QLD Should I take advantage of the FHOG in QLD/Gold Coast?

Timeframe: January - June 2019

Option 1:
FHOG is $15k on new homes/new builds and has to be PPOR for 1 year.
+ Free Stamp Duty on all first houses under $505k.

I need to be on Gold Coast - Northern regions at a maximum. This means I am left with Pimpama or Coomera at $420-450k-ish and I have been quite scared off these areas due to the oversupply and high prices with not much room for CG (it seems). Not sure whether to do this anyway and think long term for a free 15k?

Option 2:
Buy a Townhouse for 300-350k in high rental yield/demand area and live in it for a year in order to take advantage of free Stamp Duty in QLD. I would then buy standalone house after first year and use townhouse as IP after first year.

Which option do you like here? Open to Options 3 - ∞ also

 

If you go option 2 will the townhouse be the best investment you can find for 300-350k? Ask yourself in 10-20 years how you think townhouses will go in that area with CG.

New build usually means developer profit, you're thinking about buying new just to get 15k free duty in an area you are not sure about??

Usually when GC market drops townhouses and units suffer the most.

Buy the best investment you can afford. Still some stamp duty savings for FHBuyers even on existing properties.

Also some pockets where you can buy a house for 420-450k close to the CBD.

Home transfer duty concession rates | Homes and housing | Queensland Government

 

Thanks Rich, Some good points. The townhouse would be more in the mind of rental yield as investment rather than capital growth - but maybe I have underestimated the downsides. I was actually thinking after a few year lull, the GC is going to boom.

You’re right about developer profit and have convinced me the FHOG is not worth it for a scary area.

Struggling to find many 420–450k houses close to Gold Coast CBD though?

 

Thanks Rolf. Unfortunately mid 400s is absolute maximum. Trying to stay conservative.

 

Yes self imposed factoring in worst case scenarios with rate rises as well as it being first time in the market.

 

Makes sense. I think I am just eager to get into property and begin my portfolio. You don’t think it is worth it to look into cheaper townhouses or units/studios as potential IP while capital is low and then build from there?

 

You can see sold properties around Labrador and Southport for early to mid 4's, trying to actually buy one at that price level is another story! If you are based on the GC and you hassle agents daily/weekly you might find one.

The GC has already boomed over the last 5 years. Not sure how lending restrictions will play out on the GC but I'd be cautious of buying a property just for yields especially on the Gold Coast, it would typically be a unit or townhouse which as mentioned before haven't done well when markets drop there.

Currently on the GC the way I see it from Runaway Bay to Coolangatta (not Coomera or Pimpama):

Houses - sellers market, lots of buyers around, expensive prices, lots of people at open homes and auctions.
Units and townhouses - not so many buyers, deals to be had for buyers, not that easy to sell lower price point units.

 

I like option 2 on the basis after a year you have both the townhouse and a house

 

Option 3: buy a house you want to live in first time. At least buy a townhouse with the long term in mind.

I would always stress to buy a place you would enjoy living in. I've met people that bought a unit because it was cheap, could not sell it, and gave up a better house to consolidate their debt, and retire. That unit is still not desirable and hell to live in.

 

Welcome to the forum.

First off, there is nothing to take advantage of as fhog are always priced into the market.

U will save on stamp duty.

IMHO avoid those new build estates, unless the market tanks and u can get a completed build like 20% discount or more. New estate blocks are really tiny nowadays and u end up almost wall to wall with neighbouring houses. Not to mention the streets are squished up.
There's added risk of building delays and additional costs first timers are unaware of when attempting to build. Developer bankruptcy another biggie.

If u are looking at GC it shouldn't be hard to find property around 10yrs+ old which may need some touchup, especially now that property is slowing down. You get to value add via renovations/upgrades, bigger land plot and negotiate price.

Stay within your budget and have a buffer and you'll be fine.

 

'The lights are flashing red' as growing numbers of families face bankruptcy

pimpana and uper coomera.
bankruptcy leaders.
stay away

 

The simple answer is that you can't afford a new build in the Northern Gold Coast corridor, $400k is not enough. You need $500k minimum now. I believe these areas are also considered high risk lending, so that'll make it harder to get the loan.

That said, for others reading- We're very positive on that Pimpama, Coomera, Ormeau, etc corridor. The houses rent quickly to quality tenants for strong rents, no matter how much supply is out there. I wondered whether that tenant interest would drop off at first, but it's been two years and it's as easy as ever to get places tenanted. Great areas.
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As far as townhouses around these areas- not a fan. People complain that new build homes have a premium attached, but it's nothing compared to what they seem to get away with on townhouses and units. In any given area, strata dwellings are often no more than 15% cheaper than a detached home on its own block!? I've seen values of new build units and townhouses plummet after sale, across the board, year on year. Add into consideration that body corporate fees tend to increase after sale... it's a double whammy. Lots of unhappy investors...!

 

I think it's probably more realistic to monitor rental drivers from April 2018 onwards, as the big driver were the games.
I dont have any contacts left with properties in the area who can give me feedback about their rental positions as they have all sold, but you can already see a reduction in population simply by the drop in traffic around hope island, oxenford and Coomera, particularly during peak periods.

The newer hope island apartments that first sold in late 2015 are now selling at the same price, and some will soon be less.

The only things doing okay for the moment are 3bed 2 bath townhouses or duplexes under 450k with low or no strata, large flat square block detached houses 800m2+ if you can find one, and the 1mill + on water market, driven by Sydney buyers. These still go quickly if it's a realistic price.

As an investment, just about everything else I would avoid, possibly for the next couple of years unless there are some major projects announced, or lending rules ease