QLD Towoomba - would you invest in house and land package

We are looking into investing and I have been having a look in Toowoomba lately. We are looking for a house and land package in particular. Not familiar with the place so I would love to hear opinions. Budget of $550 000.
Any info would be helpful.

 

Welcome Dani05. Why a house and land package? Why not just buy an established house? Why Toowoomba? I own there and gee it has underperformed the last 7-8 years. Do you think it is due for a growth period?

 

70-80 people through opens and houses selling in days way over asking, I'd say the next growth period has started.

 

Is't it better for tax purposes getting a brand new property? I read that it will be one of the places where it's going to go ahead in the near future and there seem to be a lot of development happening. Another area I am looking is Sunshine Coast but the prices have already gone through the roof.

 

Oh really. That's interesting. Any particular area that is more popular or across the board?

 

That’s great to hear! It should be reflected in the stats and the sold prices in the next few months then. Could be the perfect time to buy if the market is kicking off. I own 2 x townhouses in Wilsonton and north Toowoomba and if I had my time again I would buy houses not townhouses or units. There has been so much sub-dividing/development of attached dwellings the past 7 years and such a large supply that it has suppressed prices.
You do get more depreciation with a new property but with a H and L package you often pay over the market value as there is a profit over and above the built in profit the builder already makes on the build so be careful. Also these packages are usually in outer fringe newer suburbs that sometimes aren’t in great locations. Also the availability of empty blocks that can take years to develop in a new suburb can suppress prices. I wouldn’t buy new just for the tax benefits, you can get plenty of depreciation from houses 5-20 years old.
If you really wanted new consider buying the land and THEN engaging a builder of your choice. You should compare the price of doing it this way compared to buying a H and L package.

 

The better parts of Toowoomba are the southern and eastern suburbs, and Highfields on the north side. Check out Middle Ridge, Rangeville, East Toowoomba, and the suburbs close to the uni.
That would give you a good price comparison of established verses new build, and an idea of rental return..
I don't live in Toowoomba but I know a lot of people who do, it seems to have a country life style with more facilities, such as health and education.

 

Correct.
I have been following Toowoomba since I looked at adding an SDA Duplex there earlier this year. Since then, it has started showing quite a few indicators which point to the market significantly heating up- Rental vacancy down to 0.5% (lowest in 3 decades) and rents pushing up - Stock on market at a decade low and prop ask is also nudging up every week.

 

And there are some other factors supporting price growth
Matusik Missive - Toowoomba Land Supply

The local council aren't as bright as they might like to think. Like most SEQ councils they love hefty infrastructure charges. Then a couple of years ago they observed developers weren't developing because of this. So they gave a infr charges holiday for a finite period when first homeowner grants were introduced and the place got over-flooded with ugly cramped unit developments more suited to metro areas. It has taken a while for the market to digest this.
Now there is a looming shortage of home sites, which is what people are looking for. Council may need to change their thinking on a few planning issues to avoid supply problems. The flipside is that existing home values may continue to gently rise until they figure this bit out.

 

Just planting an idea, think about selling one or both townhouses and buy a house instead. I know there will be transaction costs, but I think that’s better for the long term. Just something to think about.

 

Buying brand new property for the tax benefits isn't a great idea, mostly hear spruikers saying this to sell house and land packages.
You'll likely overpay and have issues with lender valuations coming in lower than purchase price, buyer beware.

 

Does anyone know about Kilalah Park Estate? Says is right next to the Highfields Village Shopping Centre. Is Highfields any good for investment?

There are a lot of house n land packages released there. 600sq land with single level 4br is around $521,000 says estimated rent will be $530. But I looked on the map Highlands seems to be a small town vs Toowoomba. And existing house of 3000sq are selling for similar price.

Do you think it's worth invest in there or better looking at Toowoomba?

 

Highfields is becoming a city in its own right with a school, shopping centre and police station. It was very popular years ago and still is for large leafy blocks (street view somewhere like Sunray Drive). However the over development of under sized (sometimes 400 sq m) uninspiring blocks mentioned above has flooded the Highfields market.

There is many 1000’s of blocks coming onto the market there in the Avenues and other developments to the North of Highfields. You may achieve that rent now in our highly unusual rental market but in the future will be competing with hundreds of other rental s which look exactly like yours.

My advice (for what it’s worth) try to stay East of Hume St and South of North St and buy a 3 or more bedroom house like:

https://www.realestate.com.au/property-house-qld-mount+lofty-136726066
https://www.realestate.com.au/property-house-qld-middle+ridge-136454730

good luck
Scott

 

Thx Scott. I've read a few posts on this forum and it seems even for Toowoomba the capital gain is very low. During this recent booming period 2017-2021 across Australia the house price there has not increased much at all. Do you think it is still worth investing there?

 

Hi Jessi, as always the answer is “it depends”, what are you chasing? I can tell you that if you listed a decent house in town for rent right now you would get over a hundred applicants at first open trying to outbid each other to secure the place.

I also think growth numbers have yet to reflect what has happened recently (up to 20% growth in the last 12 months for anything half decent with a bit left in the tank due to the very low starting point). You have heaps of options for that money and could go for something around $400k in an average suburb to lower your risk.

Workmate listed his 2 bed Cottage hoping to get $310k got multiple offers before first open and ended up selling sight unseen to a Sydney investor for $360k.

All anecdotal but that is what I am seeing.
Scott

 

Would also like to point out there was no “across Australia” boom 2017-21. That was Sydney, Melbourne, Hobart. Different waves to surf now (check the Brisvegas thread)

 

LOL will go and have a look