RP & Cattleya,

The population growth of Queensland at about 1.9% is double that of VIC and NSW. From a state population (demand) point of view QLD is a long term stayer. In addition to this, the entry price or affordability relative to VIC and NSW suburbs is far better in QLD. Affordability is increasingly becoming a very important factor in purchase decisions now that all major banks have adjusted their lending policies for investment buyers. That being said, the buying caps or price points in South East Queensland are far more reasonable than major capital cities in VIC, NSW, WA and NT.

In terms of potential suburbs, the real key is to become less emotional about the purchase. We find many of our prospective Clients come to us with ideas of investing in units by the sea on the Sunshine Coast, Gold Coast and other areas where they feel they could retire or live themselves. Without going into the details as to why units are typically poor property investments, the objective of identifying a good location is to find an area with very high current and future population growth, well above the State average. Fast growing regional suburbs (close to major capital cities) is always a great place to start. Some Northern areas of the Gold Coast and Western Areas of Brisbane are growing at an incredible rate of population, driven by their physical locations in relation to capital city employment catchments and close proximity to major, large scale, State-approved infrastructure and retail developments. An example of one of these areas might be Pimpama which is currently growing at a rate of about 9.6% p.a. in population (now officially the fastest growing regional suburb in Australia according to the Qld Treasury and Trade Dept.). There is also an approved 80-Hectare Westfield development which takes up one third of the entire suburb that is now approved to go forward. With 11 schools in the local area and 700 local businesses operating within 7 mins drive it is a massive, massive employment hub. The suburb is also strategically located between to of the largest cities in the Country (Bris / GC). Areas like this, available at prices less than half of Sydney, Melbourne, Perth and Darwin make them extremely compelling investment prospects. Couple this with Commonwealth Games growth (proven to be – as per Melb and Syd games historical price movements – 10% over 2 years post games) it makes it almost impossible to replicate anywhere in Australia.

Moreover, there are other areas west of Brisbane and Gold Coast, some of the larger Lendlease estates that provide huge upside over the next 3-5 years. Some of the land prices in these master planned, community driven, brand new estates have increased by $50,000 over the last quarter alone. Yields for even brand new properties are hovering around the 5% mark which comfortably allow for progressive yield compression without rental increases as the market grows strongly (eg Sydney yields are arguably 3.5%). This provides room for growth.

The data quite frankly doesn’t point anywhere else other than South East Queensland. Affordability and population growth being the main drivers. Even Caboolture is on the up and up after years of zero growth due to oversupply. I read today that occupancy rates in this once hated investment area are now just 1%! The supply issues there are well and truly gone but demand remains. Probably a few bargains to pick up in this area due to it being out of favour for so long.

Hope this helps!

• This reply was modified 9 years, 2 months ago by  Lloyd James Ross.

Hi Argyle, Jacqui mentioned above, it all depends on how much super you have to use for the property acquisition.

Generally best to invest in a State or location that has strong population and job growth over a variety of industries. Higher growth rates of both typically results in higher growth rates in the value of land. The same can be said for land that is also in close proximity to large scale infra projects incl future schools and retail (this is essentially what helps create long term sustainable job growth).

That being said, you’ll probably find better job and population growth in South East Queensland than in Tasmania where affordability is still fairly reasonable although not quite as good as TAS. The weather and job growth will attract a higher population long term in Qld as as such, I’d expect Qld property to outgrow TAS in the long term. Jump on realestate.com.au and scope out some options. I’m sure you’ll find a few properties that will meet the requirements of your SMSF funds. Might also be worthwhile looking into a few mortgages in possession sales to ensure a low buying cap.

Don’t always be in a hurry to save tax. Many people don’t realise that to save 33% you have to spend 66% so strategies purely geared around saving tax are always floored. Tax deductions are merely a way to incentivise business spending and investment, which includes property investment.

The benefit of securing a tax saving through depreciation and negative gearing is to assist with covering the operating costs of a property while the investor waits for capital growth to occur.

With interest rates being so low at the moment, tax savings secured from non-cash charges like depreciation create a neutral and often positive-cashflow property. This allows for sensible cash flow mgmt until capital growth occurs.

• This reply was modified 9 years, 4 months ago by  Lloyd James Ross.