All posts by Staff Writer

8 QLD Infrastructure Projects Worth $7.8bn Will Drive New Home Growth

Understanding the location of new infrastructure projects can be enormously beneficial for buyers of new homes.

Besides helping you buy off the plan property in high demand locations, infrastructure investment can increase the price of your home.

This is a reason why so many industry experts talk about new infrastructure projects nearing completion.

Today we will go through 8 infrastructure projects you can incorporate into your decision making process when buying a new home in Queensland.

1. Sunshine Coast Public University Hospital

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Construction for the $1.8bn Sunshine Coast University Hospital (SCUH) is scheduled to complete construction in Q4 2016.

The hospital will provide complex treatment to over 10,000 patients each year.

They predict once opened, the 450 beds could be expanded to 900 beds in 2021.

2. Moreton Bay Rail Link

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After four years of construction the Moreton Bay Rail Link costing over $1.8bn is due to finish in Q4 2016.

The new line will offer six new stations at Kallangur, Murrumba Downs, Mango Hill, Mango Hill East, Rothwell and Kippa-Ring.

Every full train on the line is estimated to take 600 cars off the road.

Travel time to Brisbane is Brisbane CBD will be dramatically reduced during peak periods.

New stations are forecast to become hubs for new off the plan development.

3. Cairns Hospital Redevelopment

Major redevelopment of Cairns Hospital has added 168 beds and cost over $450m.

The hospital has been under redevelopment since 2009.

Refurbishment of blocks A, B and C is scheduled to complete in 2016.

4. Bruce Highway Upgrade

The Bruce Highway project will deliver a four lane divided highway over three sections.

The project is projected to complete in 2016 and is expected to support long-term road freight and high speed travel needs within the region.

5. Rockhampton Hospital Expansion

Expansion of Rockhampton Hospital starting in 2007 is projected to finish in 2016.

Total cost is estimated around $200m.

Benefits include new seven story ward, rooftop helipad and many services to support Central Queensland.

6. Warrego Highway

Upgrade to the Warrego Highway will benefit Toowoomba.

Cost of the project is estimated around $200m and will add two more lanes.

Increased lanes will reduce congestion, improve safety and efficiency.

7. Pumicestone Road – Interchange Upgrade

The project will construct an interchange over the Bruce Highway enabling Australian standards to be met.

Cost for the project is estimated under $100m.

8. Queensland State Velodrome

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A new Velodrome is under construction for the Commonwealth games due for completion in Q2 2016.

The facility will attract elite athlete squads and the development of cycling in Queensland.

Conclusion

Buying new property near infrastructure projects can have a dramatic effect on your return on investment.

Incorporating the knowledge of where these projects are located can give you greater peace of mind for interstate investors.

They can also create greater stability for the off the plan investment.

If you haven’t purchased a new property interstate before, speak to a company who has the experience to help you through the buying process.

Oliver asks what does ‘off the plan’ mean?

Oliver has been researching online for days trying to figure out what type of property he should buy for his first home, subsequently becoming an investment in the future. Constantly coming across this word ‘off-the-plan’.

He decided to call one or two companies in the property industry who specialised in selling off the plan such as Off the Plan EXPRESS and ask them “what does off the plan mean to them?”.

He wrote down a list of key points on what each company said:

  • Signing a contract before the apartment, house or townhouse is built
  • Understanding images, floor plans, schedule of finishes and marketing materials
  • Having a solicitor / conveyancer review and explain the contract
  • In some developments you can have a physical display to walk through the project and experience what the finished property feels like
  • Paying a 10% deposit and in some instances a 5% deposit

From his days of research he jotted down notes which mirrored these key points above. Even though his dream was to buy a house in NSW, he still couldn’t get his head around signing a contract and paying a deposit before his future dream property was built.

Whilst strolling down the street to his daily shopping trip at the local Coles, he opened up a magazine at a street vendor, with amazing pictures of new developments around Australia. The allure of a scarce location and new construction really started to appeal to him.

Pushing his trolley through aisle three in Coles, Oliver had a revelation on what off the plan means to him. Not usually such as proficient baker, he stared at a yeast packet and the process of bread making totally clarified what off the plan means.

Excited by his new discovery, he rushed without thought with his trolley that veered to the right as it’s back left wheel needed some repairing. Only to push it straight into a young lady named Amber, causing her to fall to her knees, whilst narrowly missing serious injury. “I’m so sorry!” Oliver exclaimed in a loud shrill to young Amber.

“At least I didn’t hurt myself”, said Amber in a slightly stunned tone. Oliver helped her up to her feat and she asked him “why are you in such a hurry?”

“I just worked out what off-the-plan means!!”, he said. Amber was interested about this definition and kindly asked Oliver, “What off-the-plan is?”

Oliver started his explanation and was excited to unleash his bread making analogy about off the plan.

You have the first stage where you select which type of bread you want to make as you would the type of property you want such as apartments, houses or townhouses. In Oliver’s example he is making a basic bread recipe with wholemeal flour as he refers to it as his ‘NSW house’.

The second stage is buying the ingredients. In his analogy this exchange process covers holding deposit, contract review followed by the signing of the contract and payment of the balance of 10% deposit.

Thirdly is the construction process which is equivalent to the rising of the bread. A crucial step in achieving a quality finished result. He wanted Amber to picture herself in her kitchen at home. With a large glass bowl, a sachet of yeast, luke warm water and cup of flour in front of her. With all the ingredients mixed, risen and rested. You would bake as the builder / developer would excavate, reinforce, frame, pour, render, finish and decorate.

The final step is the settlement and occupation of the property. This step is represented by the resting of the bread once it has been baked and subsequent eating of the bread. A most exciting step in the process as your initial hard work is rewarded with delicious results.

Oliver’s enthusiasm for this new understanding about off the plan property excites Amber. He invites her for dinner at a local restaurant…to be continued

Off the Plan Buyer – May 2016

Off the Plan Buyer is a monthly update of all information that affects new property buyers and off the plan projects around Australia.

Interest rates drop to historical lows

With the most recent cut to the cash rate by 25 basis points to 1.75 per cent, interest rates are currently at the lowest recorded level. Comparing to the highest level in the last ten years of 7.25 per cent, rates are four times lower. Majority of the major banks have passed on this cut CBA (-0.25%), NAB (-0.25%), Westpac (-0.25%), St George (-0.25%) and ANZ (-0.19%). An off the plan property with a loan size of $500,000 with a -0.25% reduction works out to be savings over $1,200 per year. Currently many of the major banks are offering home loans between 3.90%-4.50%. The main reason for the rate cut range is ‘unexpectedly low levels of inflation’.

19 new councils in NSW

On the 12th of May 2016 it was announced by the NSW Premier that 19 new councils would be created in NSW. The minister plans to create further 9 new councils subject to legal proceedings. Benefits to new councils include up to $15 million to invest in community projects, up to $10 million to speed up administrative processes and ratepayers will have their rates protected against future increases for 4 years. The key argument in favour of these amalgamations is reducing waste and red tape would free up close to $2 billion over the next 20 years. This supports the argument larger amalgamated councils have more resources to perform their jobs and become more equal partners with other tiers of government and the private sector. This should benefit the off the plan market as councils resources are more efficiently used towards achieving faster outcomes.

Vacancy rates remain stable

Majority of capital city vacancy rates around Australia are remaining strong according to recent SQM data. Hobart (0.9%), Canberra (1.4%), Sydney (1.7%), Adelaide (2%), Melbourne (2.1%), Brisbane (2.8%) and Darwin (3.4%). Generally 3% is considered to be equilibrium i.e. a market in balance. This is positive news for off the plan buyers as stable vacancy rates means there are plenty of renters for new properties.

Home values continue to rise around Australia

Residential dwelling values have increased by 3.3% over the first 4 months of 2016 according to CoreLogic. Total gross returns over the previous year were highest in Melbourne (13.6%), Sydney (12.7%), Brisbane (11%), Canberra (9%), Adelaide (8%), Hobart (6.5%), Perth (1.9%) and Darwin (1.7%). During this current growth cycle which started in June 2012 dwelling values have increased by 34.4% with Sydney (52.7%), Melbourne (37.1%) and Brisbane (18%) experiencing the strongest increases. If this trend continues new properties under construction in some of these high growth areas could experience capital growth during the construction period.

Negative gearing could be the decisive vote

A key point in the upcoming federal election will be negative gearing. It will be a key deciding factor for many Australians. The Liberals are sticking to the current system while Labor believes negative gearing should be abolished. Various industry experts have outlined their views with some linking the removal of negative gearing with price falls and or potential rental price changes. The off the plan market is forecast to be relatively unchanged as any changes are likely to be enforced on established property. Leaving new off the plan property to benefit from negative gearing as a way to continue to encourage growth in construction and the broader economy.

Federal budget 2016/2017

The budget has focussed on transitioning jobs from the mining sector to the broader economy with a goal for more jobs and growth. Over 2015/2016 there were over 300,000 new jobs created which is the largest number of jobs created since 2007. The government has committed $50 billion for infrastructure investment between 2013/2014-2019/2020. A commitment to lower tax rates for companies over time to become more internationally competitive. Support innovation in Australia through $1.1 billion National innovation and science agenda. The Australian economy is forecast to grow by 2.5 per cent in 2015/2016 and 2016/2017 and increase to 3% in 2017/2018. All these measures are very positive for the off the plan market. Namely infrastructure investment increases convenience for property buyers. Whilst innovation can create new industries which increases Australia’s current income earning potential, this has many positive flow on affects for the off the plan market.

Building approvals are coming back to normal

Building approvals have reduced over the last quarter in every state around Australia besides the ACT. These record levels experienced in 2015 seem to coming back to normal levels, which is positive news for buyers and current owners. Lower levels of building approvals reduces potential future supply of new property. This means if demand increases above current levels, we could experience further competition for available property. Typically associated with increasing prices.

Foreign investment grows in Australia

Foreign investment in Australia grew by 8% over 2015 tolling $3,024.4 billion. The countries leading investment in Australia are USA (28%), UK (17%), Belgium (8%), Japan (7%) and Singapore (3%). Australians invested $2,080.7 billion overseas. The preferred markets USA (29%), UK (17%), NZ (5%), Japan (4%), China (3%) and Singapore (3%). Growth in foreign investment shows Australia is a reliable destination for overseas investor funds.

Strong Chinese real estate investment in Australia

Chinese investment in real estate accounted for 45% of all Chinese investment made in Australia over 2015. In total Chinese investors, invested $11.1 billion over 2015. Two major real estate deals accounted for nearly half of the entire Chinese investment volume. Australia remains the second largest recipient country of direct Chinese investment behind the USA between 2005-2015. Inflows of overseas money is typically associated with increasing prices and higher competition for available opportunities in the off the plan market.

Investment property loans continue to grow versus owner occupier loans

Investment loans are categorised by either new construction or purchase of rental or resale properties. Investment loans made up 33.4% of all loans in November 2015. This was the lowest level since January 2012. Since then they are on an upward trend nearing levels experienced in early 2015. Currently sitting at 37.2% of all loans. This upward trend shows confidence is coming back into the investment segment of the Australian property market.

Wages are growing

According to recent ABS statistics, some of the strongest performing industries in terms of wage growth are Education, Health Services, Finance and Insurance services, Arts and Recreation and Retail Trade. Increasing wages are usually associated with higher borrowing capacity to fund and invest in new property opportunities.

Unemployment rate is dropping

Since highs of 6.2% in early 2015, the unemployment rate has trended downward to the current rate of 5.7% in April 2016. Low unemployment rates are very positive for the off the plan market as more residents working and earning in secure jobs means greater economic stability for the broader property market.

Research of the month: why property prices rise?

A paper released by the RBA and authored by Koeller and Merwe analysed ‘long-run factors influencing Australian house price growth’. They concluded during the 1980s houses broadly followed inflation in the economy. With the advent of financial deregulation in the late 1980s, cheaper and easier access to finance resulted in increased debt-to-income ratios and high housing price inflation from the early 1990s to mid 2000s. Over the previous decade strong population growth (high immigration) and smaller household sizes (affordability and demographic shifts) led to increases in underlying demand exceeding the supply of new dwellings. Strong population growth is forecast to continue. Many new off the plan projects will need to be built to counteract this increased demand with limited supply.