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Keeping a Close Watch on Perth Property

Property in Melbourne and Sydney often hog  the limelight, but savvy and seasoned investors are keeping a close watch on the West Australian city of Perth.

West Australian property is proving its broad appeal, with new figures from the Foreign Investment Review Board (FIRB) revealing a total of 2043 approvals for foreign buyers, an increase of almost 30% from the 1572 in the previous financial year.

To recap, Victoria topped the list with 16,775 approvals, followed by NSW with 12,349 and Queensland with 5023, with a big number of approvals for overseas buyers from the Chinese.

The Numbers are Looking Good

In the not too distant past, news had circulated of the mining slump adversely affecting Perth’s economy and softening the housing market. However, sales volume data up to March 2016 show signs of a bounce in consumer confidence. It appears that the property market is close to or at the bottom of the cycle with industry experts predicting a cautiously optimistic outlook for Perth in 2016.

This chimes with official figures released by the Australian Bureau of Statistics (ABS) which show a 0.5% jump in Perth’s residential property prices in the December 2015 quarter, marking an end to the trend of sliding property prices recorded since late 2013.

“The performance of the housing market is tied to the economy, which is reflected in unemployment rates/employment opportunities,” says CSI Prop spokesman Virata Thaivasigamony.

“And, here’s the thing: all that negative predictions of a boom or bust in the WA economy that has been going around, has not been reflected in employment stats. In reality, Perth’s economy is more diversified and not solely driven by the mining industry as people make it out to be.

“ABS’ labour force figures for March 2016 show WA’s unemployment rate had fallen to 5.5% — which is below the national unemployment rate of 5.7%. Of course Australia’s economic performance in general is tied to the global economy, but from these numbers, the WA economy isn’t a lost cause and the reason why the Perth property market hasn’t tanked drastically as has been predicted,” Virata adds, citing Melbourne as yet another city that has defied years of doomsaying.

According to ABS, WA’s unemployment rate is lower than Victoria’s (5.7%), Queensland’s (6.1%), South Australia’s (7.%) and Tasmania’s (6.8%), and marginally higher than NSW’s (5.3%).

Meanwhile, Perth’s population is expected to increase by 70% to 3.5 million by 2050. ABS statistics show that Perth’s population growth is scheduled to overtake Brisbane by 2028, becoming the third largest city in Australia. Wise investors are looking to leverage on this growth by investing in strategically located property at currently affordable prices (while there is little competition among buyers) in order to achieve strong capital growth in the coming decades. Note that prices of inner city property is far more affordable than a similarly located project in Sydney.

10 Years Rental Assurance

Investors looking to also benefit both in the short term (rental income) and long term (capital growth) can apply for the National Rental Affordability Scheme (NRAS), a joint Australia and WA Government initiative to increase the supply of new affordable rental dwellings in WA.

Under the NRAS, applicants can apply for annual incentives to buy and rent their homes to low and moderate income households (tenants must be approved by Australian Government).

NRAS landlords rest assured that their property will be the first pick among the rental community as the property must be rented at a 20% discount. However, this amount is paid back by the government to the landlord as an incentive. These incentives, totalling over A$100K, is tax-free.

In fact, these incentives are worth more than the discount given, which essentially means the landlords benefit a great deal at the end of the day.

Landlords end up with a 7.2% gross rental yield vs a typical property which generates only 4% – 5%. This also means that investors are essentially assured of rental for 10 years at a higher return.

Call us at 03-2162 2260 to learn more about Perth property, discuss options or how you can be part of the NRAS programme.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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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Foreign Investment in Australia Property at Record High

Approvals for foreign investment in Australian property hit a record high of  A$61bn, an increase of 75% in the 2014-15 financial year, possibly accounting for approximately a quarter of new developments Down Under.

This increase is on the back of a 102% spike on the year before.

The Foreign Investment Review Board (FIRB) records 36,841 (60% more than FYE 2013-14) applications by non-citizens and non-permanent residents to buy residential properties, representing 81% of total value of residential building approvals in 2014-15.

According to UBS economists, 75% of these new properties are located in NSW and Victoria, with data strongly suggesting that most were concentrated in the inner-city high-rise markets of Melbourne, Sydney and Brisbane.

“From these approvals, it is estimated that roughly about 1 in 3 convert into actual investment which means foreign investment accounts for about 25% of the new developments in Australia. The highest proportion of real estate investments by foreigners into Australia comes from China while Singaporeans and Malaysians have also been identified as some of the top investors in Australian residential real estate,” said CSI Prop spokesperson Virata Thaivasigamony.

“Australia’s popularity amongst investors is not unfounded due to its sound economy and policies. However, investors should study the markets well and find out which states and sectors general investment monies are going into before putting money down on property for investment. We place a lot of emphasis on research and we cannot stress more how important knowing the market is.”

Newsflash: Victoria Doubles Foreign Buyer Stamp Duty

“Victoria’s surcharge on foreign owners of residential real estate has been in effect since July 2015, but it has had little impact on foreign demand. Similarly, we don’t see a significant impact with this new surcharge increase, but we are bracing ourselves for a surge in demand over the next two months as investors rush to save on the surcharge hike,” said Virata.

With the increase in foreign investment in property in Victoria, the government is taking action to ensure foreign buyers of residential real estate contribute their fair share to the liveability of the state.

To this end, the Australian government is increasing stamp duty surcharge on foreign buyers of residential property from 3% to 7%, applicable to contracts signed on or after 1 July 2016.

Additionally, land tax surcharge on absentee owners will also rise from 0.5% to 1.5% from the 2017 land tax year.

“Australia is headed for an election and one of the biggest challenges the government faces is the complaint from voters that foreigners are buying and pushing up prices; this could be a form of appeasement.

“Victoria’s surcharge on foreign owners of residential real estate has been in effect since July 2015, but it has had little impact on foreign demand. Similarly, we don’t see a significant impact with this new surcharge increase, but we are bracing ourselves for a surge in demand over the next two months as investors rush to save on the surcharge hike,” said Virata.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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 Silver Lining Behind Perth Property

Imagine owning a home just within walking distance from Cottlesloe Beach in Perth, Australia. It’s a buyers market now, and chances are, you can! Photo Credit: http://www.bosso.com.au/portfolio/cottlesloe-beach/

With property prices softened, buyers can now call the shots, purchasing real estate in some of the best suburbs at lowered prices. Strategic purchases will yield better returns and result in greater appreciation when the property market escalates.

The Perth property market has been on a decline over the last few years, but it may be that the market has bottomed out. Official figures released by the Australian Bureau of Statistics show that Perth’s residential property prices jumped 0.5% in the December quarter, ending the ongoing trend of sliding property prices recorded since late 2013.

That said, industry observers are remaining conservative, predicting a mild rise in prices (or for some, not at all) in 2016. Still, as they say, behind every cloud is a silver lining. It is now a buyers’ market in Perth and, coupled with low interest rates, a great time to shop for real estate. In time, when the market recovers, property is bound to see a corresponding rise in value.

What you COULD get with $A1million

So what can you get with A$1 million in West Australia today? Most likely an impressive 2-storey house near the city, acreage in the east or a beachfront cottage in the South West, reports the West Australian.

  • In Perth North – $999K buys a 4-bedroom, 2-storey house 10km from the city in Stirling.
  • In Perth South – $999K buys a 3-bedroom, 2-bathroom townhouse with a shared tennis court.
  • In Perth Southwest – $1 million could get you a beachfront property.
  • In Mosman Park – traditionally one of Perth’s most expensive suburbs – you could get a home for below $1 million.

What you SHOULD get with A$1 million

If you’re looking to take advantage of the market and get a better long term investment, a wise move would be to buy in sought-after suburbs that have seen a temporary softening in price instead of splurging on bigger and fancier homes.

There are predictions that older entry-level properties in suburbs like East Fremantle and Wembley Downs in the $550,000-plus range will see capital growth of up to 10% in the next 12-18 months.

“We are firm believers that location plays a big role in your investment. It makes logical sense to pay for a good location that has lots of potential for growth,” says CSI Prop spokesperson Virata Thaivasigamony.

“We like areas with infrastructural growth and job employment like Atwell, but we also see the potential in established locations like Cottlesloe, West Perth and Southwest Perth where capital appreciation is concerned. Of course, it is the buying motive will guide the purchase at the end of the day. The important thing is to speak to people who know the market, consult your own tax advisors, do your research,” he adds.

Are you watching the Perth suburbs? Here’s a list of bargain buy suburbs courtesy of Realestate.com.au:

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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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Australian Suburbs Blacklist 2016

Bangaroo, Sydney. Credit: Taken from http://bit.ly/1Ri9DWf

Summary:

·       AMP Bank has blacklisted 140 apartment suburbs across Australia due to oversupply and other issues

·       Queensland and Western Australia lead with most blacklisted suburbs

·       In Australian capital cities Sydney CBD and Melbourne CBD tops the blacklist for high rise builds

AMP BANK has blacklisted apartments in more than 140 suburbs due to growing concerns of oversupply, off-the-plan sales and falling prices. The list was leaked and published in the Australian Financial Review yesterday.

The concern of oversupply could push down prices, rents and lead to defaults. AMP is not the only big lender circulating black lists, where buyers will face tougher terms on the amount borrowed, number of apartments purchased in a single development and a ban on using some incentives offered by developers, such as rental guarantees. Last year, NAB had blacklisted more than 80 suburbs across Down Under where they capped LTVs in the area.

Currently, Queensland and Western Australia leads AMP’s blacklist, while among capital cities, Sydney tops both AMP and NAB’s ‘high risk’ list, as building of apartments has boomed due to demand from investors and first-time buyers. Melbourne is not spared either, namely the CBD, Docklands and Southbank.

What’s worth flagging is that Brisbane CBD, Melbourne CBD, Perth CBD, and Sydney CBD have appeared on both NAB’s blacklist in 2015 and AMP’s blacklist this year.

“We have been warning our clients that the CBD is not the place to invest in as valuations have been unfavourable. We have refrained from marketing Sydney property as prices have gone too high and there is a great oversupply there. AMP’s blacklist just confirms our predictions,” says CSI Prop spokesperson Virata Thaivasigamony.

“Our objective is to make a difference in the lives of our clients, to help them achieve their investment goals, which is why our projects are concentrated in locations that have sound growth potential. We pride ourselves on our research, which is the bedrock of the investment projects that we offer,” he adds.

An estimated 45,000 apartments are due for completion and settlement over the next nine months to Christmas in Melbourne, Sydney and Brisbane, an increase of nearly 25 per cent compared to last year, with another 53,000 coming to the market in the same postcodes next year, according to planning consultancy MacroPlan Dimasi.

Below: AMP’s Apartment Suburb Blacklist 2016

Credit: Australia Financial Review http://www.afr.com/real-estate/amp-blacklists-more-than-140-suburbs-for-apartment-lending-20160322-gno3em

To read more about AMP’s Apartment Blacklisted Suburbs 2016, click http://bit.ly/1RAp8Li

To compare with NAB’s credit risk list in 2015, read: http://bit.ly/1MDqT2P

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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: CBD or Fringe

Melbourne to overtake Sydney as largest city in 2053. Source: Australia Bureau of Statistics

MELBOURNE PROPERTY: CBD VS FRINGE

Among all the states in Australia, statistics show that Victoria will have the largest population in the future, driven by massive and rapid growth in Melbourne city (source: CBRE). The Australia Bureau of Statistics projects that Melbourne will overtake Sydney as Australia’s biggest city in 2053.

It’s easy to understand why – spurred by a highly diversified economy and world-class education and tourism, Melbourne has been named Most Liveable City five times consecutively since 2011.

Smart investors looking to net significant rental income from the growing population have been investing their money in various suburbs across this beautiful city.

The key question is, where is the best place to invest in Melbourne?

MELBOURNE CBD: SMART INVESTORS STAY AWAY

Melbourne CBD is an amazing place – organized, pretty, artistic and with amazing walkability scores – and we love it! From an investment point of view, however, property in the CBD is an absolute NO.

Here’s why:

  1. Valuation for property in the CBD has been 20%++ BELOW purchase price

In the CBD, housing projects are confined to high-rise development only, which usually takes about four to five years to complete. The team at CSI Prop has heard from many of those who had previously invested in CBD property, complaints that the banks had undervalued their property by 20% lower (or more) than purchase price. Statistics have shown that the average property price in Melbourne increases by 9.53% each year (source: Australia Property Monitors). This essentially means that the abovementioned properties in the CBD had not only been valuated BELOW its original purchase price, it had also depreciated! Speak to a licensed independent mortgage broker or lawyer for Australian property if you want verification.

  1. The last three years have seen NEGATIVE capital appreciation in CBD property (source: Australian Property Monitors).
  2. The CBD is approaching an oversupply of apartments. There is increasingly higher vacancies as more properties come to completion.

Melbourne CBD approvals for six months of 2015 was 12,516. Melbourne’s high-rise boom currently encompasses 33 towers under construction and a further 39 to be built, according to Skyscraper, Activity Monitor and UrbanMelbourne. Researcher BIS Shrapnel said, “The city is already heading for a glut of apartments. By June 2016, there will be a surplus of 15,000.”

  1. No Exit for the next 10 Years++

Last September, Australian website Domain.com published that investors should “get out as soon as possible (otherwise) it will take 10 to 15 years before you get your money back.” This is due to (i) the oversupply of apartments in the CBD and (ii) Australians generally dislike living in the CBD. In case you didn’t already know, foreigners are not allowed to purchase property in the secondary market. Which simply means that foreign investors looking to exit the market are only allowed to sell to Australians. But Australians don’t like living in the CBD…

 

CBD FRINGE PROPERTY – HIGH RETURNS, GREATER CAPITAL APPRECIATION

Research has shown that investing in property located at the CBD fringe is the most rewarding. We at CSI Prop are supporters of properties located in these locations, based on our own research which is backed by industry experts.

Property located in the CBD fringe are a top choice because:

  1. They are extremely accessible to the city by all kinds of transport including walking, yet removed enough from its hustle and bustle.
  2. Many are located close to areas with lots of green, F&B outlets, entertainment and the arts.
  3. Good appreciation value. If you invest in the right location, you should be able to own seven properties in 10 years, with an initial capital of only RM100,000. Ask us how.

We leave you with a chart of the top CBD-fringe suburbs to invest in:

Melbourne-Fringe-VS-CBD-csiprop
Comparative data of property located at Melbourne CBD-fringe

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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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Australian Property: Doomsayer’s Obsession

Economist Steve Keen at the summit of Mount Kosciuszko after losing a bet house prices would plummet 40 per cent. Photo: Andrew Meares. Credit: Domain website http://bit.ly/1T7b9MT

“…we can live without gold, we can even now live without oil, we can live without stocks and shares, we can live without just about everything now, but we can’t live without somewhere to live. There is this whole crowd of people who love to give the property market a hard time as if it is a bad boy for making people money.”

IN 2010, Steve Keen undertook a 224-kilometre walk from Canberra’s Parliament House to the Snowy Mountains’ Mount Kosciuszko wearing a T-shirt with the words, “I was hopelessly wrong on house prices. Ask me how.” The walk was the result of a lost wager – the economist had made a bet with Macquarie Bank analyst Rory Robertson that home prices would fall 40% from peak to trough in a year.

Contrary to Keen’s prediction, capital city house prices in Australia rose by 12.1%, hitting a new high, as demand from first-home buyers sparked a revival at the lower end of the market.

In 2014, American economist Henry Dent forecast a fall in house prices of at least 27% in Sydney and Melbourne over the next several years. Macroeconomic researcher Lindsay David followed suit with his prediction of a housing bloodbath in the same year.

UK-based economist Jonathan Tepper is the latest in a line of doomsayers touting the proverbial Australian housing bubble and the property market crash of between 30% and 50% in values.

“Australia now has the highest level of household debt to GDP in the entire world,” says Tepper, following his well-publicised research ‘expedition’ in Sydney’s Western suburbs.

It’s fascinating how his predictions are based on a rather unrepresentative sample of the entire Australia. Equally fascinating is the forbearance of Australian industry experts and how they have patiently swatted away predictions by doomsayers time and again.

AMP Capital chief economist Shane Oliver said: “In a way I think it is a bit of a joke, this sort of story has been wheeled out almost continuously now since 2002, 2003. We had a big run up in property prices then and it did become a bit bubbly around that time and of course various people were inclined to think that property could crash. Then as the years rolled on I began to realise and I think most people in Australia realised, that the Australian property market is a lot more complex and a lot more stable than people give it credit for and the reason prices don’t crash is because we don’t have an oversupply like America did at the time of the GFC.’’

Real estate expert Andrew Winter said commentators who expressed this kind of “drama” about the market were forgetting what the commodity was.

“This commodity is property, residential property, and that is where all the calculations fail. For the simple reason is we can live without gold, we can even now live without oil, we can live without stocks and shares, we can live without just about everything now, but we can’t live without somewhere to live. There is this whole crowd of people who love to give the property market a hard time as it if it is a bad boy for making people money.”

Truthfully, there is much to be considered in the life and times of the Australian property market – not just prices in Sydney and one or two suburbs in Melbourne.

Things are going well Down Under, overall: the RBA has highlighted lower unemployment, above-average business conditions and stronger business lending, noting expansion in the non-mining parts of the economy had strengthened during 2015. The facts speak for themselves; research has shown that the Australian population is slated to increase over the years with Melbourne leading the way.

CSI Prop spokesperson Virata Thaivasigamony chuckled at the recent prediction made by Tepper, joking that doomsaying helps make headlines and drive newspaper sales.

“Australia has one of the highest population growth trends, superseding a good number of developed countries in child birth rates. Its capital appreciation rates are unlike Singapore, Hong Kong and Malaysia – there are no steep fluctuations. The last 50 years have seen Australia’s appreciation rates on average rise at a steady 7% thereabouts, which I would attribute to population growth. And with population growth comes increase in demand for housing,” he said.

But as they say, there are two sides to a story, just like there is always more than one story. Ultimately, the decision lies in the hands of the buyer/investor. As always, we strongly advise investors to research the market: do some reading and/or call us for obligation-free consultation and advice so that you can make informed decisions. At Cornerstone International, we place great value on research and strive to offer viable investment projects backed by research.

For now, let us leave you with a darkly humorous parting shot: predicting when the property bubble will pop is bad for your mental health, according to the Sydney Morning Herald J

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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 Suburbs to Watch in 2016

Melbourne Suburbs

If you’re watching the Melbourne suburbs market following our last posting on the Australia Outlook for 2016, here are some tips to give you a heads-up on what Melbourne suburbs to look out for in this city this year.

To recap, Melbourne did pretty well last year, ending 2015 on a high auction note compared to other cities in Australia. However, median house prices growth is expected to moderate this year, yet the increasing population and relatively low interest rates will continue to fuel interest in the property market in Melbourne.

Real Estate Institute Victoria (REIV) expects moderate growth across the city in 2016, with further price increases in a range of suburbs in Melbourne’s inner, middle and outer rings.

Based on research by the REIV, here are the suburbs to look out for:

West of CBD

  1. Footscray
  2. Altona
  3. Sunshine
  4. Spotswood

North of CBD 

  1. Preston
  2. Epping

East of CBD

  1.  Burwood East
  2. Montrose
  3. Mount Waverley
  4. Glen Waverley

South of CBD

  1.  Seaford
  2. Chelsea

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CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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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Outlook 2016: AUSTRALIA

TALK is rife that the Australian property market is poised to slow down and prices are set to slump, attributed to an ongoing market correction in Perth and Darwin, and the APRA actions of restricting credit growth.

As usual, this has sparked a debate among the experts. Some say that Australia’s housing price boom has hit its peak, and there could be an impending recession. Other industry insiders say that a price correction is part of the cycle. Macquarie predicted a dip in house prices of as much as 7.5% by March 2016 – a figure that some experts have dismissed.

Naturally, this has sparked concern among investors and home buyers on how major Australian cities like Melbourne, Sydney and Perth will be affected.

Louis Christopher, managing director of independent property research company SQM Research, forecasts that the national housing market will slow down in 2016 predominantly as a result of a slowing Sydney housing market, but that the market will not record a fall in prices for the year.

Perth and Darwin are reported to experience the largest falls in rents, but this is just part of an ongoing trend currently being recorded in the two cities, says Christopher.

All said and done, there’s no need for hysterics or dramatics. “I don’t think there is any immediate danger of a significant fall in house prices – 7.5% is remarkably precise and you’re brave to be that precise in forecasts about the housing market,” says Saul Eslake, a leading Australian economist, arguing that even though house prices might be overvalued, did not mean they’d fall in the same way as stocks.

Melbourne to Outshine Sydney!

It certainly isn’t all doom and gloom. In spite of the bleak news, SQM’s 2016 Housing Boom and Bust Report forecasts that average capital city dwelling prices will rise between 3% and 7% next year (the last 12 months up to June 2015 posted a 9.8% rise).

So, yes, the fact is that there has been a moderation in Australia’s housing market, but this is normal and part of the cycle that affects housing markets all over the world. Corrections are to be expected in markets that have boomed in recent years as part and parcel of rebalancing, i.e, markets which have experienced the most robust price growth and where conditions have been imbalanced.

Additionally, Melbourne is set to outshine Sydney on property price growth, with a rise in Melbourne residences predicted to between 8% and 13%. Rents in Hobart and Gold Coast are also set to increase.

And while Sydney has been in the media for its huge rate of capital growth, Melbourne has experienced five years of 15% plus annual growth since the year 2000.

The streets of Melbourne are always full of character

Melbourne : The Figures Don’t Lie

Having been ranked the World’s Most Liveable City for the 5th year, Melbourne is an interesting city to watch as the numbers and fundamentals seem to be in its favour. Let’s consider the facts:

  • With 100,000 people migrating to Melbourne each year, Australia Bureau of Statistics projections has Melbourne overtaking Sydney as Australia’s biggest city in 2056.
  • The current population of 4.35 million is anticipated to reach 7.7 million.
  • With an average of 2.6 people per household, 38,000 properties are needed per year to accommodate that growth.
  • In 2014 Melbourne’s recorded median housing price of A$630,000 registered more than a 16% annual growth figure, after negative growth of nearly 5% during the 2012 downturn.
  • To learn more about the growth boom in Melbourne, watch this special news documentary by 7 News. Hover and click on the link to watch the videos.

#DidYouKnow that 63% of Malaysians choose to migrate to Melbourne?

In conclusion, the facts speak for themselves. The threat of a massive oversupply in Melbourne may well be overstated, say some experts, given the fall of vacancy rates as population growth and housing formation have quickly absorbed new housing stock being completed.

There are still many affordable properties available in the inner north and south of the city. Melbourne’s most affordable 1-bedroom apartments are located in Carlton, Carnegie in the southeast, Elwood and St Kilda. Whilst in the city’s west, there is Footscray and Maribyrnong. In some parts of Melbourne, it is still possible to purchase a bungalow near a train station for $400K! While stocks last, of course 🙂

Ultimately, in the face of Melbourne’s impressive consistent capital growth patterns, it is wise to remember that it are certain suburbs, property types and varying categories of buyers that are driving this growth.

More Reading

  1. Melbourne Looks Set to Outshine Sydney on the Property Ladder
  2. Real Estate Industry Insiders Say Property Prices Look Set to Fall
  3. The Melbourne Market Will Continue to Perform for Investors This Year & Beyond if You know Where to Buy
  4. Maribyrnong the Next Melbourne Property Hotspot

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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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Brunswick East: Transformed Property Landscape

Brunswick East is surrounded by hip and happening dining, entertainment and retail outlets.

PLENTY has changed for the Brunswick East neighbourhood. The suburb in Melbourne’s inner North has transformed into a gentrified area featuring some of the hippest and trendiest dining, entertainment and retail outlets in the city namely along the Fitzroy and Lygon Streets.

At its most basic, Brunswick East’s allure lies in its close proximity to Melbourne CBD. Australians, in general, prefer living out of the city – a segregation that draws a clear line between work and play, both geographically and psychologically. Conversely, Asian investors prefer to be at the heart of the action, but are compelled to invest in dwellings outside the city to accommodate the local rental market comprising mainly young Australians.

One can imagine how being only 3km – 4km from the city centre, with fantastic public transport accessibility, makes living in the Brunswick East locality extremely attractive.

Additionally, housing is bigger and comparatively more affordable to neighbouring North Fitzroy and Carlton.

Hot Market

Today, Brunswick East is known to be the most difficult suburb in Melbourne to buy a house, forcing local and international buyers and renters alike to look to apartments instead. Recent CoreLogic RP Data statistics show that median house prices have increased by 26.6% in the last 12 months as a result. In the year ending Nov 30, only 2.1% of houses in Brunswick East had been listed for sale – well below the Melbourne average of 5.3%.

Built in 1910, this Brunswick East house was recently sold for $3.4 million to a foreign investor.

To illustrate, a house built in 1910 sold for an incredible $3.4 million at a recent auction. The house, which began at a starting bid of $1.5 million and rose by increments of $100, 000 was sold to an international investor who bid via mobile phone!

Brunswick East is followed by Carlton, Fairfield, Carlton North and Fitzroy North as some the most difficult suburbs to buy into.

Conclusion

In a neighbourhood like Brunswick East, there is high potential for capital growth (5.06%) given the amenities in the locality.

But, the increase in property prices in Brunswick East has an undeniable knock-on effect on rental yields. After all, rental that is too high forces potential tenants to look slightly further afield for something better. Yes, it is a constant juggle.

However, as with the law of physics, so it is with the property cycle: what goes up will come down. Prices can only go so high before the market rights itself.

What will remain constant is the demand for rental housing. Here are 3 reasons why:

  • A 2.1% vacancy rate
  • 20% residents are students (Uni of Melbourne and RMIT are about 10 minutes away)
  • Good public transportation system with direct access to CBD
  • The incredible growth rate of Melbourne’s population – more people, more need for housing (100K migrants per year; Victoria’s growth rate of 1.8% surpasses W. Australia (1.6%) and NSW & Queensland (1.4%)
Capital Growth in the Lygon / Brunswick East suburb

Additional reading:

  1. Time Capsule House in East Brunswick to go Under the Hammer
  2. Brunswick East the Most Difficult Suburb to Buy a House
  3. The Melbourne Market Will Continue to Perform for Investors if you Know where to Buy
  4. Melbourne’s Little Italy A Guide to Lygon Street
  5. Buying into A Tightly Held Suburb of Melbourne

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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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Top 10 Buyers’ Market in Perth (Part 2)

In the second part of this blog, we touch on what the market players say about some of the suburbs listed in the Top 10 Perth Buyers’ Market List. These include top personnel from Properties Invest, Perth Property Partner, Harcourts Vogue, LJ Hooker and Midland Real Estate Plus. As we say, there are some upsides to the softening of the market!

 Click on the icons in the map above to learn the locations of these areas and their proximity to Perth’s Top 3 universities.

PERTH’S TOP 10 BUYERS’ MARKET LIST

  1. Beeliar
  2. Southern River
  3. Midland
  4. Piara Waters
  5. Harrisdale
  6. Burswood
  7. Jane Brook
  8. East Perth
  9. Spearwood
  10. Coogee

Source: Realestate.com.au

 

The top markets for negotiating is calculated using supply and demand rations, average discounting and days on the market.

Beeliar

A good opportunity for owner-occupiers.  Fantastic location as it is close to Fremantle, Murdoch University, Coogee Beach etc, but further out from Perth city area.  Softening of prices noticeable in homes in the A$500,000 and under category but there has been a slight pick-up in recent weeks.

Southern River & Harrisdale

Good opportunity for owner-occupiers. An extension of Canning Vale, the most Malaysian-populated suburb in Perth.  The market in Southern River has softened and may possibly continue for some time. Harrisdale is a decent area, close to an older established area that is being built out.

Piara Waters

An extension of Canning Vale, the most Malaysian-populated suburb in Perth. Good location because closer to the freeway and the facilities associated with the growth in the Southern Corridor of Perth.

Midland

The suburb has shown strong growth over the years because a lot of money has been spent on it. It is the link between the farmers and the city; farmers prefer to stop at Midland rather than go all the way into Perth as Midland has everything they need. The state government is also redeveloping the area with new hospitals and schools and moving some of the public service operations out there, so there is more growth to come.

Coogee

The state government is injecting a lot of money into the area. Land in Coogee Marina that was bought for A$3.2 million at the top of the market can be bought today for A$1.5 million.

Spearwood

Spearwood presents the best investor opportunities, even though it is ranked at no. 10 on the list. Historically, this suburb has done very well in long-term capital growth. It also has a number of old ‘60s and ‘70s style houses on development sites.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student 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 and due diligence. 

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