The Experts

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John McGrath
Property Expert
+ About John McGrath
About John McGrath - Founder and Executive Director, McGrath Limited

John McGrath is considered one of the most influential figures in the Australian property industry. As Founder and Executive Director of McGrath Limited, , he took McGrath Estate Agents from a lounge room start-up in 1988 to one of Australia's most successful residential real estate groups, listing McGrath Limited on the Australian Stock Exchange in November 2015.

An integrated real estate services business, McGrath today is one of the fastest growing real estate companies in Australia with a strong market presence in NSW, the ACT & Queensland, and a growing presence in Victoria.

In October 2008, John was honoured by the Real Estate Institute of NSW with the Woodrow Weight OBE Award, a lifetime achievement award for his outstanding contribution to the real estate industry.

John himself has become a spokesperson for the industry both in Australia and internationally. John has five books that have reached bestseller status including “You Don’t Have To Be Born Brilliant” and “You Inc.”. In “The Ultimate Guide to Real Estate”, John shares with the reader his invaluable knowledge on the Australian property market.

John is a Director of REA Group and also the South Sydney “Rabbitohs,” which is one of his great passions.

Why selling in winter works

Tuesday, July 17, 2018

So, it’s the Winter season. Fewer people attend opens. There are fewer homes for sale. The gloomy weather allows less light into your property. The rain makes your lawn soggy. The house feels cold. Doesn’t sound like the best time to sell but let me surprise you – Winter can actually be the perfect season to sell.

Let me explain why. There are three key reasons.

First of all, genuine buyers don’t stop looking for a new home just because it’s raining on Saturday morning. Fewer people will attend your open in Winter but you can bank on those buyers being genuine – not locals popping in for a look or future buyers researching the area.

Secondly, there are less homes for sale. People are seeing fewer listings advertised and fewer signboards. It makes the market look slow and boring, right? Not true. It’s actually great news for sellers.

Low supply of similar homes for sale will always work in your favour. It means buyers don’t have as many options and therefore, more of them will notice your home.

They’ll have more opportunity to inspect it because there will be less homes sharing the same open time slot.

Buyers will be less rushed with fewer opens to attend, so they’ll have more time to wander around your place and imagine living there. This is all good for you.

Lastly, Winter is an advantageous time to sell because it enables you to buy in the traditionally busy Spring period, when more homes are listed for sale. 

Sell in Winter and you won’t be competing against all those new Spring listings, you’ll be competing for them. With your sale done and dusted, you’ll have an exact budget to work with, too.

Some properties are particularly suited to a Winter sale. For example, beautifully renovated period homes with open fireplaces can be cosy and inviting in Winter. Conversely, beachside properties with pools will always present best in Spring or Summer.

For Winter sellers, Adrian Bo, McGrath’s Performance Growth Coach, provides the following tips on how to maximise your home’s appeal in the cooler months.

Maximising your home’s Winter appeal

·       Make sure windows are clean and window-dressings are well presented to make the most of natural light

·       Schedule your inspections for times of day when rooms capture the most winter sun possible

·       Use candles, lamps and soft furnishings like cushions and throw rugs to make darker areas cosy and appealing

·       Factor in time to properly heat your home before potential buyers arrive for inspections and the auction itself

·       Make sure your home is ready for any winter downpours – clear gutters and pathways so water can clear easily

·       On wet days, don’t be afraid to ask those who come to the inspection to take off their shoes at the door to protect floors from muddy footprints

When the weather changes and the temperature drops, the market doesn’t go cold. Talk to your local agent about market conditions and whether this Winter provides a good opportunity for you.

 

Your end of financial year property round up

Tuesday, July 10, 2018

Now that we’ve hit the mid-year point, it’s an opportune time to drop a pin in the market and see what’s really going on and how things have changed over the past 12 months.

Of course, the headline this year is the market turn in Sydney and Melbourne.

We are currently well into the cooling process. While some suburban pockets are still recording price rises due to local factors like a particularly desirable location or a lack of supply, both cities overall are slowing down.

Latest numbers from CoreLogic for the year to May show transactions were down -13.5% in Sydney and -12.9% in Melbourne. In the last week of June, Sydney recorded an auction clearance rate of 56% and Melbourne 60%. At this level, we are well and truly back to normal market conditions.

Over FY2018, Sydney home values fell and Melbourne’s rate of growth pretty much grinded to a halt.

Sydney prices softened by -4.5%, which was a significant turnaround on FY2017 when prices rose by 12.2%.

However, these statistics tell us we’re seeing an orderly correction and certainly no dramatic changes. Think about it. In FY2018, Sydney values fell by the equivalent of one-third of the price growth of FY2017 alone.  In the grand scheme of things, it’s not much of a drop.  

In Melbourne, prices are not yet in negative territory – they’re up 1% for FY2018 but this rate of growth is well down on FY2017 when prices rose by 13.7%.

Across the country, the results are mixed. Here’s a state and territory comparison.

FY2018 change in property prices

Sydney            -4.5%

Melbourne      +1%

Brisbane          +1.1%

Canberra         +2.3%

Adelaide         +1.1%

Perth               -2.1%

Hobart            +12.7%

Darwin            -7.7%

Source: CoreLogic, July 2018 – house and apartment prices combined

Typically, when Sydney and Melbourne slow down, that’s when other cities start to shine so the national picture will be very interesting over the next 24 months. Which city or cities will become our next big market movers?   

Hobart is having a run at the moment but I think Brisbane and South-East Queensland present the best opportunities for value and growth. I still have a lot of confidence in this market, with high levels of interstate migration and more southern investors looking to buy.

No matter where you’re looking to buy in FY2019, you must be conscious of what’s happening in the home lending environment.

Tightening credit policy, especially in expensive markets, is having a real impact on buyer competition. Availability of finance is now becoming a bigger barrier than high house prices for some buyers and we haven’t seen this in the market for a very long time. 

Up until now, credit restrictions introduced by APRA since 2014 have successfully targeted investors. Now, owner occupiers are also feeling the pinch as lenders look more closely at debt-to-income ratios and the personal living expenses (rather than a general index) of every buyer to determine serviceability.

It’s very hard in Sydney and Melbourne not to have a high debt-to-income ratio on a property buy, so purchasers in these cities will be hardest hit by these new yardsticks.

It’s never been more important to get your finance organised early and shop around for the best lender. APRA has largely left it up to individual institutions to decide how to tighten their serviceability criteria and mortgage brokers will be able to advise you, based on your financial position, which lenders will be more receptive to a loan application from you.   

As Sydney and Melbourne cools, people will start to notice a departure of many agencies and agents from the marketplace. There’s nothing like a cooling market to weed out the poor performers in our industry.

The best agents will navigate the change in market conditions with ease – they’ve been here before and they know what to do.

It’s crucial to be selective with your choice of agent in this market. Anyone can sell a property (especially in a boom) but a good agent should sell it for 10% more because they have better negotiating skills and a greater commitment to doing all the small things that make a difference.

This includes calling every single person who inspects your property for detailed feedback and tailoring a marketing package to suit you rather than a one-size-fits-all.

Looking ahead to FY2019, it’s obvious that Sydney and Melbourne will continue to cool. At some point, prices will settle and we’ll see more normal rates of steady, conservative growth for several years.

Every market presents opportunities and right now first home buyers in Sydney and Melbourne have the advantage.

With interest rates still very low, I recommend that long term home owners and investors shift their focus from capital growth to debt reduction.

It’s a matter of time til interest rates rise, so with the market softening I see FY2019 as a great time to be prudent, pay down debt where you can and in a better position yourself to absorb any rate rises ahead.    

 

What's different about this market slow down?

Tuesday, July 03, 2018

The key difference between the current market slow down occurring in Sydney and Melbourne and previous market corrections is that this one has been largely engineered through increasing restrictions on residential lending that are compromising buyers’ ability to purchase property.

Previous market slowdowns following a boom have typically been the result of rising interest rates or a change in economic conditions.  Not this one.  Interest rates remain very low with no prospect of a rate rise in sight and the economy is doing well with low unemployment and good growth.

While normal market cooling factors are certainly at play, such as affordability and reduced yields for investors, the biggest factor dampening our market right now is the availability of finance.

Tighter lending policy for residential property began in 2014 and was initially aimed at investors.

APRA imposed a 10% limit on investor credit growth, which meant the banks couldn’t lend to as many investors. Then they told the banks they had to limit new interest-only loans.

This resulted in banks putting a premium on investment interest rates (typically about 0.6%) and interest-only loans (typically 1%), which dampened investors’ enthusiasm. This had the greatest impact in Sydney and Melbourne, where investor activity has been highest in recent years.

Now the banks have tightened their serviceability checks on all borrowers – not just investors.

The way they calculate what a borrower can comfortably afford has changed. There is far more scrutiny around living expenses and debt to income ratios, which makes it tougher for borrowers in our most expensive markets to get approval.

APRA suggested that banks limit loans on “very high” debt to income ratios of six or more. According to CoreLogic figures, the ratio of home values to income in Sydney and Melbourne is 9.3 and eight.

Not only does this mean fewer people are getting loans, but more significantly, the time it’s taking for good borrowers to be approved is blowing out, and this is directly reducing auction competition.

We are hearing many stories of buyers not being able to get loans approved in time to bid.  They see the property in week one, they commence the formal loan approval process and by week four they are still waiting for the rubber stamp. You can’t bid without your finance, so they don’t compete.

This is a problem in a cooling market where many auctions are typically attracting one to three bidders instead of five or more during the boom. It is no doubt contributing to falling clearance rates (although a great price can still be achieved later when buyers are able to participate).

While tighter credit policy is frustrating the marketplace, it is making our banking system stronger. After seeing what can happen when the sector fails, as it did in the US in 2008 triggering the greatest financial crisis of our time, the long-term benefits of a strong system outweigh everything else. 

If you’re currently looking to buy and you’re in a good financial position where securing finance shouldn’t be too difficult, the market presents good opportunities for you today.

There is more stock available for sale, so if your finance takes too long for approval on one house, there will be plenty of others to choose from.  Less competition means you can negotiate harder.

On top of that, you can take advantage of extremely low interest rates when they matter most – in the first five years of your loan when the interest component of repayments far exceeds the principal. 

While we do expect a period of low price growth in Sydney and Melbourne over the next few years, that shouldn’t deter buyers today if you’re buying for the long term. The opportunity to lock in a low interest rate should be far more front of mind than prices falling. History shows they don’t fall much in our big cities (see last week’s column).

Today’s buyers need to keep two things in mind.  Firstly, start the finance process early.  Secondly, with income growth remaining low, it’s important to have a buffer in place so you can afford higher interest rates when they do eventually (and inevitably) go up. 

 

How low will Sydney and Melbourne prices go?

Tuesday, June 26, 2018

In the easing markets of Sydney and Melbourne, we’re hearing more speculation in the media and amongst buyers about how low prices will go as our big cities continue to cool.

The latest opinion came from two senior economists at ANZ Bank, who published a paper last week predicting both cities would see a 10% peak-to-trough fall in prices over 2018 and 2019.

We’re going to hear more of these predictions over the next 18 months, so let me see if I can offer you some reassurance based on my experience of more than 30 years in real estate, during which time I have seen many peaks and troughs in the market cycle.

How far prices will fall is a hard question to answer with any real accuracy. We know both cities are cooling – Sydney faster than Melbourne (but remember, Sydney had a faster rate of growth during the boom).

We also know that neither market is going to crash because there are too many fundamentals holding prices up, such as the undersupply, high population growth largely due to migration, very low interest rates, low unemployment and a strong economy.

But we’re certainly seeing prices paring back, with auction clearance rates falling into the 50% bracket in Sydney and the low 60% in Melbourne.

Given the property market is cyclical in nature, it’s reasonable to rely on history for an indication of how low prices might go.

A Macquarie Bank Sales and Trading note released last week summed it up pretty well: “Australia has had six previous episodes of declining housing prices since 1980, with the peak-to-trough range of 2.5%-8%. Nearly all previous corrections occurred following interest rate rises, a drag unlikely to be repeated any time soon in this cycle.”

In terms of where we are now, the latest CoreLogic data shows Sydney home values have fallen -4.2% since June last year, while Melbourne values have risen 2.2%. But a recent acceleration in Melbourne’s cooling is apparent with an -0.5% decline in values in May and a three month decline of -1.2%, which is its largest fall over a three month period since 2012.

Price movements in both cities are tracked monthly and what we’re seeing so far is a very orderly softening of prices. Sydney has experienced extremely small monthly declines in median values since September last year. Out in the marketplace, you can feel that the heat has gone but it’s not translating into a big drop in the city’s median price.  

The great thing about this stage of the cycle is seeing buyers get a bit of negotiating power back. The urgency has gone, competition is weaker, there’s more homes for sale and much less risk of paying a premium at auction. We’re getting back to normal market conditions.

This is a good thing, especially for first home buyers. The timing couldn’t be more perfect for young people in Sydney and Melbourne – they’ve got generous stamp duty concessions; property prices are easing; and there’s far less competition from their investor rivals.

Is a cooling market a bad thing for owners? Of course not. It’s actually extremely positive because market corrections prevent bubbles. We want a period of consolidation now to cement in the significant price gains of the boom.

Put the price falls happening now into perspective. Around this time last year, when we were close to the peak of the boom, Sydney house prices were up 67% and Melbourne house prices were up 40% since mid-2012 when the growth cycle began.

So, even if they fall by 8%-10% or more, most home owners shouldn’t be concerned by this.

At the end of the day, the gains made during the boom will far outweigh any price falls we experience now. 

 

 

 

Top Performing Suburbs of Past 25 Years

Tuesday, June 19, 2018

A joint study by Aussie Home Loans and CoreLogic has revealed the top 100 suburbs for capital growth across Australia over the past 25 years.

It makes for interesting reading because the past quarter century has been an extraordinary growth period in the history of Australia’s property market.

I was in the first few years of my real estate career back in the early 1990s and I’ve seen some dramatic changes since then that have all contributed to price growth.

There is certainly more awareness today around wealth generation, with more mums and dads using property as a vehicle for investment.  According to the study, investment has risen from 20% of mortgage demand in 1993 to an historic high of 55% in May 2015.

Lifestyle elements, such as proximity to cafes, restaurants and public transport, have become key drivers in where people to choose to live and there’s been a huge surge in apartment living.   

In the 2000s, the internet changed everything by creating a massive buyer audience for every home listed for sale. It encouraged buyers to look beyond their own neighbourhoods for better value and lifestyle, which raised competition for homes as ‘out of area buyers’ became more prevalent.  

Significant economic reforms, massive population growth (especially migration) and a severe undersupply of housing in our major cities has also led to exceptional capital growth since 1993.

How exceptional, you may well ask?

Well, the Aussie/CoreLogic study shows national house prices have soared by 412% from a median of $111,500 in 1993 to $571,400 today. That’s annualised growth of about 6.8%. Melbourne beat the national average at 8.1%, as did Sydney at 7.6%. 

Median apartment values have risen 316% from $123,800 to $515,600 today, annualised at 5.9%.

How about this to demonstrate change. Back in 1993, 98% of all houses sold nationwide were less than $400,000 in price and only 0.2% sold for more than $1 million. Today it’s a vastly different story, with only 29% of houses selling for less than $400,000 and 16% selling for at least $1 million.

Chief Executive Officer of Aussie, James Symond, said: “Our report clearly shows that housing continues to grow as Australia’s largest asset class, with the typical home owner showing average dollar growth in their investment at $18,400 a year over the last quarter century.”

With two out of three Australians living in a capital city, it’s not surprising to see 81 of the top 100 suburbs in a capital city. Melbourne led the way with 41, followed by Sydney 25 and Perth 12.

What might come as a surprise though, is 9 out of the top 10 suburbs were in regional areas, which just goes to show there is plenty of opportunity to make money in property outside our big cities.

The No 1 suburb was Suffolk Park near Byron Bay on NSW’s North Coast, where the median house price has risen from $74,250 to $1.185 million over the past 25 years.

Here are the first 50 suburbs. If you’d like to see the full list, go to www.aussie.com.au/25years.

National Top 50

Best performing suburbs

Median house price growth 1993-2018

 

 

 

 

 

 

 

City escapees and where they’re moving

Tuesday, June 12, 2018

 

Some are swapping Sydney for Melbourne, others are heading to commuter regions and pretty much everyone wants to live on the Gold Coast, according to new figures on internal migration recently released by the Australian Bureau of Statistics and analysed by CoreLogic. 

The figures looked specifically at where people from capital cities moved to in 2016-17.  Here are the key trends.

Sydney to Melbourne

About 14,400 people moved from Sydney to Melbourne in 2016-17.  This city swap isn’t surprising because as great as Sydney is, Melbourne offers much of the same big city benefits including plenty of recreational facilities, high quality education and job opportunities – but more affordable housing.   

Melbourne has a median house price that is $198,000 lower than Sydney and a median apartment price that is $176,000 cheaper. There’s no doubt property prices in both markets will grow in the future, so Melbourne has plenty of appeal for those who are stretched financially in Sydney. 

Melbourne is currently Australia’s fastest growing capital city, with 2.7% growth compared to 2% in Sydney in 2016-17. While Melbourne experienced a net internal migration gain, Sydney had a loss.

Ripple effect to regionals 

Towards the end of every major capital city boom, we see strong migration to regional areas within commuting distance. Many of these regional hubs have undergone significant transformation into beautiful lifestyle centres with thriving local economies and communities, as discussed in our 2018 McGrath Report. 

The top two locations chosen by Sydney escapees in 2016-17 were Newcastle/Lake Macquarie in the north (5,500 arrivals from Sydney) and Illawarra in the south (5,300 arrivals from Sydney). 

These are popular traditional choices for Sydney families who have found it too tough to buy and have eventually chosen to commute in exchange for a cheaper home and a coastal lifestyle. 

Newcastle is undergoing a massive construction boom in a citywide update of public buildings and amenities. It has a top university and a burgeoning café scene, as does the Illawarra. Both have rail links to Sydney and upgraded roads are making the drive quicker and easier. 

The top two locations chosen by Melbourne escapees were Latrobe-Gippsland (7,300 arrivals from Melbourne) and Geelong (6,900 arrivals from Melbourne). 

Not all those moving to Geelong are being pushed out of Melbourne due to house prices. Several government departments have set up in Geelong, bringing thousands of new jobs to the region. 

Everyone loves the Gold Coast 

The Gold Coast has become a magnet for capital city escapees – in fact, it was among the top 10 destinations chosen by people leaving capital cities in every single state in 2016-17.

Relocations to the Gold Coast in 2016-17

  • 8,800 people from Brisbane
  • 5,200 people from Sydney
  • 2,500 people from Melbourne
  • 975 people from Perth
  • 750 people from Adelaide
  • 492 from Canberra
  • 413 from Darwin
  • 237 from Hobart 

I’ve been recommending the Gold Coast to my own investor clients for several years now. The GFC hit this city hard but the long road back has provided many opportunities for southern investors and sea changing families. 

The enormous infrastructure spend that came with the Commonwealth Games has added huge liveability to the city. The light rail has improved accessibility and there are plenty of new sporting facilities for families and major venues to attract more domestic and international conferences.

Australians love their big cities. We’re a large nation in land size but more than two thirds of our population live in just eight capital centres, according to the Census.

Net internal migration figures give us a great insight into which towns and smaller cities are luring people away from our most desired locations. 

The lifestyle appeal of transformed regional areas and the economic vitality of secondary cities like the Gold Coast, Newcastle and Geelong are obviously capturing people’s attention and imagination.

 

 

Australia's golden triangle of opportunity

Tuesday, June 05, 2018

It was great to be back on the Gold Coast for the 21st annual Australasian Real Estate Conference (AREC), attended by over 4,000 of Australia’s best industry professionals.  While I was there I was once again reminded of how much potential the South-East Queensland property market is offering both sea changers and investors at this stage in its market cycle. 

In my view, Brisbane is the best market in Australia currently for short to medium term price growth, with the value gap between it and the other big East Coast capitals as large as I’ve seen it in many years.

When you factor in the key drivers for future growth – liveability, affordability, scale and future economic prospects, they all suggest that Brisbane is a market to invest in.  Check out the latest statistics from CoreLogic below.

Value gap – median house prices 

Brisbane $536,286

Melbourne $821,006

Sydney $1,019,093 

Value gap – median apartment prices

Brisbane $385,121

Melbourne $573,673

Sydney $749,765

I’ve been bullish on Brisbane for many years and in hindsight, I called its next growth phase a couple of years too early. It’s had some growth in recent years but there is a lot more to come over the next few years. 

According to McGrath’s top prestige agent in Brisbane, Alex Jordan, one of the dominant trends today is downsizers buying up luxury apartments.  

Alex says: “Despite the reported oversupply in Brisbane’s inner city apartment market, we are seeing great strength in the prestige apartment sector. 

“The luxury apartment market ($1M+) is driven by owner occupiers, particularly baby boomers and empty nesters, who are attracted to less maintenance and better accessibility.  

“Popular suburbs include New Farm, Newstead, Teneriffe, Kangaroo Point, South Brisbane, St Lucia, Paddington and the Brisbane CBD. These areas offer a desirable lifestyle with an abundance of shopping, dining and entertaining precincts at their doorstep.”

South East Queensland has so many options for asset-rich, cash-poor southerners. Many of our customers in Sydney and Melbourne are looking closely at South East Queensland both for investment and a potential sea change. I believe its affordability will continue to attract record levels of interstate migration. 

If you live in Sydney or Melbourne and you’re struggling with the mortgage and cost of living, Brisbane is a fantastic alternative. It offers big city job opportunities, high quality education options and the chance to transform your financial future. 

The boom delivered Sydney and Melbourne home owners a capital gain of up to 75% - that’s enormous new equity that could be cashed in to fund an amazing new lifestyle with far less mortgage stress up north. Plus, you’d be buying in just before Brisbane’s next wave of price growth. It’s the perfect scenario.

I believe the area from the Gold Coast to Toowoomba and up to the Sunshine Coast is Australia’s golden triangle right now.

Toowoomba, with its expanded airport facilities which have opened up easy access to the south, is the perfect and affordable treechange destination. Known as Queensland’s Garden City, about 2,300 people moved here from Brisbane last year for its cheaper house prices and enjoyable regional city lifestyle. 

Both the Gold Coast and Sunshine Coast are also appealing sea change options benefitting from a raft of new infrastructure that will drive further population growth and generate more local jobs. 

Brisbane is one of the world’s great cities but I don’t think this is fully realised as yet. If you haven’t been to Brisbane for a number of years, get on a plane. This is a thriving city that offers many of the lifestyle amenities you love about the southern capitals but at a much cheaper price.

I think Brisbane will also become very attractive to migration and investment from Asia in the years ahead. 

South East Queensland is offering opportunity everywhere for both owner occupiers and investors alike. Now’s the time to consider what Australia’s premier lifestyle market can do for you!

 

Western Sydney Airport brings investment opportunities

Tuesday, May 29, 2018

 

Western Sydney Airport will be one of the largest infrastructure projects Australia has seen in many decades, and with it comes some very compelling opportunities for property investors today. 

The airport will be a game changer for Sydney’s western suburbs, where almost half of Sydney’s population currently lives and where a million more residents will settle by the early 2030s. 

We’re talking about an airport that will service five million passengers in its first year – about the same as the Gold Coast Airport today; and its capacity could double in as little as five years. 

Along with it comes a new train line, new housing estates, new community facilities, many road upgrades throughout the west, north-west and south-west; and serious sky-is-the-limit economic investment. Not to mention about 28,000 new jobs by 2031, according to the Federal Government. 

Construction is due to start later this year and it’s supposed to be operational by 2026 – which is not that far away in real estate terms. We talk of Sydney property values doubling every 10 years, so what will an international airport do for western suburbs house prices in less time? 

The location of Badgerys Creek for Sydney’s second airport was confirmed by the Federal Government in April 2014. Since then, home values in the immediately adjacent suburbs have skyrocketed, as shown by CoreLogic data published on realestate.com.au. 

The median house price in Bringelly – which is right next to the airport site, went from $890,750 at the start of 2014 to $3,000,000 today. No, that isn’t a typo! Here’s some others:

  • In Kemps Creek, home values went from $1,180,000 in 2014 to $2,850,000 today
  • In Rossmore, home values went from $1,105,000 in 2014 to $3,375,000 today
  • In Mount Vernon, home values went from $1,080,000 in 2014 to $2,750,000 today
  • In Luddenham, home values went from $685,000 in 2014 to $1,480,000 today 

These suburbs have many large acreages, and it’s the land that both local and international developers have been keen to acquire for future housing estate projects. They’re snapping up the large blocks with run down cottages and sheds that will be easy to develop down the line.

But don’t think of these suburbs as little rural outposts full of modest farmhouses alone. There are some spectacular contemporary prestige estates out here that would be very appealing to high net worth clients now that an airport is coming to the area.

The airport provides plenty of opportunity to expand commercially and they can swap a $6 million - $8 million home on the North Shore for a $2 million - $3.5 million home of the same quality but on much more land and in a much more relaxed, rural-style environment. Check out this example. 

As a property investor, it’s important to realise that the airport is not a singular infrastructure project, and it’s not just suburbs close to the actual site that will benefit. 

One of the major associated projects of the airport is the North South Rail Link, which is likely to run from Macarthur to Schofields with a connection to the Sydney Metro Northwest at Cudgegong Road station. 

Agreement to commence stage one – a rail line between St Marys, the airport and Badgerys Creek Aerotropolis (a world-class commercial hub surrounding the airport) was reached in March. 

What do you think a new rail link will do for St Marys, where median house values are currently $660,000 – about 35% lower than Sydney’s median?  St Marys is 21km away from the airport but will benefit directly with the rail link providing easy access to thousands of new jobs and facilities. 

There’s also major improvements on the road network through the west, south-west and north-west that will make life easier for residents with reduced local traffic and travel times. 

The first section of $1.6 billion The Northern Road Upgrade from Narellan to Oran Park was completed last month. This major arterial road stretches 35km from Narellan to South Penrith and will connect to the new M12 Motorway leading to the airport. Many more upgrades are yet to come on this one road, which will benefit residents in a variety of suburbs.

The airport forms part of a greater vision for Western Sydney that will see more residents working locally and greater economic activity and investment than ever before. And all of this is happening in one of our city’s most affordable regions, so there is plenty of room for capital growth.

Smart investors should start looking at the opportunities that Western Sydney Airport presents now.

 

 

Top 10 most popular suburbs for immigrants

Tuesday, May 22, 2018

New population stats give a fascinating insight into the most popular suburbs with our newest arrivals from overseas.

They show that immigrants continue to favour areas where there is a strong established community of fellow countrymen, affordable accommodation and/or proximity to jobs and universities.  

Along the East Coast states, it was the CBDs that were most popular, followed by suburban areas with big immigrant communities, according to recently released ABS Regional Population Growth figures for 2016-17. 

It’s somewhat surprising to see that Brisbane CBD attracted the highest number of new international residents in 2016-17, with 12,847 net arrivals compared to 9,316 in Melbourne CBD and 8,505 in Sydney CBD. 

Melbourne and Sydney are well known cities overseas and as such attract large numbers of new settlers. However, immigrants are increasingly discovering the other capitals, with Brisbane certainly offering more affordable housing, not to mention great weather all year round and reasonable job prospects.

While the data didn’t specify where immigrants came from, we can draw some conclusions based on where they settled, especially in NSW and Victoria.  Take a look at the tables below.

We know it’s typical for those wanting to start new lives to do so in suburbs popular with fellow immigrants.  We also know that immigration from Asia and India is rapidly rising – in fact, it’s more than doubled over the past 10 years alone.  We also know that Sydney and Melbourne have received the lion’s share of Asian immigration in recent years.

It’s therefore not surprising to see suburbs with a high proportion of Asian and Indian-born residents being the most popular neighborhoods among new arrivals last year. 

In NSW, Parramatta council area in Sydney’s west was the No 1 suburban hot spot for new arrivals, with 7,682 immigrants settling there. More than 20% of Parramatta’s residents were born in India and China, according to the 2016 Census. 

Victoria’s No 1 suburban hotspot was Monash council area in Melbourne, with 6,734 new immigrant settlers. Monash has large Chinese and Indian communities representing a collective 18% of the residential population.

In Queensland, the Gold Coast council area attracted 5,374 new immigrants. The Gold Coast has traditionally been popular with New Zealanders (8% of the current residential population) and English immigrants (5.2%).  However, we’re definitely seeing growing appeal among the Chinese too, partly due to more Chinese development on the coast in recent years. 

More than 3,500 Chinese-born residents moved to the Gold Coast between 2011 and 2016, according to the Census. The opening of a dedicated Chinatown in Southport in 2014 and the first direct flights to China in 2015 reflects the Gold Coast’s rising Chinese resident profile.

 

Immigrant Hot Spots – Top 10 LGAS with new arrivals 2016-17

Net overseas immigration plays a bigger role in our national population growth than natural increase (births minus deaths), so it has a significant impact on our property market.

Prior to the 1970s, Australia attracted mostly European immigrants. Today, we’re attracting mostly Asian immigrants.

Immigrant communities have given great character to their suburbs, with specialty retailers, grocers and restaurants providing traditional foods and goods. Some suburbs have earned special designations due to their large immigrant populations. Sydney examples include ‘Little India’ in Harris Park, ‘Little Vietnam’ in Cabramatta and ‘Little Portugal’ in Petersham.

The 2016 Census revealed that for the first time ever, the majority of Australian residents born overseas are now from Asia, not Europe.

We expect this to remain a growing trend that will influence demand for homes in our most densely populated Asian immigrant communities. 

 

 

 

Budget targets traffic congestion to improve city living

Tuesday, May 15, 2018

 

Looking at last week’s Federal Budget through the eyes of home owners, buyers and sellers, one of the most significant and relevant initiatives to us is the $1 billion Urban Congestion Fund.   It’s basically money for state projects aimed at reducing traffic ‘pinch points’ in our major cities.

The policy idea is concrete proof that traffic is becoming a real issue both economically and socially in our major cities, largely due to rapid population growth – and it needs to be addressed.

The Government is focused on the economic costs of congestion – estimated at $16B in 2015, with Treasurer, Scott Morrison saying busting congestion is “a very important economic objective.”

But for home owners, traffic is a lifestyle issue and it certainly impacts property values.

History tells us that anything done to reduce travel times between where we live and work has fundamentally changed the value of homes in affected areas.

Think about the M5 East in Sydney. The road was completed in 2001 and house prices in Revesby, Roselands and Bexley North went up by more than 40% in 2001-2003.

How about Brisbane’s Inner City Bypass? It was completed in 2002 and house prices went up by more than 50% in Clayfield and Ascot in 2002-2004.

Traffic congestion has a major impact on our lifestyles because so many of us prefer to drive to work. No matter how good the public transport is, we are a car-loving nation and statistics show we’ll drive to work if we can.

But sitting in traffic induces stress and soaks up time we could be spending doing other things. It’s a real deterrent that buyers factor in when making decisions about where to live.

A report by the Grattan Institute published in October 2017* provides a new form of analysis of traffic congestion based on comprehensive Google Maps trip-time estimates.

Focusing on Sydney and Melbourne, the report confirms what every CBD commuter knows – traffic is getting worse. Roads are proven to be busier and slower.

In the morning peak, the average CBD-bound trip in Sydney takes 70% longer than it would in the middle of the night when there’s no traffic; and around 80% longer in Melbourne. The report identified some specific ‘pinch points’ too:

  •   Sydney CBD commuters from Hurstville in the south and Balgowlah in the north face some of the worst delays. Drivers spend an extra 15 minutes on the road as a matter of routine, far longer than drivers commuting over similar distances from other parts of Sydney
  •   Melbourne CBD commuters have a worse time if they live in north-east areas like Heidelberg, Kew and Doncaster. Drivers using the Eastern Freeway and Hoddle Street in the morning peak are often delayed for more than 20 minutes – much longer than drivers from other parts of the city

Another big issue with traffic congestion is the unpredictable nature of it. If it normally takes 30 minutes to get to work but on a bad day it can take 50, then people must allow 50 minutes every day if they want to make sure they’re never late.  The report points out that many people can handle traffic if the required travel time is reliable.  Unfortunately, in major ‘pinch points’, it’s usually not!

Bad traffic is prompting some Sydneysiders leave the city permanently.

According to our McGrath regional NSW Principals, more Sydney buyers are mentioning traffic as a direct reason for their choice to quit big city living.  In years gone by, it was mainly about finding more affordable homes or pursuing a coastal lifestyle but today, traffic is definitely a push factor.

Social researcher Mark McCrindle has identified the same trend. A recent Fairfax article quoted him saying: “It’s discomfort with the affordability of the big cities and the infrastructure challenges that's pushing people out of cities, rather than the pull factor of a particular idealistic location.”

For those of us who stay in Sydney, it’s the loss of personal time that this an issue.

“Commuters are sick of being stuck in traffic rather than spending time with their families,” says Federal Regional Development Minister, John McVeigh.

So, it will be interesting to see what this Urban Congestion Fund can achieve in our trouble spots. If they make good decisions and manage to materially change traffic conditions in suburbs with long-standing issues, it could have a very beneficial impact on people’s lives and on property values.

*Stuck in traffic? Road congestion in Sydney and Melbourne by Marion Terrill, Grattan Institute, published October 2017

 

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