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Australia Property Outlook 2020

What’s the outlook for Australian property in 2020?

With a strong start to the year, Australia’s property market is looking bright for investors once again. We expect house prices to rise substantially this year, led by double-digit gains in Sydney and Melbourne. 

Australia prices are forecasted to be led by double-digit gains in Sydney and Melbourne

Having made a rapid comeback in recent months, home price gains are forecasted to reach as high as 15% in Melbourne and 14% in Sydney in 2020. The other Australian capital cities are expected to have low to mid single-digit price increases — up to 7% in Hobart, 6% in Canberra, 5% in Perth and Brisbane, and 3% in Adelaide.

Historically low interest rates, strong population growth and tight supply of housing are providing support for price growth. Sydney and Melbourne, in particular, are tipped to surpass their previous house price records towards the end of 2020. 

Prior to the slump of the last two years, house prices were at their highest in 2017, with the average house costing $859,500 in Melbourne, while Sydney’s broke the 7-figure mark at a staggering $1.05 mil.

Australia’s economic growth is expected to pick up this year, but risks to that include the recent global outbreak of the Covid-19 virus, and damage from the bushfire crisis. 

The Reserve Bank has already taken steps to boost a flagging economy, having cut rates late last year to a record low of 0.75%. Economists have predicted further cuts this year to stimulate growth and increase employment.

Demand from a growing population

Australia has one of the highest population growth rates in the developed world. The World Bank puts it at fifth place behind Iceland, Luxembourg, New Zealand and Israel, although the first four are significantly smaller countries.

The growth in population comes mostly from migration, which accounted for 62% of total growth, according to latest figures from the Australian Bureau of Statistics (ABS). 

Although the number of residents continues to go up, housing supply has decreased. The number of completions declined severely last year, and construction activity is expected to remain weak going towards 2020/21, which will fuel a higher demand for housing.

While interest rate serviceability thresholds for most borrowers has been reduced, lenders are expected to maintain their more conservative approach towards assessing borrower income and expenses. 

Hence, although a market rebound is expected, it is unlikely that we will see a repeat of the surge that lifted prices by about 75% in Sydney and 65% in Melbourne from 2013–2017.

Melbourne is the clear winner in capital growth over the last 15 years (Image: abc.net.au)

Currently, the favourable exchange rate is opening a window of opportunity for Malaysian investors. The Australian dollar fell to a 10-year low against the Malaysian ringgit in February 2020, at RM 2.74 to the dollar.

With the cheaper exchange rate, investment property in Australia is more affordable.
With the cheaper exchange rate, investment property in Australia is more affordable.

 

Here is our investor’s pick of Australian cities for 2020:

Melbourne (Victoria)

Australia’s star performer, this state has the highest economic and population growth of the nation. More than any other city in the country, Melbourne sees a continuing increase in migrants each year. Its present population of 5 million is not far off from Sydney’s 5.2 million, and is set to replace it as Australia’s largest city in the next few years. 

House prices made a comeback at the end of 2019, attributable to lower interest rates and easier credit conditions. Melbourne rose a total of 8.2% in the year to Jan 2020. 

The demand for housing in Melbourne will increase due to the continued migration and tightening supply. This will support the rental market and push values higher. 

Vacancy rates, historically lean in this city, are at a tight 2.1% according to data in as recent as January. Although Melbourne has the largest supply pipeline of apartments of all the capital cities, this has significantly shrunk over the past two years. The number of starting projects has decreased, and we have seen several sites converted to other uses, like hotels, offices and purpose-built student accommodation. 

Sydney (New South Wales)

Sydney’s sentiment and market activity have picked up in recent months, and demand continues to improve on the back of lower interest rates and easier credit conditions. 

House prices went up by 7.9% in the year to Jan 2020, and auction clearance rates are hovering at around 70%.

The city saw a period of strong supply that reached its peak in 2018. Supply has since dropped and it is likely Sydney will fall into a position of undersupply for the next two years, causing rentals to stabilize, and support price growth.

Infrastructure spending and increased commercial construction activity will bolster economic growth in Sydney over the next few years, with projects like the $45 bil WestConnex and $12 bil Sydney Metro well underway.

Brisbane (Queensland)

Brisbane’s population growth has increased over the past few years and is expected to remain strong, growing by about 2% annually.

Housing remains very affordable compared to Sydney and Melbourne. The recent drop in house prices here has been quite shallow compared to the big two cities, with local values only 2.4% below their peak.

Supply is already very thin, and there are fears of undersupply in the coming years, especially as the population continues to expand.  Increased infrastructure spending from key inner city projects such as the $3.6 bil Queens Wharf and $5.4 bil Cross River Rail are expected to support jobs growth, migration and housing demand.

Vacancy rates have fallen to 2.4% in Jan 2020 since their 4.1% peak at the end of 2016. The improving rental market, with relatively high yields, is expected to draw more investor interest this year. 

Property values of Australia’s state capitals as of Dec 2019 (Source: Domain)

Perth (Western Australia)

After a long decline since 2014, property in Perth has become one of the most affordable in Australia. Vacancy rates have also fallen dramatically to 2.1% early this year since peaking at 5.5% in 2016, indicating a ripe environment for growth.

Early in 2019 we saw the state government follow the trend to introduce a stamp duty surcharge for foreign buyers, but this was pulled back by the announcement of a stamp duty rebate just a few months later. 

The stamp duty rebate is limited to buyers of off-the-plan apartments, and will last until the end of this year. Investors should take advantage of this window to benefit from the stamp duty savings.

Perth’s local economy is expected to bounce back strongly over the next few years with a recovery in the mining industry, which will boost jobs growth, migration and housing demand.

Article by Ian Choong; Edits by VP

If you are looking for property in the cities of Sydney, Melbourne, Perth, Brisbane and more — fill out the form below, give us a call at (+65) 3163 8343 (Singapore), 03-2162 2260 (Malaysia), or email us at info@csiprop.com.

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Sources:

  • https://www.abc.net.au/news/2019-11-14/property-prices-in-2020-sqm-forecasts/11703668
  • https://www.abc.net.au/news/2018-10-11/fact-check-australia-population-growth-rate/10342960
  • https://mccrindle.com.au/insights/blog/melbourne-at-5-million/
  • https://www.corelogic.com.au/
  • https://www.jll.com.au/
  • https://blog.iseekplant.com.au/australian-infrastructure-guide
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Good news for Australia Property Investment – Sydney & Melbourne to rebound

Melbourne & Sydney experienced its strongest auction showing in almost 2 years.

Good news for the Australia Property Investment market — after another successful weekend of auctions, the worst appears to be finally over for the Sydney and Melbourne property markets. 

Across the weekend, 78% of all Sydney and 74% of Melbourne homes were sold, according to real estate platform Domain.

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Hello Melbourne, Move Over Sydney

Melbourne could be Australia’s next biggest city by 2031 if growth trends continue (Photo: Leigh Hennigham)

Right now Sydney is Australia’s largest city, but this may no longer be true by 2031 if current growth trends continue.

According to demographer Bernard Salt, if Melbourne maintains its current growth rate, its population will surpass that of Sydney by 2031, well ahead of previous estimates.

Historically, the population of Melbourne once exceeded Sydney’s back in the gold rush-inspired 1850s. By the time of Federation — the establishment of the Commonwealth of Australia — both cities were about the same size at half a million people each.

However, at the end of the 20th century, it was Sydney that took the lead with close to 4 million people, higher than Melbourne by about 600,000.

Sydney’s current lead is close to 350,000 but it is losing ground at a rate of 20,000 a year.

The difference in population between Sydney and Melbourne (The Australian)
The difference in population between Sydney and Melbourne (The Australian)

Why is Melbourne attracting more growth than Sydney?

According to Mr Salt, Melbourne offers what Sydney cannot or is inclined not to offer — access to affordable housing on the urban fringes. Where the price for a house and land package on the fringes starts with the number three in Melbourne, Sydney’s more distant equivalent starts with a five.

Mr Salt added that it was the policies — Sydney’s “full” and Melbourne at 2030 — which changed the long-term fortunes of both cities.

Bob Carr, Labour premier and environmentalist, declared Sydney full in 2000. This led his government not to invest enough in infrastructure to accommodate expansion. Melbourne, on the other hand, planned for growth under Jeffrey Kennett’s government in the 90s, forming a plan for 5 million residents by 2030.

This plan opened up the Melbourne’s west region to new development and was the beginning of its transformation. Within a decade, the Gold Coast lost its place as the nation’s fastest-growing region to Melbourne’s west.

In November 2007, census ­results confirmed that Melbourne was closing the gap on Australia’s previously untouchable Emerald City. This trend has continued, and the last figures released by the Australian Bureau of Statistics showed that Melbourne added a record-breaking 108,000 residents whilst Sydney added just 83,000 — in the year to June 2016.

The housing and jobseeker market most readily gravitates to cities that deliver housing affordability combined with access to a capital city job market. And that is precisely what Melbourne is doing better than Sydney in the 21st century.

Whilst Sydney’s house prices continue to fall, Melbourne’s housing remains in demand. In the year to April 2018 house prices in Sydney have dropped by about 2.1%, whilst Melbourne has managed a healthy 5.3% increase.

The Future of Melbourne

As Melbourne continues to grow, it will reach an estimated 8 million residents by the early 2050s. More development of housing and infrastructure will be needed in order to keep pace with the city’s booming population.

Melbourne City Council has already submitted a proposal for two more underground rail tunnels by 2035 to cope with exploding population growth. The proposal also includes its trams having road and traffic light priority throughout the city – as in Zurich – to cope with the demand. An extra 116,000 people are expected to take trains into the city in the morning peak by 2031, which is almost double the present number.

The two proposed Metro Lines (1 & 2), with Metro 3 - a second airport rail line linking to Southern Cross (The Age)
The two proposed rail tunnels (Metro 1 & 2), with another – Metro 3 – a second airport rail line linking to Southern Cross (The Age)

Property group Stockland has recently announced plans to deliver more than 1,600 homes in the Melbourne suburb of Truganina. The $540 million residential project will be less than 30 kilometres from the CBD, and will span a 138-hectare area, comprising a community activity centre, local parks, town centre, primary school and a 54-hectare conservation zone.

For those that would rather live closer to the city, and have less need for a house and land package, Melbourne’s prime CBD zone is where it’s at. There have been several new luxury apartment developments in the CBD, one of them being the strategically-located Palladium Tower, which achieved an amazing 98 out of 100 walk score!

With a full host of amenities and a Woolworths supermarket on the ground floor, it offers luxury living right within reach of everything Melbourne has to offer. The Crown Casino is right opposite, and 2 tram lines on both sides lead into the CBD near the Free Tram Zone. The development is fully FIRB approved, and commands a high rental yield with an average of around 5.2%.

Article by Ian Choong

  • https://www.theaustralian.com.au/business/bettercities/melbourne-set-to-become-nations-most-populous-city-by-2030s/news-story/59ab02029829655b7be9e894a0133cbc?nk=122e6921473baa0added54bc530e46f3-1524031882
  • https://theurbandeveloper.com/articles/stockland-to-develop-540m-residential-project-in-melbourne
  • https://www.smh.com.au/business/the-economy/sydney-melbourne-property-prices-continue-to-slide-20180403-p4z7i2.html
  • https://www.theage.com.au/national/victoria/melbourne-needs-two-new-rail-tunnels-by-2035-council-says-20180419-p4zalf.html
  • http://www.afr.com/real-estate/sydney-house-prices-fall-21pc-in-the-year-to-march-20180402-h0y91k
  • https://csiprop.com/changing-face-of-melbourne/
  • https://csiprop.com/properties/palladium-tower/

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. 

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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Is Growth in Store for Australian House Prices?

What’s in store for the Australian housing market in terms of price growth?

This year will not be a bumper one for the Australian housing market; Sydney will drag Australia house prices down this year. But will it be all doom and gloom moving forward? What does the future hold?

Australia and New Zealand Banking Group (ANZ) economists say Australian house prices will start to go up this year, with higher growth expected in 2019.

Australian house prices are 0.8% higher than they were 12 months ago. ANZ forecasts a growth of 1.8 % this year, which will pick up to 3.6% in 2019.

Senior ANZ economists Daniel Gradwell and Joanne Masters said, “We think most of the slowdown has already occurred. We retain our view that prices will not materially decline. Over the near term, auction results in Sydney and Melbourne suggest that the majority of the price growth adjustment is behind us.”

Australia housing price forecast to 2019: Australia and New Zealand Banking Group (ANZ) economists say Australian house prices will start to go up this year, with higher growth expected in 2019. Source: ANZ
Australia housing price forecast to 2019: Australia and New Zealand Banking Group (ANZ) economists say Australian house prices will start to go up this year, with higher growth expected in 2019. Source: ANZ & Domain

The economists see the strong labour market and rising incomes as the main drivers of price growth, with the absence of an interest rate increase this year also supporting house prices.

However, Morgan Stanley analysts aren’t as confident, seeing risks building in 2018 after several months of house price weakness and a potential for increased regulatory pressure.

“Conditions for housing for the remainder of 2018 continue to look challenging with further regulatory tightening of credit, an increasing stock of properties to be settled, and continued uncertainty on government policy for housing as the election cycle looms,” equity strategists led by Daniel Blake wrote to clients this week.

“This leaves us cautious on the outlook not just for housing, but the broader economy in 2018, given the leveraged exposure of the economy to the property market.”

Australia housing price forecast by states to 2019: Melbourne and Hobart take the lead again in house price growth. Source: ANZ
Australia housing price forecast by states to 2019: Melbourne and Hobart take the lead again in house price growth moving into 2019. Source: ANZ & Domain

AMP chief economist and head of investment strategy Shane Oliver said that a looming house price crash was unlikely.

Debt serviceability remains relatively strong, with APRA’s rule tightening leading to a drop in interest-only lending, and mortgage stress appears to be low, for now.

House price growth by market segment : Data reveals that, unlike Sydney, Melbourne has seen continual price growth for most market segments throughout the year, albeit at a moderated rate. Source: ANZ & Domain
House price growth by market segment : Data reveals that, unlike Sydney, Melbourne has seen continual price growth for most market segments throughout the year, albeit at a moderated rate. Source: ANZ & Domain

“To see a property crash we probably need much higher interest rates or unemployment (neither of which are expected) or a continuation of recent high construction for several years (which is unlikely as approvals have cooled from their 2016 highs),” Dr Oliver wrote.

ANZ predicts that Melbourne and Hobart will continue to outperform the rest of the Australian capital cities, like Sydney and Perth. We discussed extensively the growth of Melbourne and the emergence of Hobart in our 2018 outlook on the Australian housing market.

First-home buyers are replacing investors

Tighter regulations governing the number of investor and interest-only lending has seen a significant pullback in buying activity from those types of buyers, ANZ research shows.

Last year, the Australian Prudential Regulation Authority (APRA) changed the rules for lending to investors and interest-only borrowers. There has been an increase in interest rates for these types of borrowers, and serviceability calculations and loan-to-value (LTV) ratio requirements have also been affected.

Financing for Investors vs Owner-Occupiers 2005-2018: While tightened regulations continue to moderate investor sentiment, it will not be at too substantial an extent, given that the Australian housing market is underpinned by strong population growth and housing demand. Source: ANZ & Domain
Financing for Investors vs Owner-Occupiers 2005-2018: While tightened regulations continue to moderate investor sentiment, it will not be at too substantial an extent, given that the Australian housing market is underpinned by strong population growth and housing demand. Source: ANZ & Domain

We are optimistic that while tightened regulations continue to moderate investor sentiment, it will not be at too substantial an extent, given that the Australian housing market is underpinned by strong population growth and housing demand.

However, despite APRA changes reducing the number of investors in the housing market, to a large extent, the gap is being filled by first-home buyers. Government grants and sizeable stamp duty tax concessions in NSW and Victoria have helped spur a revival among first-home buyers.

Number of first home buyer financing commitments 2006-2018: Government grants and sizeable stamp duty tax concessions in NSW and Victoria have helped spur a revival among first-home buyers in recent times. Source: ANZ & Domain
Number of first home buyer financing commitments 2006-2018: Government grants and sizeable stamp duty tax concessions in NSW and Victoria have helped spur a revival among first-home buyers in recent times. Source: ANZ & Domain

Interest rate hike not expected till 2019

The ANZ economists write that high household debt leaves households sensitive to interest rate increases, but this is unlikely to become an issue this year. They predict that the rate hike will come in mid-2019.

“We do not expect the RBA to hike rates until 2019, and then by only 50 (basis points) in the year, which is unlikely to hit affordability in a material way. Moreover, most households continue to hold a solid buffer.”

While Morgan Stanley remains cautious on the property market, the analysts concede consumer confidence has remained above trend, and building activity has also outstripped expectations.

“These factors are holding up better than past relationships with prices would suggest, which in turn sees the broader impact of the slowdown in housing prices being limited – so far,” the equity analysts wrote.

Article by Ian Choong

 


  • https://www.domain.com.au/money-markets/five-graphs-that-explain-why-the-worst-is-behind-the-australian-property-market-20180405-h0yd27/
  • https://www.domain.com.au/money-markets/whats-next-for-australian-property-prices-3-economic-heavyweights-make-their-case-20180409-h0yijb/
  • www.csiprop.com/australia-property-outlook-2018/

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. 

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 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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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 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 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 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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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 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