than 5km away from the new campus, and can be reached by bike in less than 20 mins!

Nearer still, and just 5 mins away by bike from Palladium Tower is the University of Melbourne’s Southbank campus, which is also undergoing a A$200 million transformation. This transformation, expected to be ready by 2020,  will see the Conservatorium staff and students co-located with their colleagues and peers at the Victorian College of the Arts at the heart of the Melbourne Arts Precinct.

Palladium Tower has a walk score of a near perfect 98/100, which reflects how easy it is to get around without a car. With a self-contained Woolworths supermarket, and the Crown Casino & Entertainment Complex, Melbourne Convention & Exhibition Centre, Melbourne Arts Precinct and the Royal Botanical Gardens all within walking distance, Palladium Tower is strategically located at the nexus of all the city has to offer.

Keen to find out more about Palladium Tower or other projects in Melbourne? Give us a call at 03-2162 2260 or 016-221 8691/9150. Feel free to share and comment on this article!

By Ian Choong

Sources:

  1. https://www.alumni.unimelb.edu.au/university-announces-new-engineering-campus
  2. https://www.smh.com.au/national/victoria/students-set-to-take-the-bus-to-melbourne-unis-1b-future-of-engineering-20171221-h08ihg.html
  3. http://finearts-music.unimelb.edu.au/about/campus/southbank-campus-development

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and commercial property including student accommodation and carehomes, in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Melbourne Property is Fastest Selling in Australia

There is incredible demand for property in Melbourne – the fastest selling city in Australia and with extremely low vacancy rates

In Melbourne, house vacancy rates become tighter even as property flies off the market at amazing pace — a clear indication that the city’s property market is undersupplied. Melbourne property is the fastest selling in Australia

Melbourne property is currently the fastest selling amongst Australian cities, at an average period of 33 days. The city tied with Hobart at the top spot, according to a CoreLogic Property Pulse report.

The report revealed that properties sold privately in Australia last year took an average of 45 days to change hands. 40 days was the average for properties in the capital cities.

The average time taken to sell a property was 41 days in Adelaide, 42 in both Sydney and Canberra, 47 in Brisbane, 53 in Perth and 75 in Darwin.

CoreLogic state director for Victoria, Geoff White said that strong buyer demand was keeping Melbourne’s average days on market low, with properties in popular parts of the city commonly selling within a week. He also said that the days to market would remain low for the foreseeable future.

“It won’t change that much unless something significant happens, like an interest rate rise that cools buyer demand, or an influx in supply,”

During this recent Chinese New Year week, Chinese investors had Melbourne property in their sights — up to 125,000 Chinese nationals were Melbourne-bound to celebrate the Golden Week holiday

Carrie Law, the chief executive of leading Chinese property website Juwai.com said that this may be the biggest week of the year for Chinese property buying in Melbourne.

A recent survey done by the portal shows that Australia is the second favourite offshore investment destination for Chinese buyers, behind the US.

Realestate.com.au chief economist Nerida Conisbee said suburbs around Melbourne’s top universities continues to draw strong interest.

“There’s still very much an education focus for Chinese buyers,” she said. “They really continue to see educational institutions as aspirational locations and are looking close to Melbourne’s best universities, Melbourne Uni, Monash Uni, RMIT.”

Low Vacancy Rates & Housing Undersupply 

Even as houses fly off the market, rental prices are rising in Melbourne due to the low vacancy rates.

Figures from SQM Research show just 1.8% (9744 properties) of property in the city was available for rent, down from 2.1% (11,478) in December.

SQM director Louis Christopher said this shows that the dire warnings of apartment oversupply have not eventuated. On the contrary, it looks like there is a housing undersupply in Melbourne. 

“What’s happened here is the population growth rate is a lot faster than the Australian Bureau of Statistics expected and that’s absorbed the additional stock in the market,” he said, adding that  vacancy rates in the Southbank market fell to 3.9% from 6% in January 2017 and Docklands is at 2.8%.

A population growth rate of 2.4% indicates 110,000 people are moving to Melbourne every year. The vacancy rates continue to fall due to the severe undersupply of housing.

Melbourne’s price growth has lowered from the rapid rises seen previously, which will further increase rental take-up and sales. Yet, the city’s price growth continues to outpace all other mainland state capitals, at 7.3%.

Article by Ian Choong

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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The Spiraling Growth of Melbourne CBD

Housing is a necessity in Melbourne. As the population continues to swell, so must housing supply.

Perhaps the easiest measure of how deserving Melbourne is of the World’s Most Liveable City title for the 7th consecutive year, is its increasing population growth. That, and the fact that it is perhaps the most populated state capital city in Australia, with 75% of the population of the entire state of Victoria living in Melbourne city alone.

In 2016, the Australian Bureau of Statistics (ABS) reported Melbourne as having the most epic population growth of any Australian city, making up almost a third of Australia’s population growth. The contrast is quite significant, with 2.4% in Melbourne compared to 1.2% in the rest of Australia.

Australia’s population growth is faster than many OECD countries including Malaysia, Philippines, Singapore and the UK. Image source & credit: ABS

Australia’s population growth is faster than many OECD countries including Malaysia, Philippines, Singapore and the UK. Image source & credit: ABS(For the record, Australia’s population growth is faster than many OECD countries including Malaysia, Philippines, Singapore and the UK. This is an interesting fact because a developed nation’s growth is typically slower than that of a developing nation, hence property prices should grow faster in a developing nation. Australia, however, is the exception.)

In ABS’ latest report, Melbourne (Victoria) continues to headline the country’s population growth of 388,100 people, with an increase of 2.3% year-on-year.

But first, a short lesson in geography: Melbourne, with its population of approximately 4.8 million people, comprises the broader metropolitan area (also known as Greater Melbourne) as well as the city centre. Altogether, it consists of 31 municipalities.

However, this article specifically refers to the city of Melbourne which encompasses the Melbourne CBD, Southbank, Docklands and many of the suburbs in Melbourne’s inner city.

As of 2016, the estimated  residential population in the municipality of the City of Melbourne was 151,176. A whopping approximate of 903,000 people people were recorded as having travelled to, or were present in the municipality on an average weekday in that same year, an increase of 6% from 2014.

Statistics in the City of Melbourne’s Daily Population Estimates and Forecasts reveal that expansion in the city will continue, and is expected to hit 266,455 residents by 2037 due, largely, to births and immigration.  According to projection estimates, there will be over 1 million people in the city on an average weekday within the next 5 years, and 1.4 million by 2036.

By 2037, the population of Melbourne (CBD) is expected to reach 76,982. This is 44.68% higher than the population in 2017. Credit & source: http://bit.ly/2rYxoi3
By 2037, the population of Melbourne (CBD) is expected to reach 76,982. This is 44.68% higher than the population in 2017. Image redit & source: http://bit.ly/2rYxoi3

Recently, BIS Oxford Economics predicted that Melbourne is headed for an undersupply in housing. What makes this especially noteworthy is the fact that it was a complete reversal of its earlier prediction that the city would suffer a surplus of apartments! The consultancy has based its forecast on census figures that show Melbourne had 109,000 more people than previously expected.

“We thought it would get to a 20,000 excess (of apartments) in Victoria by 2018. We’re now saying in 2018, the market has still got an undersupply of about 2000 dwellings. We’re talking a 20,000 turnaround,” said BIS managing director Robert Mellor.

There are currently 25,321 private dwellings in Melbourne (CBD). By 2037, this is expected to increase to 56,838. Image source & credit: http://bit.ly/2rYxoi3
There are currently 25,321 private dwellings in Melbourne (CBD). By 2037, this is expected to increase to 56,838. Image source & credit: http://bit.ly/2rYxoi3

Spiralling Growth in the CBD

Figures by the ABS show that between 1991 and 2016, the population living within 10km of the CBD grew by 40%, from 743,000 to 1,042,000.

Melbourne’s CBD has also seen spectacular growth; with its population swelling from 1611 in 1911 to 15,249 in 2006 and 35,447 in 2016.

The increase in population is reflected by a sharply-tightened vacancy rate of 1.7% and 1.4% for apartment units and houses at as recent as Q3 2017.

According to Mellor, census figures show that the proportion of students rose to 27% demand for inner city apartments in 2016, from 20% in 2011. Students comprise a key demographic occupying apartments in the CBD, where Melbourne’s high-rise supply has been concentrated.

The increase in population is reflected by a sharply-tightened vacancy rate of 1.7% and 1.4% for apartment units and houses in Melbourne at as recent as Q3 2017. Image source & credit: Domain.com.au
The increase in population is reflected by a sharply-tightened vacancy rate of 1.7% and 1.4% for apartment units and houses in Melbourne at as recent as Q3 2017. Image source & credit: Domain.com.au

According to SQM managing director Louis Christopher, the last time the figure slipped as low as 1.7% was in June 2007.

“This is quite remarkable — despite predictions of looming apartment oversupply in inner-city Melbourne, we are seeing vacancies fall rather than rise,” he said.

“Even in the Docklands the vacancy rate tumbled to just 2.4% (as at July 2017), down from a high of 6% in December.”

The tight vacancy rate is good news for landlords, especially if seen from the perspective of future population growth.

By 2037, the CBD’s population is expected to reach 76,982, 44% higher than the population in 2017. Interestingly, this growth forms 29% of the total projected population growth of the City of Melbourne within the same time frame — a significant percentage, particularly if you consider that the CBD spans an area of about only 6.2km2!

In terms of age, the CBD population will be dominated by the 25- to 34-year-olds, followed by the 35- to 44-year-olds by 2037. Logically and based on current property prices, the 25- to 34-year-olds represent the demographic that is most likely to rent a property.  Image credit & source: http://bit.ly/2rYxoi3
In terms of age, the CBD population will be dominated by the 25- to 34-year-olds, followed by the 35- to 44-year-olds by 2037. Logically and based on current property prices, the 25- to 34-year-olds represent the demographic that is most likely to rent a property.  Image credit & source: http://bit.ly/2rYxoi3

In terms of age, the CBD population will be dominated by the 25- to 34-year-olds, followed by the 35- to 44-year-olds by 2037. Logically and based on current property prices, the 25- to 34-year-olds represent the demographic that is most likely to rent a property.  

Meanwhile, housing looks set to increase too, with the number of private dwellings projected to grow to 56,838 in 2037, compared to 25,321 dwellings in 2017.

Back in the day, the CBD was probably last on a laundry list of choice residential areas, but this trend is changing. While the CBD may not be the cheapest area to live in Melbourne, there is a growing community of residents.

What will continue to draw the crowd and keep the CBD alive, are its industries and jobs, and its proximity to universities, festivals and the arts, food and beverage, services and retail.

Article by Vivienne Pal

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Australia Property Outlook 2018

Subdued, Yet Still Robust

It has been said that housing is, by far, one of Australia’s largest assets and the foundation of its household wealth, financial system and economy. Little wonder, that: as of Dec 2017, the total value of the nation’s 10 million residential dwellings stands at $6.8 trillion according to latest official estimates by the Australian Bureau of Statistics (ABS).

Over the last 5 years, house prices in Sydney and Melbourne — two of Australia’s biggest property markets — had increased 75% and 59%, respectively.

Just 3 months ago (Oct 2017), a report by the Swiss-based Bank of International Settlements (BIS) pegged Australia as having the 6th highest rise in annual property prices in the world over the last 5 decades, with house prices surging 6556% since the 1960s at an average increase of 8.1% per year.

Be that as it may, Australia’s housing market saw substantial moderation in 2017 (particularly the second half) led largely by Sydney, and, to a lesser extent, Melbourne, due to stricter lending measures which have affected investor appetite. What, then, would the outlook be like in 2018?

The Bank of International Settlements (BIS) pegged Australia as having the 6th highest rise in annual property prices in the world over the last 5 decades, with house prices surging 6556% since the 1960s at an average increase of 8.1% per year. Image credit: http://bit.ly/2ri0BEl

The Bank of International Settlements (BIS) pegged Australia as having the 6th highest rise in annual property prices in the world over the last 5 decades, with house prices surging 6556% since the 1960s at an average increase of 8.1% per year. Image credit: http://bit.ly/2ri0BEl

The property market will continue to see growth in 2018, albeit at fairly modest levels as tightened regulatory and lending criteria for investors remain in place. The moderation of house values across Australia will be driven by Sydney, which had already begun experiencing a drop in price levels in Nov 2017.

Yes, it does appear that the Sydney boom is over, but while we agree with the common perception that prices in Sydney may fall in 2018, we don’t think the prices will drop drastically within the year.

In Melbourne, price growth will also ease though not at Sydney’s rates, given that property is more affordable. Speculators are pulling back but serious investors know that the city is backed by strong population growth. Again, in both cities, we don’t see anything that suggests widespread declines in prices.

Perth will be a city to watch as we think the housing market has finally reached its bottom. Market experts predict that Perth property prices will be flat in 2018, but that interest levels and, consequently, demand will eventually pick up. A recent ANZ-Property Council Survey reveals that confidence levels in Western Australia are rising to similar levels seen in Australia’s eastern states.

Experts are also predicting modest growth to continue in Adelaide and Brisbane, slowing at more moderate levels in Canberra. Hobart, Australia’s stand-out performer last year, will continue to have strong growth levels, albeit slower than its double-digit surge in 2017.

The value of the property market next year will depend largely on whether the Bank of Australia (RBA) will increase interest rates, or if there will be further tightening on lending criteria. That said, it looks unlikely that interest rates will budge from the 1.5% level that it is at currently.

SILVER LINING

Australia’s housing market has remained vibrant due to active investor activity and strong population growth.

The latest Foreign Investment Review Board (FIRB) Annual Report 2015-2016 found that residential real estate applications had increased by 19% to to $72.4bn in 2015-2016 compared to $60.8bn in the previous year. The total number of applications approved for residential real estate had also jumped from 36,841 to 40,149 during this period. It is interesting to note that residential property approvals comprised 96.9% of all foreign investment approvals.

FIRB's largest residential approvals were in Victoria (44%), followed by New South Wales (32%), Queensland (17%) and Western Australia (4%). Image & source credit: FIRB
FIRB’s largest residential approvals were in Victoria (44%), followed by New South Wales (32%), Queensland (17%) and Western Australia (4%). Image & source credit: FIRB

The largest residential approvals were in Victoria (44%), followed by New South Wales (32%), Queensland (17%) and Western Australia (4%). Meanwhile, the top 10 countries that dominate real estate in Australia include China (highest at $31.9m), US, Singapore, Malaysia and Japan.

It must be noted that Chinese investments has levelled off over the past year due to tightened investment regulations in China. Charles Pittar, CEO of international property site, Juwai.com, said, “Over the past year we have seen growth in Chinese investment level off, from 90% growth in Chinese buyer enquiries via Juwai.com in 2015 to 28% in 2016.”

 

STRONG POPULATION GROWTH

Tightened regulations will continue to moderate investor sentiment, but not too substantially, as the housing market remains underpinned by strong population growth. This will translate to increased demand for housing.

The latest report by the Australian Bureau of Statistics (ABS) shows that Australia’s population grew by 388,100 people with Victoria being the fastest-growing state or territory, with a population increase of 2.3%.

The latest report by the Australian Bureau of Statistics (ABS) shows that Australia’s population grew by 388,100 people and Nett Overseas Migration at a 27% increase. Source & image credit: Australian Bureau of Statistics
The latest report by the Australian Bureau of Statistics (ABS) shows that Australia’s population grew by 388,100 people and Nett Overseas Migration at a 27% increase.  Victoria charted the highest population increase in Australia. Source & image credit: Australian Bureau of Statistics

Nett overseas migration (NOM) was recorded at 245,400 in 2017 — an increase of 27% from the previous 12 months. New South Wales (NSW) was the most popular destination with NOM of 98,600 followed by Victoria with 86,900, Queensland (31,100) and Western Australia (13,100).

“NOM in NSW and Victoria increased by 31% and 23%, respectively. This growth has seen both states surpass their previous recorded high in 2008-09,” said ABS Demography Director Beidar Cho.

 

CONTINUED INVESTMENT POTENTIAL

Despite the cooling in price growths in the mainstream markets, Australia will continue to attract migrants, says Virata Thaivasigamony of CSI Prop.

“There is a strong desire to live in Australia, and this will cause demand for property to increase,” he says. “Naturally, investors will question whether property will remain a good investment, but it is the strategic investors who will view property with a long term outlook. This period of slower growth is a buying opportunity for long term appreciation.”

Movements in some of the main cities in Australia projected from 2017 – 2020. Image source & credit: QBE Housing Outlook 2017-2020

For whatever it’s worth, the current ANZ-Property Council of Australia Confidence Index (March quarter) came in at 137.7 in their latest survey, just below the all-time high of 139.5 in the final quarter of 2017. That’s a lot of confidence in the market!

Article by Vivienne Pal

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc) and Australia (Melbourne, Perth, Brisbane). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Most Liveable City 2017 Goes to Melbourne

The Australian city of Melbourne has been declared the world’s most liveable city again – for the 7th consecutive time. Image credit: http://bit.ly/2wSBIgX

Melbourne is the only country to win World’s Most Liveable City for 7 consecutive years.

The Australian city of Melbourne, Victoria has been declared the world’s most liveable city again – for the 7th consecutive time.

This is the first time in the survey’s 15-year history that a city has held top spot in The Economist Intelligence Unit’s Global Liveability Index for seven consecutive years. Vancouver, which shared the top-ranked spot with Melbourne from 2002 to 2004, held the title for 6 years.

The Economist’s report scores each city out of 100 for stability, healthcare, culture and environment, education and infrastructure. It also looks at factors such as crime, how good the food is and even how bearable the temperature is in each of the 140 cities surveyed. Housing affordability is not considered.

Melbourne’s overall rating is 97.5 out of 100. Little wonder that the population of the city has continued to swell dramatically by around 2000 people a week, a quarter of them from Sydney.

Melbourne is not the only Australian city listed in the Survey. Adelaide is at 5th place (with Calgary in Canada), Perth at 7th place, Sydney at 11th and Brisbane at 16th. Sydney used to be in the global top 10 and is now overtaken by two smaller Australian cities.

Melbourne wins most liveable city again in EIU’s Global Liveability Survey Rankings for 2017. Image credit: The Economist


CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Last Chance: Save ~A$20K Before Stamp Duty Increase on Melbourne Property

Stamp duty will be increasing in Melbourne again. This increase is caused by the removal of the off-plan stamp duty concession on Melbourne property, which will affect all buyers. THIS WEEK COULD PROVE THE LAST CHANCE FOR YOU TO SAVE ~$A20K in stamp duty on Melbourne property.

WANT TO KNOW MORE ABOUT THE STAMP DUTY INCREASE? WATCH THIS VIDEO:

This video follows articles that we had written and published on our website previously regarding this change from as far back as 2 months ago.

To read our article on the new stamp duty increase, please click HERE.

To read about Vacant Residential Property Tax (VRPT), please click HERE.

These articles and video are our way of sharing knowledge with our clients and friends.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Melbourne: Vacancy Tax to Hit Foreign Property Buyers

Foreign buyers who don’t have a tenant in their property (or live in it themselves) for more than 6 months in a year, will be hit with a vacancy tax, effective 1 January 2018. Image credit: sourceable.net

Government measures for affordable housing at expense of foreign investors:

(i) Vacant Residential Property Tax (VRPT)
(ii) New residential developments restricted to only 50% foreign buyers

 

Last month we published an article announcing the latest raft of changes by the government to scrap off-the-plan stamp duty concessions in order to waive stamp duties for first-time buyers of houses worth up to $600,000 in Melbourne. (Click HERE to access the article).

More restrictions are in store for foreign investors. The Victoria government has also now effected a vacancy tax (Vacant Residential Property Tax or VRPT) which will will cost foreign buyers who don’t have a tenant in their property (or live in it themselves) for more than 6 months in a year, an annual penalty of 1% of the property’s capital-improved value. This means investors with a home worth $500,000 will pay $5,000 in tax if they don’t rent the place out.

The tax takes effect on 1 January 2018 and will target homes around inner and middle suburbs of Melbourne. This would include the following local council areas: Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip, Stonnington, Whitehorse and Yarra.

At press time, it is still unknown how the new tax will be applied or policed, but a on the State Revenue Office (SRO) of Victoria website states that the tax will be self-reporting, i.e, owners of vacant residential property will be required to notify the SRO of any vacant properties they own.

Meanwhile, moving forward, developers can only sell 50% of properties in new developments to foreign buyers. This means that at least 50% of new homes will be sold locally.

The suite of changes introduced by the government has drawn mixed reactions from the public and industry players. Some agree that it is a great move towards housing affordability, but there are parties — including from within the party — that have criticised this move.

What’s clear is that while this is a populist move that brings in the votes, it is a temporary measure that could cause the property market to remain on the boil.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Why Investors Must Buy Melbourne Property NOW Before 1 July 2017

The Victoria government has made changes to the stamp duty laws, which effectively means no more off-the-plan concession for investment properties. Image credit: Win Real Estate
  • From 1 July 2017, purchasers of off-the-plan (not yet built) commercial or residential investment properties will be liable to stamp duty on the purchase price or market value of the property (whichever greater)
  • Investors will possibly pay approximately $15K – $20K* more than what they are currently paying
  • Off-the-plan concession only for purchasers who make the property their principal dwelling

Investors should get into the Melbourne property market NOW and exchange by 30 June 2017 to avoid hefty stamp duty charges, which could cost some $15K to $20K* more than current rates. From 1 July 2017, investors of Melbourne property are no longer eligible for stamp duty concessions, resulting in payment of tens of thousands of dollars more. Note: Victoria is the only state in Australia that has stamp duty concessions.

The increase in stamp duty charges are due to the Victoria government’s changes to the First Home Owner Grant and new stamp duty exemptions and reductions for first home buyers (i.e, concessions have been removed to fund these reductions and exemptions). First home buyers in this case refers to local Australians or foreigners with PR who are purchasing a property for the first time with the intent of occupation.  

Effective 1 July 2017, off-the-plan stamp duty concessions will only be available for people who intend to live in the property. First home buyers no longer need to pay stamp duty on properties valued under $600K, while discounts are available on a sliding scale for purchases between $600K – $750K.

Impact of new stamp duty on investors

The new laws will impact borrowing capacity as investors will need to include the new stamp duty into their calculations. We advise that you speak to a mortgage broker to understand its full implications.

How does stamp duty currently work?

Victoria has the highest stamp duty rates in all Australia. However, unlike other states, Victoria stamp duty is split into land and construction.

Investors/owners of completed properties pay FULL stamp duty, fulfilling both the land and construction components.

Investors/owners of off-the-plan property that has yet to commence need only pay stamp duty on the land component.

Investors/owners of off-the-plan property that has begun construction will need to pay duty on the land component plus a tiered payment for the construction component depending on how far along construction has taken place.

Example:

Your apartment is valued at $500,000 and its land is valued at $100,000

PROGRESS OFF-THE-PLAN CONSTRUCTION BEGUN COMPLETED PROPERTY
PAYMENT DUE $2,150 $2,150 + tiered amount $25,070

AVOID FULL STAMP DUTY COSTS OF $15K – $20k* – INVEST IN MELBOURNE NOW AND EXCHANGE BY 30 JUNE 2017.

*The $15K-$20K estimation is benchmarked on a 1-bedroom property priced at $400K-$500K. A 2-bedroom property priced at $1million or more will cost higher stamp duty charges

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

Source: http://bit.ly/2prHWAb or http://bit.ly/2p405Y7

 

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Australia’s Housing Market to Remain Bubbling

Looks like the Australian housing bubble is here to stay for some time yet. Image credit: globalriskinsights.com

Very recently, the Victorian government announced the abolishment of the controversial stamp duty for first-time homebuyers. This ‘lifeline’ to young people struggling to get on the property ladder takes effect from July 2017 and is applicable for any homebuyer in Victoria whose property costs less than AUD$600K.

In a market where experts and market watchers are spouting concern over housing undersupply and skyrocketing house prices, this could well be the road to hell being paved by good intentions’.

Why?

Because simple economics tells us that cheaper property prices (in the form of the abolished stamp duty in this case) will stimulate demand. And increased demand in an overheated market will push prices higher in that price range. Even Federal Treasurer Scott Morrison has shared his reservations, which you can read here.

Compounding this is the low interest rates (the central bank slashed rates twice last year) which  contributed to the boom in house prices, particularly in Melbourne and Sydney. Experts argue that to put a dent in the housing market, the RBA would need to raise interest rates, which is unlikely due to concerns about inflation and the risk that it would impact the economy significantly.

Sharp increases in interest rates may not be the wisest thing to do because it will affect growth and if anything, the RBA would likely increase rates on a gradual basis.

Which is why it may be some time yet before the prices of property will collapse as interest rates would have to rise to a certain level before the property bubble will pop. An article in The Daily Reckoning reports that when the US housing market blew up in 2007/2008n, it was the result of the Federal Reserve raising rates 17 times (25 basis points each time) from 2004 to 2006.

So it seems most likely that the housing market may well bubble merrily away…and house prices in Melbourne at the very least will continue going higher for some time to come.

Read more at http://bit.ly/2m6wLL1

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260