QLD Brisbane... Again. Suburb vs Property???

Hi Bryan Loughnan, you make a solid point! Not too sure... I am priced out of Sydney in terms of a house and from all my research all factors point to Brisbane having the next major growth cycle. Long term staying within 30k's of capital city's seems like a safe and steady growth option, once my portfolio is kicking a bit more I will feel comfortable taking some riskier moves with regional etc AND Quick CG in the next 12 months is what I need in order to fund the deposit for the next IP...

Open to suggestions though - what would you do? By all means PM me if you prefer. Tks

 

Agree @tazy400 that long term the fundamentals of Brisbane are sound. You could certainly do worse. I'd argue though that Brisbane is going to have 'the next major growth cycle' - it's unlikely we are going to see another location anytime soon perform as well as Sydney has over the last 2-3 years. It needs to be remembered that even taking the last few years into account - Sydney is the worst performing capital city since the year 2000. That's fact. if you are treating property as a long term asset class (which I believe you should because it's to expensive to buy and sell or trade like shares) then I'd actually argue that buying another property in Brisbane and further increasing your exposure to one state government and having a huge part of your portfolio driven by the two or three industries which drive Brisbane - is actually riskier than seeking out another location - probably in another state - with completely different economic drivers.

Regarding your comment about 'quick CG in the next 12 months' - the market is certainly moving - this is being heavily driven by an increase in buyer activity - particularly by interstate investors (generally from Sydney and Melbourne - and they are doing it because their research/reading of mainstream media suggests they should). From an investors perspective the short - medium Brisbane outlook isn't great though. Supply is on the increase significantly - new apartment complexes are popping up everywhere in the City and around the fringe - further out (>15km) there is so much available land supply around Brisbane with plenty of new land subdivisions already expected in the next 2-5 years as outlined in the Brisbane City Council Regional Plan to assist with population growth... This coupled with every single property purchased by an interstate investor immediately entering the rental pool has already over the last 6months seen rentals decrease as well as vacancy rates and vacancy periods increase - this is only likely to get worse with so much new supply forecast.

Whilst you could do worse than buying in Brisbane, you could definitely do better... Particularly given your existing exposure.

 

Not to burst your bubble, but with the economy going the way it is and apra and banks clamping down on investors, 100k off a 600k base is speculative at best for brissy.

Probably gold coast region would be a better bet with the tourism revival from the depreciating aud.

 

Thanks Kangabanga (love the name btw - story there no doubt! lol) I should have specified 100k will be what I am aiming for from two of my brisbane properties over the next 12 months. I managed to pull 90k out of my mt druitt property in 18 months which has really helped in funding the last purchase and now my next one... just trying to replicate that strategy.

I could look at GC, although which do you think will move first? I should mention the other reason brissy suits right now is I have an arrangement with a friend up there who is happy to look at properties for me for some cash in hand, which saves me going up every weekend and allows me to move quickly... may need to make some new friends further afield should I look elsewhere.

 

Hi Bryan. So where do you think could be better? I read a few reports and Adelaide appears to have near zero growth forecasted for the next few years, it's not the time to buy in Sydney.
Melbourne... maybe but the buyer would really have to know where, Perth no, Darwin no,
And I wouldn't personally do Tas nor go regional unless there was a really good reason.
Canberra maybe?
Otherwise overseas... But that is a different kettle of fish and would require a lot more research.
Would like to hear what you think could be the go.

 

Hi @Gockie - that's the important question isn't it - and one that hindsight will answer for us I guess. Can I ask what your definition of a regional location is? And why you are so set on capital cities? Of the 550 Local Government Authorites throughout Australia - there are 78 in Sydney, Melbourne and Canberra combined. When you look at capital growth over the last 15 combined with rental returns - not a single one of those 78 LGA's in Sydney, Melbourne or Canberra have performed in the top 100. Yet people still believe that locations like Sydney and Melbourne are 'bluechip' investments - I'd disagree. I'm certainly not saying that people should invest in 2000 population mining towns - but regional locations (being any location other than a capital city) either in proximity to a capital city, or a regional large enough and with a diverse enough economy - akin to a capital city - what would cause you concern? This is purely a question to better understand your thoughts. Certainly not every 'regional' location would be good investing - but generally regional locations don't see the significant supply issues that capital cities do (the bulk of major developers tend to stick to capital cities) - and further to that one third of Australian's elect not to live in capital cities - yet as investors this is often completely disregarded. Just a few things to think about.

 

So Bryan based on your above comment surely you just avoid units and buy established houses on good sized blocks of land within 15kms from the Brisbane CBD?!

 

Not necessarily @dan2101 - if anything - steering away from Brisbane, but I've said that plenty of times before.

 

I have a sister who has a house in Wagga... her house that she bought for 170k about 4-5 years ago today would be worth no more than 190k. And she recently had a 2 month vacant period. If she put that same money in Sydney she possibly would have doubled it.
Generally regional doesn't have the same land scarcity factor as capitals. And I want the scarcity and desirability factor otherwise the growth wont be there. You might get good yields, but then again, growth is more important to me than yield. As long as I can hold it and there's growth, the yield doesn't have to be over the top.

So, are there any regionals with outstanding growth then (with diversified economies too boot?)

 

Bryan,
I've seen this written or spoken of before - can you give a definition of "top 100" and what "...combined with rental returns" actually means? How is the CG and yield "combined"?

Can you give us one or two in the top 5 so we can understand what locations are so amazing?

I would have said most of these top X lists are entirely bogus in the sense that they have no meaning. For example, they show 40% CG over the past 12 months when what has happened is that there are a small number of sales and a development has come along and skewed the results to meaninglessness. I think it was Yardney or John L who were the last ones I read poo-pooing the top X concept.

... but if there's good meaning in there - I'd love to know more!

 

One problem I have with regional is that the tradies and PMs can sometimes be either useless or screwing the big-city LLs and there aren't any others to switch to.

 

I have heard this thrown around about Custodian, but I have been led to believe that you only pay what the bank values the property at? (+ their 3% on your first I.P)

Am I missing something?

 

This is quite fascinating Bryan. So if the Sydney suburbs weren't the top performing ones, then which ones were. And over what time period. I think this should be its own thread I would really like to explore this further. Do you have some data etc. It seems Sydney was playing 'catchup' based on what you are saying. What were the top 100 over the last 15(?) years?

 

Below are the best performing suburbs of Sydney over the last 10 years. The best in Brisbane was West End which did 121%
Source: googling and clicking on mainstream news links.


Centennial Park $965,000 $4,250,000 340.4%
Chippendale $440,000 $1,301,000 195.7%
Pemulwuy $267,000 $782,000 192.9%
Chiswick $892,750 $2,398,000 168.6%
Homebush $560,000 $1,450,000 158.9%
Darlington $505,500 $1,290,000 155.2%
Burwood $683,500 $1,740,000 154.6%
Kirribilli $1,300,000 $3,300,000 153.8%
Waitara $560,000 $1,397,625 149.6%
Alexandria $560,000 $1,350,000 141.1%