NSW government changes to housing code Duplexs here we come :) Some one will be doing well

I don't think it's a real good thing at the moment. Sydney is getting ridiculously busy. As a builder my self I'm sick of the amount of granny flats that are going up. It's destroying Neighbourhoods.
Btw has any noticed how many duplexs have been on the market in the past year or so? We sure as heck don't need more of them

 

Been waiting for this change to come through for a while now..but didn't want to risk sitting on a site. Given I'm already building dulplexes now I wish I had the funding to go shopping

 

I acknowledge your viewpoint however given a choice of bigger sprawl and longer commutes or higher density, I'd rather go the higher density option. Kids can always play in parks rather than in their own backyard. People can get a smaller pet rather than a huge horse. Most people can use public transport rather than drive to destinations (higher density makes public transport more viable). People can be a bit more flexible with working hours... Personally I think it's better to go higher density than larger spreadout sprawl.

 

we might see less and less houses with some backyard. however, how many inner city suburbs have houses with large backyard

 

That's your view.
Duplexs are great so our town houses and many other forms.
Not everyone wanta to live in an apartment.

Care to elaborate how a Granny Flat ruined a neighbourhood?

Im curious

 

If the public transport is ever built. Also remember that most jobs are in the suburbs and outlying areas and are hard to get to without a car. More density just means more congestion. And there is another choice which is wind back our mass immigration program and stabilise the population.

 

Exactly, people are waking up, hopefully the pollies will pick up to stop this mass immigration insanity.

 

I think it's a good thing. I don't believe it will be an epic change but they need to encourage more medium density properties, particularly in most parts of Sydney's middle ring where there has been a lot of units being built but no other alternatives to free standing houses.

The demand is there in particular in the inner and middle rings for this housing type in my opinion. I especially think that certain suburbs would find well designed new terrace houses to be very popular.

 

Immigration is key to our economy. You stop that many industries will stop. A simplistic view of stopping immigration or limiting to small numbers will have huge detrimental affects to our economy.

 

You can't know anything about economics or the concept of per capita to say that. Sure the parasitic FIRE industries will take a hit but other more productive industries will fill the void. Also how do you thing we can have endless population growth in a finite country (and world)?

 

This is not an economy thread but if you honestly believe limiting immigration to very minute amounts will not affect the wider health of the country I don't want to waste my breath.

Start a thread about limiting immigration and we can discuss in there otherwise this thread will derail.

 

I didn't say reduce it to minute amounts. What's wrong with growing slower by winding it back to the long term average of around 70,000 pa? Remember our fertility rate is relatively healthy being just a bit below replacement. What do you mean by the 'wider health of the country'. Does the environment rate a mention? Or things like overloaded services and infrastructure and congestion.

PS: Why are you so worried about 'derailing this thread' . Are you just trying to save yourself from my retorts?

 

No because I'm not interested in talking about economics with you or immigration. This thread is about building duplex's which is going to make me a lot of money as these new regulations will help many investors potentially double their profits.

Arguing with you makes me 0 dollars. Thats all. Other investors talking about duplex's and their experiences with the new laws will actually help me.

 

Well why did you bother saying 'immigration is the key to our economy' reducing it will adversely effect the 'wider heath of the country', and then run away from it?

Oh that's right you are more interested in how much money you can make flipping properties

 

Duplexes dont stack up at the moment in Sydney... I know a lot of builders and they all say its tough to make any money out of them .

Purchase an old house for 800-900K on 650-700M2 site for example. Knock down. DA. There's another 50-60K.

You are somewhere in the 850-950K range before you start. Might even be $1Million when you factor in stamp duty and interest.

Build a set of 4 x 2 duplexes. That's going to set you back @ 600K.

So the site owes you the best part of 1.5-1.6 Million . Even if you can sell them or 800K each, its barely profitable. if that market comes off another 5 or 10% you may even lose money .

Of course, those sitting on old narrow blocks they bought years and years ago for a small amount of money might be able to turn a very nice profit.... but those thinking they will go and buy up narrow blocks, put duplexes on them and turn a big profit. That's going to be pretty hard to do.

 

@euro73 duplexes can still make sense in Sydney - just not in areas where the end product is worth $800k. Needs to be in a more affluent area.

Block will cost you more, build will cost you more to cater to what the market is looking for, but end product is worth more and hence margin exists.

 

Would it be worthwhile for an existing owner to do a knockdown-rebuild, and put up a set of duplexes?

Going by the example figures that @euro73 gave, the profit would be circa $100K plus or minus any market movement. Given the current direction of prices in Sydney, that's a pretty big downside risk.

I'd be interested in seeing if @Morgs has any figures for a higher margin project. The duplex development in Leichhardt returned 20%, but half of that would have been down to the Sydney boom. That's a similar sort of percentage to euro73's example.

 

@Graeme we went into Leichhardt with a budget between 10% and 25%. Too many variables to talk through in how it transpired but without doubt the market conditions helped the sale price.

One we looked at recently in Dover Heights- really rough figures were:
- Buy: $4m
- Sales: Between $3.5m - $4m (ea)
- Total Costs: $2.6m
- Margin: 5 - 20% ($350k - $1.3m)

We were only tyre kicking as all our money is tied up so we couldn't have done it even if we wanted to. Return on capital isn't great in the lower end but if you get it right the margin is there. The build needs to be something that'll be in demand in the area, for instance seeing some good results in the east with downsizers, I wouldn't want to be doing a duplex build as per euro's example above in the current climate.

 

I guess if you owned an older house on decent land and had purchased it for 400-500K ( or even less if you bought 15-20 years ago) instead of 800-900K then it may very well still be very profitable. Then again...simply selling that older house for a healthy profit and letting a developer or investor carry that risk may be just about as profitable, and risk free....

But certainly, purchasing at today's market price and trying to make it work would be tough I would imagine. 4% goes in stamp duty, 4-5% goes to interest ( assuming it takes a year to get the site bought, DA approved, site demolished, complete the build , then get them re-sold and settled) And when you factor in that there may be another 3,4,5% decline in the Sydney market over the next 12 months. Those 3 factors combined, eat up 12-15% of any profit...so you'd need to making 25% to make 10% or more in that example.

That's a big ask in a market that's severely plateaued since the lending restrictions were introduced. But hey...in the right sorts of boutique locations it may still work.... although I suspect the right sorts of boutique locations means price points that most readers here simply cant consider. @Morgs mentioned Dover Heights and $6.6Million project cost for example. In that example, 1.3 -1.4 Million is the top end of the profit estimates( before taxes) based on achieving 8 million for the 2 sales, and everything going exactly right. So after accounting for GST, selling costs etc, if that market comes off 10% or interest costs increase, or build costs blow out even a little bit ....... not much margin left - if any

Now, if you can find a way to build complying 60M2 granny flats at the rear of the duplexes, you may be onto something.... but you'd need 1200M2 + blocks. Subdivide into 600M2 each... and go from there . Construction funding may be an issue though ... not sure.

 

I'm pretty conservative though, so maybe there is more profit the DH project

The one thing I'm thinking about with this new rule that has finally be approved is that any developer / investor looking into doing duplex projects is that you won't be "battling" with others buying into blocks and putting pressure on feasibility. It'll be those who already hold those blocks and to a degree don't care about their historical cost base who can afford to sell stock cheaper.

With demand staying constant and duplex supply increasing there is going to be a point where these people will drop their prices for a sale and therefore ruin feasibility completely for any new market entrants. Therefore in theory the rule will help to improve affordability.

So again I'd approach this one with conservative optimism (more than usual )