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Find the good even in toughest times. Courage and commitment in times of adversity, they are the key not only to survival but even happiness. Happiness is not just the joy that comes from good times, it is also about being able to survive adversity. It seems strange to discuss happiness in a property article. However, property investing must also be a happy experience. It is about a dream, birthing a plan and taking action to realise the wealth outcome.
Matusik Insights publication in September 2008 quoted a wise saying that all investment markets gravitate towards their long-term average over time. This is a timely quote given the force of the financial turmoil hitting the headlines this week. Matusik said that the Australian residential property market is not likely to implode. "Calls of substantial price drops due to the "global financial meltdown" are also ill-founded. While the events of the week have unsetted some property buyers, the fundamentals supporting Australian residential property remain robust.... Migration/population growth is rising; our economy is stronger than most; unemployment is low and we have an undersupply of new stocks. While the traditional spring selling season may not be as strong as many would like, that does not mean that prices are likely to fall."
We feel it is appropriate at this time to take a closer look again at residential investment returns (capital growth plus rental returns) across Australia.
The table below (prepared by Matusik from REIA data) shows that houses fell by 2.5% during the June Qtr and attached dwellings ( apartments/units, townhouses ) fell 0.3% over the same period. The 12 month average however showed house was up 11.4% and attached product up 11.3%.The medium time frame (last 5 years) showed houses return 11% per annum and units 9.9%. The ten year average was 13.4% for houses and 12.8% for units. Coming back to the earlier quote : "all investment markets gravitate towards their long-term average overtime."
Another observation is detached houses and attached residential property show similar total returns. Many still believe that detached houses are better investments because of the land content. But the superior location of apartments, paricularly new products, and the concept built to the needs of a changing and affluent demographic have seen attached product returning better rental yields than detached houses.
In October there is time ( nine months), relative to the tax year ending June 2009, to look at a few things for yourself in terms of tax planning. Was your tax bill a hefty sum last year? Would you investigate how much tax savings you may obtain this year acquiring an investment property?
You may like to check out two projects we have researched that have the parameters for :
- generally affordable entry price approximately $360,000
- strong rental yield potential : strategic location attractive to the affluent demographic
- strong capital growth potential: unique developmnent
- Chancellor Executive Apartments, Varsity Lakes, Gold Coast:
- Brand new completed July 2008
- Well price, fully furnished one bed room apartment $359,500; 66sm
- Based on the Investment Analysis for a couple with combined earnings of $100,000 a year, investing in a Chancellor Executive apartment priced at $359,500, with a 20% deposit and 80% bank funding :
- the tax savings are approximately $7,363 in the first full tax year
- the cash flow required to hold the investment property is approximately $76 per week
- This is a residential apartment that you can live in yourself, or lease as a traditional tenancy for 6 or 12months at approx 5% p.a. rental yield, or lease it short term to the target market at the projected 7% p.a net rental yield
- Walking distance to waterfront, Bond University, commercial hub offices, lifestyle cafes, restaurants and shops, buses on door.
- Capitalise on a Master planned mixed use community strategically on a land scarce location so close to the University, waterfront, commercial hub, lifestyle shops and transport.
- Town Centre Apartments, Emerald Lakes, Carrara, Gold Coast
- Brand new completing late October/Novembert 2008
- Well price from $359,000 large one bed apartment 87sm
- Based on the investment analysis of a couple with earnings of $100,000 a year, investing in a Town Centre apartment priced at $359,000, with a 20% deposit and 80% bank funding:
- the tax savings are approximately $8,233 in the first full tax year
- the cash flow required to hold the investment property is approximately $165 per week
- Mixed use development with offices, retail, lifestyle cafe and restaurant
- Be among the Porto Bellago Italian Village apartments
- Capitalise on the the visionary development of the French Quarters European village lifestyle hub scheduled for completion in late 2009
- Capitalise on the proposed development of the fresh food markets
- Waterfront and next to the established golf course (unique, difficult to replicate)
- Central to GoldCoast CBD and Surfers Paradise
For investors who are considering investing, and wanting to have a later completion /settlement date in 2009, 2010 and later :
- Sphere Southport is strategic with Griffiths University next door and the completion of The Gold Coast University Hospital also next door in 2012. Incentives available.
- Pavilions on 5th, Palm Beach Gold Coast, 120m from the beach, completing March 2009. Incentives available.
- Promenade Hamilton, 6km from Brisbane CBD, waterfront. Completing late 2010.
We wish you well. And a quote from another wise man, Warren Buffet: "Our favorite holding period is forever."
if you would like an investment analysis or further information. Or please call .
Eric Wan --- 0412 829 255 (Outside Australia +61412 829 255 )
Jack Liu --- 0430 198 389 (Outside Australia +61430 198 389 )
Sonya Kim -- 0413 203 424 (Outside Australia +61413 203 424 )
Tel : 07 3360 0808 ( outside Australia +617 3360 0808 )
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