Investor surge tipped if Labor wins election
PROPERTY experts are predicting a likely surge in investor activity if Labor wins the federal election — and it’s got nothing to do with buyers supporting their policies.
A Shorten Labor government would restrict negative gearing to investors who have bought newly built dwellings and halve the capital gains tax, with the changes expected to start next January.
Properties purchased before then will be grandfathered, with industry experts predicting investors will move swiftly to ensure they retain the current concessions.
The Courier Mail has crunched the numbers, and taken a look at median values, rental yields and vacancy rates across the state.
Recovering mining towns are offering value for investors keen to take a punt on the property market, while some of Brisbane’s most affordable suburbs have come out on top.
Buyers agent Daniel Walsh said now was the “hour to invest”.
“Unless investors buy new properties — and most smart ones don’t — then that taxation benefit will no longer be around (if Labor wins office),” he said.
Brisbane buyers agent Nathan Wunsch of Property Pursuit said he expected to see an increase in investor activity if there was a change of government, with many investors holding off until after the election.
“I would say that we might also find some people trying to liquidate their assets, and others trying to get in on the back of that, so it could also be a good time for buyers trying to get in to the market,” he said.
MCG Quantity Surveyors managing director Mike Mortlock said the vast majority of investors were families with only one or two properties, often retaining their first home and upsizing or downsizing to another property.
They are the “accidental investors”, he said.
Terry Ryder of Hotspotting said would-be investors should look at solid markets like the Sunshine Coast, which remained affordable and benefited from a number of major growth drivers.
He said Cairns was another place to consider, saying that market “is promising”, and Mackay and some Central Queensland markets were showing signs of recovery.
Townsville and Toowoomba were also worth a look, as was Gladstone, which suffered a significant blow during the resources downturn.
But he said yield was not the only factor to consider, saying places like Collinsville still had high vacancy rates.
“Resources towns are often high risk,” he said.
In the southeast, Mr Ryder said Brisbane was “like a car revving strongly with the handbrake on” but it had all of the right ingredients for an upturn.
He said Moreton Bay, in general, was a strong performer.
In Brisbane, one of the best performing suburbs for rental yields is also one of the city’s most affordable areas.
Ellen Grove, which is about 20km southwest of the CBD, boasts the region’s highest indicative rental yield and one of the lowest median house vales.
The median house value is currently $296,500 — the Greater Brisbane median house value is $531,000 — but those houses have a median asking rent of $315 per week, or a rental yield of 5.5 per cent.
Local agents pointed to new developments in the area, which are attracting younger tenants and investors.
In terms of houses, Richlands came in a close second with a rental yield of 5.2 per cent.
The median asking rent in Richlands is $430 a week, with the median house value sitting at an affordable $428,000.
But the number of houses available for rent are limited, with only three listed on realestate.com, au
The suburb with the highest median house value in the top 10 was Nudgee with $620,000.
Houses in that area have a median asking rent of $575 a week equating to an indicative rental yield of 4.8 per cent.
Ray White agent Renee Rennie said the Nudgee-Banyo area was very popular with both local and interstate investors due to its proximity to the airport, major arterials, good schools and amenities.
She said the majority of interstate investors were “younger generation investors” who could not afford to buy in their home city. Those buyers are often labelled ‘rentvestors’.
Local investors, she said, generally lived within the suburb and knew they could get a good rental yield.
For units, Robertson, Kuraby and Taigum came out on top, with rental yields between 6.6 per cent and 7 per cent.
For Greater Brisbane, the entire top 10 list of suburbs for highest rental yields were for units, with Beachmere, Raceview, Caboolture and Woodridge taking out the top five spots.
REIQ data shows that Brisbane’s vacancy rate remained steady at 2.5 per cent in the March quarter, while Greater Brisbane saw vacancy rates tighten from 2.3 per cent to 2.2 per cent.
The Moreton Bay region had the tightest vacancy rate at 1.7 per cent.
A small town southwest of Bowen currently boasts the state’s highest rental yield.
Collinsville, which has experienced the highs and lows of the various mining booms, could again be sitting on a property goldmine, with a host of new mining and green energy projects underway or in the pipeline.
House values tanked from a high of $250,750 in 2008 to a low of $80,000 in the last quarter, with five homes currently listed for under $100,000 on realestate.com.au
That means landlords who picked up a house for around $80,000 can command a median asking rent of $298 a week — a whopping indicative gross rental yield of 19.3 per cent based on current values.
Rents have jumped by $98 a week, up from $200 in 2017, but vacancy rates remain high.
Collinsville Real Estate principal Eileen Meyer said she had been seeing increased investor activity over the past six months, and more young families making the move to the Bowen Basin township.
“We are seeing more hits (on listings) and people from outside of the region watching our market,” she said. “Those people who already have properties, a lot of them are also hanging on to them because they are getting good rental returns.
“Those tenants are contractors looking for long term leases … young families with hubby in the mines not wanting to do the commute anymore and getting rental subsidies to stay locally.”
But Ms Meyer warned that new stock would be needed as projects, like Adani, got the green light.
“Without it, there will be a shortage of housing,” she said.
Snapping at the heels of Collinsville was Beachmere, a bayside suburb north of Brisbane.
Popular with retirees and downsizing Baby Boomers, 10 units sold in Beachmere during the last quarter, recording a median value of $91,000.
But the majority of those units were located in an over 50s community.
Beachmere Real Estate agent Paul Culley said outside of the retirement living sector, there weren’t too many units hitting the local market.
“Newer ones tend to get snapped up quickly,” he said.
Of the top 20 towns with the highest indicative gross rental yield, many were in resource regions where values have fallen but rents have remained strong.
Blackwater — a coal mining town in the Central Highlands — had the third highest rental yield with 14.4 per cent.
Median asking rents have increased by $45 a week, rising from $205 in 2017 to $250 last quarter, according to CoreLogic’s Market Trends report.
Vacancy rates are at 5.5 per cent and falling.
Blackwater Real Estate agent Jason Campbell said the rental market was strengthening, with an increase in investor and owner occupier activity in the area.
“We went through a tough period at the end of the resources boom in 2012 and bottomed out in 2017 but values are slowly increasing,” he said. “We are even recommending that leases only be for six months at a time as we are seeing rents increasing.”
Mr Campbell said they were seeing an increase in interest from interstate investors due to the affordability of housing and strong commitments from mining companies in the region.
But he warned that changes to negative gearing and capital gains tax could have dire consequences for regional towns, which often relied on investors to boost the rental pool.
“I think those changes will affect us even more than they (Labor) are suggesting,” he said. “Places like this get a lot of investors and people who come here temporarily so any changes would likely stifle the market and create a housing shortage.”
He pointed to the housing shortage and exorbitant rents charged in Moranbah at the height of the mining boom.
“For people to come to these area, there needs to be houses and there needs to be investors who provide those houses,” he said.
Recent vacancy rate analysis by REIQ showed vacancy rates across many regional towns were trending downwards, including Toowoomba, Fraser Coast, Gladstone, Townsville and Cairns.