Where would you buy right now?

It entirely depends on your objectives. If you are looking for a quick capital growth and can afford to lose money (through gearing hopefully), then buying in Hills may not be a bad idea.

I wouldn't personally buy in premium locations anymore. I would rather try to go for sub 700K houses (wherever I can find them in Sydney) and particularly aim for houses that could be rented out for $500 plus per week. This way you will minimize your risk if the market stalls for some reason.

That's not true. Lets say you have $200k available funds and you can buy up to $1 million in property in Sydney.

• Option 1 Do Nothing - You will earn around $10K in interest in two years, taking you to $210K
• Option 2 Invest in Shares - Best case scenario (10%+ growth + dividends) will take you to $225K
• Option 3 Invest in $1m property - (even with 5% annual growth in next 2 years) your equity will grow to $300K plus (I am not factoring in holding costs, taxation/negative gearing benefits as they will change for everyone)

Sitting on the fence is always the worst option as it's the least risky and obviously comes with least returns.

If you pick a good area and can find a good deal or improve your purchase by adding value etc.., you can improve the 3rd option to some very handy returns.

Expecting the market to come at your terms is always a bad idea. If you think Sydney market is over-valued, then find 10 public companies with highest exposure to Sydney market and take a short position on their shares. Sitting idle is the worst thing to do unless you are a labor/green voter and believe in socialism or complete collapse of western capitalism.

 

Can you add another choice?
Like outside of Australia

 

Nah I couldn't add any more options.

Would of liked to add more sub areas under regional.

Gold Coast, Sunshine Coast, Wollongong, Newcastle, Bendigo, Albury etc......

 

500K will definitely get you a house in Syd west with some good ol' bogan neighbours to keep an eye on your tenant's place while everyone is at work lol.

Or you could get a shoe box in Syd SE and NE for that money.

 

@DT - I know you are from SA and have a business there but why do you think now is a good time to buy in Adelaide? What signs of capital growth do you see in the near future?

 

So what are the deep economic issues? in another thread you said Adelaide is a rising market. Which is it?

 

I said Adelaide vacancy rates were steadily rising.

This is a good article on deep economic issues:
South Australia risks exodus of youth workforce, economic report says - ABC News (Australian Broadcasting Corporation)

 

An article that speculates on lack of jobs for youth while also saying that too many are about to retire and no one to fill the jobs. Solid conclusions from their research there.
Adelaide is listed as having slower growth than the rest of the country. Slower growth is still positive growth.
Here's another way to interpret that - baby boomers retiring combined with affordable housing expected to result in an influx of youth to Adelaide resulting in a housing construction boom.

Still not seeing the deep economic issues.

 

- Better confidence and vibe around the place
- better employment trends
- interstate migration. In my role I deal with quite a few tenants who have moved over for work. Further conversation revealed that some big companies are basing their non customer facing staff here due to cheaper labor, cheaper commercial leases, etc
- investor activity, I've come to know majority of the forumites who have Adelaide IPs and which PM they're using and know that Xenia and my numbers have grown.
- lack of distressed sales. Used to be stacks of these that could be had for a song and now they're pretty rare
- new liberal govt who is committed to helping out. Hopefully state election goes the same way (alp been here for 4 terms)

Yet for calendar year to date our days on market has reduced from 12 to 8

 

Nobody said anything about jobs not being filled. If 10 people retire, they don't necessarily vacate 10 positions to be filled. Around 47% of all jobs in Australia can be attributed to small businesses or self-emplyed. These are mostly graduates of TAFE or a technical professional degree. When these guys retire, you need more trained/skilled professionals to take their place. This is where the issue lies for SA and it's two fold. Firstly, they don't have enough population growth (internal or through migration) to support the new job creation and secondly the current youth population is largely unskilled and hence have a higher than average unemployment.

Another issue is an increase in retirees. Healthcare is mainly a state expenditure and you don't have enough new tax payers to support the growing body of population which aren't going to be contributing to the economy.

For an economy to grow, you need more people working and less people on the welfare and that's where things are going wrong for most Australian cities (with the exception of Sydney and Melbourne through aggressive migration).

I am not saying Adelaide is never going to recover from these issues. If you feel confident that there are plans in place to generate strong economic growth for the region, then go and invest by all means necessary.

Personally, I would see some of the following happening in order for me to feel confident about the prospects of Adelaide.

• Aggressive immigration and then strong settlement programs
• Changes in state taxes to encourage population growth (for example no stamp duty if you have two or more kids)
• Compulsory TAFE or technical education for the youth
• Tax free tech zones to bring smart people to your city
• Investment in tourism and raise profile in immigration target market (Get more of those Ind vs. Pak world cup cricket games)
• And more importantly, get your babyboomers out of that 'entitlement mentality' that got everyone in the trouble the very first place. This also goes for Queensland. If you keep electing Pauline Hanson, then don't wonder why overseas buyers aren't paying millions for your properties.

 

• Interstate migration -3763 for Adelaide - source 3412.0 - Migration, Australia, 2014-15
• Unemployment - worsened to 7.7 percent at the last reading (worst ever) - source SA's jobless rate continues to be worst in Australia

I am not convinced about the credibility of other points you raised given the job figures & continuous migration losses

 

Brisbane North FTW!

 

I'm surprised so many are still flagging the region as a buy. Once upon a time vacancy rates were considered a reasonable measure of the market, SQM currently puts the North Brisbane region at triple the number of vacancies we had in what I'd call the peak of the last cycle (07-08 ).

North:

SQM Research - Residential Vacancy Rates

Inner:

SQM Research - Residential Vacancy Rates

South:

SQM Research - Residential Vacancy Rates

Population growth certainly isn't going to fill the gap (40% lower than 2008), jobs and wage growth is weak to non-existent. Where are the real growth drivers?

Self-fulfilling prophecy off the back of interstate investors and "affordability" is only going to buoy the market for so long.

 

I will be accessing equity from my house in Wavell Heights Brisbane. It's done well the last few years as it's a nice suburb but not too expensive but good quality area. Therefore attractive to investors and owner occupiers looking for a no fuss house on 600m2 usually.

The growth will slowly continue too. Brisbane has the good coastal geography and climate that makes it a natural follower to Melbourne and Sydney. Always. Growth has been slower than in other times as Brisbane adjusts to the mining boom cessation but from what I'm picking up on this forum from investor enquiries and in general media is that it's very very popular with out-of-state investors because of the good yields and the current large undervalue compared with history.
Brisbane is looking much more stronger and always will than Adelaide. Adelaide doesn't have anything special about it. I'm not being critical of Adelaide but there's nothing really much happening. Brisbane has the beach, islands, the bay the nice weather. Its a place where people want to come and with all the new redevelopment happening it is becoming a much more fashionable urbanised place. With the large infrastructure gearing up such as the Brisbane Metro and the cross River rail and proposals such as the Roma Street precinct as well I'm positive about that.
With Perth you have to absolutely be sure about mining because that is the absolute backbone of that city. Brisbane is a safer more diversified investment.
General media sentiment is positive towards Brisbane and that counts for a lot. The general theme that I'm picking up reading across the Internet (and everyday I Google "property market news" or "property market news Brisbane") is that Brisbane houses will continue to see (modest) growth even if or perhaps particularly as Sydney comes off the boil.
That's the catch up.

 

Absolutely. The Northside of Brisbane will always command more solid CGs overall as that is where the cbd and more premium suburbs are located.

 

Not sure about this. Plenty of inner south and east that have done as good if not better than inner north.
Agree with your other comment though.

 

It works on votes, so Northside is set to do better overall

 

Are you looking at the blue bar comparison between 2007/2008 V 2015/2016?

As per SQM:


The number of vacancies did increase, and is trending upwards.
However the "vacancy rate" remains flat/hovering around 2.2%
If we're using "vacancy rate' for comparison, it is much higher as it was 8 years ago. I agree with you there.
I think the "blue bar" = number of vacancies going up, mean there are more and more dwellings available to rent (OTP, new dwelling).. If the vacancy rate (%) increase proportionally, it means the dwelling aren't getting filled.

• So in 2008, there may be 1000 dwellings vacant, of the total 45,454 dwellings in Northern Brisbane
• But in 2016, there may be 4000 dwellings vacant, of the total 181,818 dwellings in Northern Brisbane.

Each of the above calculation would arrive at a vacancy rate of 2.2%

 

Recently the Southside has had good capital gains in areas closer to the cbd and deservedly so for some suburbs that were undervalued in the 5km South and east radius but South of the river will airways be compromised by the more extreme demographic south of the river. Longer term investors will choose the security of the northside.

 

I have begun my DD and now attending auctions in Melbournes North West. I just see incredible value there with ridicilously skewed prices versus the same proximity to the south and East.

What is more the auctions are laughable and a sound strategy could save you Heaps. The value isn't there for developers yet, investors are playing in other markets and the competition usually comprises of FHB and families who have immigrated to Australia.

Last week I watched an auctioneer fumble around and accept bids of $250 which kept 2 bidders alive WAYY to long (I mean it was good for the vendor, bad for the buyer). All it needed was 1 good bid and the competition was guaranteed out for 30k less.