Эпизоды
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In this episode of "No Money Down: Smart Property Investment," Tim Graham is joined by Lucky Velasquez, the founder of FinanceBetter, to discuss innovative strategies for property investment with minimal initial capital outlay.
Lucky shares his extensive experience in helping clients navigate financial hurdles and maximise their investment potential without the need for large upfront deposits.
Key Topics Covered:
Introduction to No Money Down Investing:
What it means to invest with little to no initial capital.
Common misconceptions about no-money-down strategies.Creative Financing Solutions:
Alternative financing options and how they can be leveraged.
Examples of successful no-money-down deals and the creative methods used to structure them.Risks and Rewards:
Analysing the potential risks and rewards of no-money-down investments.
How to mitigate risks through thorough research and due diligence.Market Insights and Trends:
Current trends in the Australian property market.
How economic conditions are shaping investment opportunities.Case Studies and Real-life Examples:
Detailed case studies from Lucky's clients who have successfully implemented no-money-down strategies.
Lessons learned and actionable tips for aspiring investors.To get in contact with Lucky, please visit www.financebetter.com.au
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Are you ready to take your investment journey to the next level?
Look no further, because we have exciting news to share with you! We are thrilled to announce our new Hotspotting pre-recorded interviews with some of the top 1% of Australian investors who own 5 or more properties.
As you may know, in the 2020-2021 financial year, only 0.87% of investors in Australia owned 5 or more investment properties. But what do these successful investors know that the majority don't? We have sat down with a number of them to get exclusive insights into their strategies, tips, and personal journeys.
Our pre-recorded interviews bring you valuable knowledge and advice from Australian property experts who walk the walk and practice what they preach. Learn from their mistakes, successes, and unique perspectives on property investment. These interviews are a must-watch for anyone looking to build a successful investment portfolio and achieve financial freedom.
With over 71% of investors owning only one investment property, we understand the challenges and uncertainties that come with growing your portfolio. That's why we have curated a series of interviews that exclusively feature investors with multiple properties. They represent the top 1% of Australian investors and have achieved remarkable success in their investment journey.
Our pre-recorded interviews are available for you to watch at your convenience, so you can take in all the knowledge and insights at your own pace. Hear firsthand how they navigate the ever-changing property market and make profitable investment decisions. You'll be able to walk away with practical tips and strategies that you can implement in your own investment journey.
About Melinda Jennison
From a very young age Melinda developed an interest in real estate because her parents were property investors, so she learnt a lot from the conversations that they often had growing up. Melinda says she has been fortunate to have never rented, but instead bought her first home in Brisbane at the age of 18. This was the beginning of her own property journey.
Melinda came from a research background, having completed a PhD in 2001. Instead of staying in academia she moved into real estate, with involvement in the building and construction industry and property development. Now as a buyers advocate and QPIA®, Melinda uses the skills she has acquired over the years to make evidence based property decisions, to accurately interpret data and translate that in an easy way for clients to understand, and analyse all sorts of property deals for herself and others.
In September 2023, Melinda’s outstanding expertise in the property sector was recognised when she was elected President of the Real Estate Buyers Agents’ Association (REBAA).
You can find out more about Melinda and Streamline Property Buyers by visiting https://streamlineproperty.com.au/
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The latest lending data from the Australian Bureau of Statistics finds that loans to investors in New South Wales in April represented a 44% increase on the same time last year.
That’s a major jump in buyer demand, but it does not surprise the team at Hotspotting, particularly after the analysis we have done on market trends for the Winter edition of The Price Predictor.
Our research shows there is heightened buyer activity in selected locations, both in Sydney and in Regional NSW.
The Price Predictor Index finds that some of the nation’s regional areas are the leading markets in the nation, including the Wollongong/Shoalhaven region in NSW.
In the Winter edition of the PPI, we have nominated the Shoalhaven LGA as the strongest market among the nation’s municipalities, while the City of Wollongong also makes our National Top 10.
The Price Predictor Index for several years has charted the trend we call The Exodus to Affordable Lifestyle and our latest analysis suggests the demographic drift from the biggest capital cities is still pumping strongly.
In some cases, the NSW regional markets of note are what we call “second-wind markets” -locations across Australia which were at the peak of their up-cycles in 2021 and then subsided in 2022 and 2023 – but are now showing signs of embarking on the next up-cycle, with improved activity late in 2023 and early in 2024.
A prime example is Byron Bay which previously had a boom which, in reality, overshot true value – with property values doubling in two years. The median house price peaked at $3.5 million in mid-2022, but dropped markedly since to as low as $2.4 million. Now we see evidence in the sales data of a pickup in activity and also the first signs of prices recovering.
The strong Albury-Wodonga regional city at the NSW-Victoria border was a boom market until mid-2022 – and now, after a flat period, is showing early signs of revival. The suburb of Albury is one of our National Top 50 Supercharged Suburbs in the Winter edition of The Price Predictor Index.
Other standout locations include Newcastle and nearby areas such as Lake Macquarie and Port Stephens. Mid-coast centres like Forster and Taree are also travelling well.
In Sydney, the top end is undoubtedly leading the Sydney market while the cheaper areas are struggling to maintain their previously high sales levels.
Locations where houses sell for multiple millions of dollars are the strongest clusters for buyer activity, in a Greater Sydney market where sales levels have moderated a little but continue to be solid.
Our analysis reveals three stand-out clusters of suburbs where sales activity is most vibrant, all of them at the upper end of the market – the municipalities of Woollahra, Waverley and Bayside.
Within these LGAs, suburbs classified as rising markets include Bondi, Darling Point and Paddington.
Inner-city areas which have been boosted by strong demand for apartments in the past year or so – Sydney City and the Inner West LGA - continue to generate good buyer demand.
Rising suburbs in the City of Sydney include Surry Hills and Woolloomooloo, while Chippendale stands out for its consistency of performance.
At the opposite end of the market spectrum, outer ring areas including the municipalities of Blacktown, Hills Shire and Penrith have lost momentum and have significant numbers of suburbs classified as declining markets.
This is part of a notable trend nationwide which finds that new development areas are among the struggling markets with sales activity falling.
The problems within the housing construction sector are well-documented, with building companies going broke amid rapidly rising costs and shortages of tradespeople and materials.
We note that sales levels in the City of Blacktown, which has been a star performer in Sydney in recent years, have faded notably. It’s noteworthy that many of the declining suburbs have median house prices well above $1 million and no longer provide relative affordability, including Rouse Hill, The Ponds and Schofields.
In The Hills Shire, an even more expensive market in the far north-west, sales activity generally has dropped notably and half its suburbs are now rated as declining markets. They include a number of suburbs which all have median house prices above $1.7 million and in some cases above $2 million.
Listings of homes for sale have been trending upwards in the Hills District recently, so low sales volumes cannot be attributed to a shortage of properties.
But beyond that hiccup in the outer Sydney market, New South Wales broadly presents as a place that is attracting strong buyer demand, both in Sydney and in regional markets, with an uplift in investor activity a key factor.
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Home builders and property developers make their money creating new dwellings for Australian households.
If they get it right, they can make lots of money doing what they do.
When they decide NOT to do what they do, you have to ask why.
Why are the builders of major projects of housing or apartments walking away from their plans?
Why are big companies who have spent years and millions of dollars planning a major project making the decision not to build it?
We’ve seen many instances recently. An example is the decision by AVJennings to abandon a major housing development near Caboolture in the outer northern suburbs of Greater Brisbane. This project would have added 3,500 new homes to a market where there is a desperate shortage.
Brisbane is a market with high demand and a serious shortage of homes. Why would a big developer with a proven track record and the capacity to deliver these kinds of projects make the very big decision to walk away from the project?
All that time and money wasted.
The answer is: it’s simply not viable.
AVJennings said massive cost escalations – including the infrastructure charges and delays in getting approvals imposed by local councils – meant the project was no longer viable.
I have had discussions recently with developers who say that the cost of creating big residential projects is so high, it’s not economically and financially feasible.
They would have to place such a high price on the end product that few households would be able to afford to buy the homes.
A number of developers have spoken out about the impact that the cost impositions of local councils have on making projects difficult or unviable.
Orchard Property Group managing director Brent Hailey says the major infrastructure costs imposed on them make it too expensive for them to build homes.
Hailey said that, for example, developers in that Caboolture West precinct that AV Jennings has rejected had to pay for council infrastructure charges and also state government charges because it’s in a Priority Development Area.
Hailey says: “We’re at this point now in SEQ where unless the solutions are put in place quickly, there’s going to be a rapid decline in affordability, forced by supply not meeting demand.”
He says: “The problem facing developers is the cost of delivering the infrastructure and the balance between fully servicing those costs and trying to get an affordable home. There’s the normal council charges and the Priority Development Area (PDA) charges. During Covid-19 costs went through the roof, so now infrastructure is costing a lot more.”
Here’s another issue which is preventing the creation of affordable homes in Australia.
Prime Minister Anthony Albanese’s pledge to build 40,000 affordable homes through the Government’s $10bn housing fund will struggle to deliver any houses at all in Labor’s first term of office because only a handful of builders in Australia are eligible to participate in the program.
Rules written into the Housing Australia Future Fund legislation require builders contracted to work on new social and affordable homes under the scheme to be accredited for working on government-funded projects.
However, of the more than 400,000 construction companies registered in Australia, only around 500 are accredited by the Federal Safety Commissioner under the Work Health and Safety Scheme for eligibility to bid for head contracts funded directly or indirectly by the government.
There are few if any residential builders accredited under the scheme in Tasmania and only a limited number in regional Australia.
The industry claims the limitation threatens to severely hamper or stall Housing Australia’s ability to deliver its target of 40,000 social and affordable homes.
This comes at a time when the new construction code being imposed by governments is adding $30,000 to $40,000 to the already-high cost of building new homes in Australia.
These are just the latest events adding to a substantial list of situations which create the inevitable conclusion that we have a serious housing shortage in Australia, and very expensive new homes in this country, because of the short-sighted policies of politicians at all levels of government.
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Home loans to property investors jumped for a third-straight month in April, rising at a faster pace than loans to owner-occupiers.
The value of new loans to investors rose 5.6% to $10.9 billion in April, to be up 36% compared with a year ago, according to the Australian Bureau of Statistics.
Part of that increase, according to the ABS, is an increase in the size of the average loan.
The average size of an investor loan for the purchase of an existing home grew almost 10% since April 2023, from $592,000 to $648,000.
The strongest markets were New South Wales (where investor lending increased 44%) and Queensland (where investor lending climbed about 46%).
The higher rate of investor activity comes at a time when rents continue to rise, underpinned by very low vacancy rates, to compensate (partly, at least) for higher interest rates, as well as higher council rates, higher insurance costs and higher maintenance costs.
Figures from property consultancy CoreLogic earlier this month showed rents recorded an annual rise of 9% in Sydney and 10% in Melbourne – which means rents in the two big cities are rising faster than prices at the moment.
The rate of price growth is higher in smaller capital cities like Brisbane, Adelaide and Perth, but rental increases are as high, or close to being as high, as the rise in sales prices in those cities.
CoreLogic research director Tim Lawless says: “For most investors, higher yields will be welcome considering variable interest rates for investor loans are averaging 6.7%.
“Given the high cost of debt, a large portion of leveraged investors are probably recording a cash flow loss despite the substantial rise in rental income.”
The increased activity from investors is welcome, after a period of being well below historical averages – which, in simple terms, is why we have a rental shortage, given that investors provide over 90% of the homes rented by tenants in this country.
The rise in buying activity by investors confirms the anecdotal evidence we have seen at Hotspotting.
Right from the start of 2024, we have observed that many investors started this year with intent – and are taking action.
This is desperately needed across Australia, as it’s the only way that the chronic shortage of rental homes will be improved.
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Where’s the strongest suburb for future price growth in Australia?
What’s the most consistent location for sales activity in the nation and therefore likely to deliver superior price growth?
And what’s the absolute worst place to buy real estate right now?
The answers to all those questions and a whole lot more are revealed in the new Winter edition of The Price Predictor Index.
Now, we publish a lot of great reports with unique insights into property markets across Australia - but this is undoubtedly our best report.
The thing that’s so special about this report is that we do something that no one else does in Australian real estate - we chart trends with sales activity and use that to predict likely future movements in prices.
We apply a rating to every suburb and town in the nation - whether the market is rising, or recovering, or fading, or declining.
Our analysis of this data allows us to pinpoint the locations with the strongest trends in real estate across Australia - the ones most likely to deliver superior price growth.
We also identify the places to avoid, the ones where market trends are negative.
We pinpoint the best clusters of growth suburbs in the nation - the local government areas where suburbs collectively have the most positive trends with buyer demand.
We also identify the winners and losers among the big market jurisdictions - the eight capital cities and six state regional markets.
It’s fair to say that many of the findings will surprise a lot of people.
There is so much priceless market intel in this one report - so, if you buy just one research report this year, this is the one to get - the new Winter edition of The Price Predictor Index.
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I’m about to tell you what’s going to happen with property prices this year and I’m going to tell you why.
The information real estate buyers MOST want to know is where to buy for superior capital growth, both in the short term and the long term.
The problem for investors is that the research companies and the media don’t tell us that.
They tell us what’s recently happened with property prices. They inform us about the past.
And while that may be interesting, it doesn’t provide us with the really key information: what will happen with prices in the future.
That’s where Hotspotting comes in. Our proven methodology has a track record of predicting the future successfully and often.
And one of our core techniques is used to create the best of our stable of reports: The Price Predictor Index.
The underlying principle is really simple but wonderfully effective.
We don’t spend our time charting price movements - we devote our resources to following what’s happening with sales volumes - the number of sales in each location and whether they’re rising, flatlining or falling.
History tells us that sales activity is a forward indicator of what will happen with prices.
And the new Winter edition of the report provides important clues about which markets are rising and which ones are falling.
Here are some of the key pieces of market intelligence that our new analysis provides:-
The Perth boom has likely peaked and we urge caution for the many investors diving into this market after three years of big price growth.
Melbourne prices will perform a lot better in 2024 than they did in the past two years.
Some of the regional markets have stepped up as likely national leaders on price growth in the next 12 months. They include places like the Wollongong region, including in particular the Shoalhaven LGA; Gladstone in Central Queensland; and Albury-Wodonga at the Victoria-NSW border.
Smaller capital cities which have been weak lately are showing solid signs of recovery and will do better in the next year, including Canberra and Darwin.
Some of the iconic markets which had spectacular booms up to 2022 and have been in a correction phase since then, are now showing signs of moving into their next up-cycle. They include Byron Bay, the Sunshine Coast and the Mornington Peninsula.
Other former boom markets that look to be heading into another period of growth include Albury-Wodonga, Ballarat and Bendigo in Victoria, Hervey Bay in Queensland and Launceston in Tasmania.
Apartment markets in good locations in our biggest cities continue to attract buyers in large numbers with improved capital growth performance - Sydney City and the Inner West nearby are among the stand-outs.
The Winter edition of The Price Predictor Index has other priceless intel - including the National Top 50 Supercharged Suburbs list, the 50 most consistent growth markets in the nation, the 10 leading local government areas in Australia and the 50 worst declining markets, the ones to avoid.
From these lists, we nominate the No.1 best supercharged suburb, the nation’s most consistent location which is delivering big price growth - and the worst place to buy right now.
And, if you want to know what they are, you’ll need to get a copy of the report.
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Are you ready to elevate your property investment game? Join us for an exclusive webinar titled:
What is Commercial Property? Understanding the basics and significance of commercial property. Difference Between Residential and Commercial Property Key distinctions and their implications for investors. Myths of Commercial Property Debunking common misconceptions and myths. Benefits of Commercial Property Exploring the advantages and financial potential of commercial investments. Risks of Commercial Property Identifying potential risks and how to mitigate them. When is Commercial Property Right for You? Assessing if and when commercial property aligns with your investment goals.
"From Beginner to Pro: Mastering the Art of Commercial Property Investment."
This insightful session is designed to equip you with the knowledge and strategies needed to thrive in the commercial property market.
About the Webinar
Hosted by Tim Graham, General Manager of Hotspotting.com.au, and featuring guest speaker Steve Palise, owner of Palise Property, this webinar will delve into the intricacies of commercial property investment.
The author of 2 books and creator of The Commercial Property Institute, Steve, who retired before the age of 30 thanks to his impressive property portfolio, now dedicates his expertise to helping others achieve financial freedom. His analytical approach, rooted in his background as a chartered mechanical and structural design engineer, provides a unique and practical perspective on property investment.
Key Topics Covered
To take advantage of Steve's amazing offer of enrolling in The Commercial Property Institute's online course for FREE for a short-time only (usually $4,997), visit www.commercialpropertyinstitute.com.au and use the code word HOTSPOTTING
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It’s important for property investors to understand the difference between a population and home building hotspot – and what we at Hotspotting would define as a property growth hotspot.
There are those who believe that the best philosophy in selecting good places to buy real estate is to follow the population growth – and buy in the locations where population is growing the most or the fastest.
This, we believe, is a very poor strategy.
Very often, the locations that have the highest population growth rates do so simply because they’re locations on the fringe of a major city where there’s land available for building new housing estates – and naturally the population will grow there, often from a very low base.
And sometimes the growth in prices in these kinds of locations is subdued because there are large quantities of new housing supply being created – i.e. there’s an absence of shortage.
By contrast, some of the best capital growth is often achieved in locations where there is little or no population growth – because they’re established suburbs with no large vacant areas for new homes to be built.
The only way the population can grow in such places is by increased density – for example, houses are knocked down and replaced by apartment buildings.
Recently the Housing Industry Association published its latest hotspots report – and their definition of a hotspot is very different to ours.
The HIA report seeks to identify the areas where the greatest amount of new population and new home construction is occurring.
Media reported on this with headlines such as: “Population Boom Creates Hotspots”.
A typical article said:
“Surging population growth is creating housing hotspots in the suburban outskirts of Australia’s major capital cities.
“The annual Housing Industry Association Population and Residential Building Hotspots Report says the northwest Sydney suburbs of Box Hill and Nelson are Australia’s biggest hotspots for construction, followed by Fraser Rise and Plumpton in Melbourne’s west.”
Now, this is a perfectly valid report for the HIA to produce, because it speaks to the primary activity of its members, the important business of creating new dwellings – something the nation needs, because there’s a serious shortage.
The HIA definition of a hotspot is “areas where population growth eclipses the national rate of 2.4% and building work is worth more than $200 million”.
But it’s important to understand that such places are not necessarily good places to invest.
The Hotspotting definition of a hotspot is a place where there are underlying economic factors likely to create superior capital growth in the medium to long term.
Our EMPERICAL formula for selecting the locations likely to become capital growth hotspots includes the strength and depth of the economy, the size of the population (but not how much it is growing), the existing infrastructure and amenities, investment in new infrastructure and a number of other features.
Locations that satisfy the various criteria in our EMPERICAL formula are far more likely to deliver superior capital growth than city fringe locations where the population is growing fast through new housing estates.
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A podcast by people who make a difference, with people who are the difference. Listen to how incredible people live life on their terms.
Chris Christofi, entrepreneur, is the brain-child behind this brilliant podcast. He talks to multiple World Champions, CEOs of major property development companies, brand innovators and unexpected entrepreneurs about their journey listening to their mindset, their gratitude and their unceasing intensity to get to the top.
Chris pays it forward unveiling the secrets to their success to ensure listeners learn from the best. If you want to level up your inner game, watch Relentless on YouTube or listen wherever you listen to your podcasts.
About This Episode
From humble beginnings growing up in a country pub, it was a fateful meeting between Tim and our very own Chris Christofi that set Tim on a whole new path. From travelling all around the world selling real estate, to becoming the COO of Reventon, and finally the General Manager of Hotspotting with Terry Ryder, it's been a meteoric rise for this kid from the country. A long-time friend of the Reventon business, Tim sat down with Chris to talk about his journey, gaining the respect of clients and the challenges of selling real estate in 18 different countries.
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Join Terry Ryder & Tim Graham as they reveal the powerful EMPIRICAL Formula used to identify the Top 50 Suburbs for above-average rental yields and outstanding capital growth.
Discover how our formula has consistently delivered remarkable results, with some areas experiencing up to 30% growth in the past year.
Webinar Highlights:
The EMPIRICAL Formula: Learn the methodology behind selecting top-performing suburbs. Proven Results: See the impressive outcomes from following our tips, including double-digit capital growth in the latest quarter alone.
Top 50 Suburbs: Discover locations with high rental yields (5-8%) and property appreciation rates (10-15%).
Case Studies: Explore success stories like Orelia in Perth (17.9% increase in three months), East Mackay in Queensland, and Kingston in southern Brisbane. Exceptional Performance: Uncover 11 suburbs with over 20% growth in the past year.
Regional Standout: Dalby, Queensland, with a 24% increase in rental yields and a 15% rise in property valuations in the last 12 months. Ideal for:
Serious Property Investors Real Estate Professionals Mortgage Brokers Financial Planners Buyers Agents Investment Advisors
For more information on our Hotspotting reports please visit www.hotspotting.com.au/reports And for more information on memberships visit www.hotspotting.com.au/memberships
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The misuse of price statistics represents a clear and present danger for real estate consumers trying to make choices about where to buy.
The much-quoted adage about lies, damned lies and statistics applies very aptly to median prices for locations across Australia.
While this data can be useful to buyers and sellers, if used intelligently, way too often it’s misused and abused in news media in ways that misinform and mislead consumers.
One of the most common misuses of median price data occurs when media outlets publish lists of the locations which, allegedly, have had the biggest growth in property values in a recent time period.
Journalists love these lists, usually spat out of the computer database of a research organisation which craves free publicity and doesn’t care too much about the accuracy or authenticity of the figures.
One of the problems is that journalists often confuse a 10% rise in the median house price with a 10% rise in the location’s property values. Often it’s not the same thing at all, because median prices are very rubbery figures.
Here are a few facts about median prices you need to know about:-
If you do a computer search on the median price for any suburb or town in Australia, you might get answers from seven or eight different sources and they will be all different.
If you ask how much the median house price has grown, or fallen, in the past 12 months, you again will often get seven or eight different answers.
Median prices are notoriously and dangerously unreliable if the sales sample is small. If, for example, there have been only nine or ten sales in a suburb or town in the past year, then the median price will be meaningless, and the increase or decrease will be unreliable, because that’s a very small sales sample.
At Hotspotting, we disregard median price data for a location if there are fewer than 30 sales in a year.
So recently, a recent media headline shouted very loudly about a New South Wales location where “property values” had risen 150% in the past five years – including 8.2% in the past 12 months, according to CoreLogic – which is one of those research organisations which loves free publicity and doesn’t always scrutinise the data that achieves it.
The reality is that the location in question, Catherine Hill Bay in the Lake Macquarie area, is a very small village with very few sales – and the figures on its median house price cannot be treated as gospel.
According to the article, the median house price was $1.43 million, according to CoreLogic, up 8.2% in 12 months and 151% in five years.
But if you check out the latest figures on yourinvestmentpropertymag.com.au, the median house price is $1.56 million, up 5.7% in the past 12 months – and has grown at a rate of 25% per year over the past 10 years – which means property values are doubling every three years.
If that was true, this insignificant location would be the outstanding real estate performer in the nation, if not the world.
But PropTrack’s latest information says the median house price is $1.6 million, up 10% in the past 12 months. But with little increase in the past two years.
But here’s the thing. How many house sales in Catherine Hill Bay in the past year?
Just 10. Which means the median house price data is rubbish.
If you look at the PropTrack graph for the change in its median house price over the past five years, the figures jump all over the place – because there are so few sales.
The message is: if you torture statistics enough, they’ll tell you anything you want to hear.
But smart investors will not base a big purchase decision on this kind of data.
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It’s a common myth that an investment property can’t have both strong rental yields and capital growth.
Our data shows us time and time again that BOTH outcomes are possible, and no report illustrates it better than ‘The National Top 10 Positive Cashflow Hotspots Report’.
Investing in real estate is all about timing and choosing the right locations that promise substantial returns.
Our latest edition of the National Top 10 Positive Cashflow Hotspots report reveals the insights you need to make informed decisions and maximise your investment potential.
Our Previous Scorecard Our tips from last year had some remarkable growth in both property values and rental yields in these suburbs, reinforcing their attractiveness as investment destinations.
Here's a glimpse of the standout performers:
Armadale (W.A.):
12-month Capital Growth: 31.30%
Rental Growth: 28.20%
Withers (W.A.):
12-month Property Growth: 30.70%
12-month Rental Growth: 12.50%
Elizabeth Downs (S.A.):
12-month Property Growth: 23.50%
12-month Rental Growth: 16.70%
Orelia (W.A.):
12-month Property Growth: 25.70%
12-month Rental Growth: 14.90%
Berserker (QLD):
12-month Property Growth: 16.70%
12-month Rental Growth: 7.50%
Grab your copy today
https://www.hotspotting.com.au/product/national-top-10-positive-cashflow-hotspots/
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I have often commented that every time politicians make changes that impact the cost of housing, they make it worse, never better.
And it’s happening again.
Changes to the National Construction Code came into effect in Victoria and Queensland on the first of May.
And this is expected to add up to $40,000 to the cost of building a new home - through, among other things, the Code’s new energy efficiency standards.
HIA Chief Economist Tim Reardon said this caused a spike in new home sales before the changes came into effect – and there will a slump in coming months – as home buyers rushed to sign a contract for the construction of their new home before the end of April.
Reardon says New South Wales experienced the same phenomenon in September last year when the state introduced its latest energy efficiency standards, adding significantly to the cost of a new home.
Reardon says: “Additional regulatory costs, such as the Code changes, are one of the causes of the nation’s acute shortage of housing. The changes are intended to achieve energy efficiency and accessibility outcomes, but they also force people out of homeownership and the rental market.
“Ongoing changes to building codes will continue inflating the costs of construction with the next phase of building regulations now open for public consultation.
“If ever there was a good time to stop inflating the cost of home building, this must be it.
“Lowering the cost of delivering new homes to market is essential to achieving the Federal Government’s target of 1.2 million new homes over the next five years, and improving housing affordability across the country.”
Developers have warned that additional infrastructure charges will work against government plans to unlock more newly built homes and will make property more unaffordable for buyers.
AV Jennings chief executive Phil Kearns said about $200,000 of the cost of a new home is tied up in fees and charges across all three levels of government.
Kearns said: “It’s substantial - and now the National Construction Code will add around another $30,000 to $40,000 worth of cost for mum and dad to put up with. We have this government working against itself in trying to create more affordable housing.”
A report by Savills for the Property Council of Australia found planned increases in the next 24 months to two recent infrastructure charges in Sydney — the new Sydney Water Development Servicing Plan and Housing and Productivity Contribution charges — could jeopardise the delivery of almost 190,000 homes in the city’s west.
Modelling in the report found a typical 250-unit apartment development, and a 115-lot greenfield development would no longer be financially feasible - and will be significantly less feasible in 2026 under planned increases.
In NSW, there are currently 15 separate levies and taxes on new housing. The report found that in Western Parkland City – which covers from Wollondilly and Campbelltown to Blue Mountains and the Hawkesbury — 33 per cent of new home costs will be government fees by 2026.
In the Central River City region, spanning the Hills Shire, Blacktown and Bankstown, the figure was 26 per cent.
Kearns said there is also the continued challenge to secure skilled labour on-site, which continues to exacerbate delivery costs.
He said the labour skill shortages, the tax situation, and the difficulty in getting approvals through, are preventing homes from being built.
He said: “Blocks keep getting put in our way.”
Meanwhile, Reserve Bank chief economist Sarah Hunter has warned there is no “quick fix” for Australia’s housing market woes, as developers defer projects due to high costs - sending dwelling approvals per capita to decade lows.
The severe undersupply of homes means house prices and rents will continue to rise as the market fails to keep pace with strong demand for space fuelled by high migration and more people working from home.
Dr Hunter says: “Demand pressure, and so upward pressure on rents and prices, will remain until new supply comes online.”
She says that, usually, rising prices and rents trigger a surge in new housing supply as investors and developers see opportunity to profit from new builds.
But Dr Hunter says a “perfect storm” of constraints has prevented the construction industry from responding to the current housing shortage. In the current circumstances, many projects are simply not viable.
What it all means is that the shortage will continue for years to come – and the cost of buying or renting homes will continue to rise.
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The Federal Government’s latest Budget will go down in history as the “band-aid budget”.
Rather than fix fundamental problems and deal with core issues, the Federal Treasurer has thrown cash in various directions, in what looks very much like an election Budget.
They haven’t provided solutions to any of the core problems in the housing industry, particularly the rental shortage.
There are broken limbs everywhere in the industry - and in other parts of the national body - and the Federal Government has applied band-aids to a few of them.
It’s the same in other areas. Rather than pull the necessary levers to bring down power prices, as they promised repeatedly to do at the last election, they are throwing cash at everyone to help with their next power bills.
It’s another band-aid. It doesn’t reduce power prices which are a key component of inflation and a serious problem for many businesses. It’s simply a short-term, short-sighted, vote-buying measure that doesn’t address the core problem.
But, at Hotspotting, our key focus is on the very important issues in the housing market, particularly the rental shortage and the high costs of buying homes.
The Federal Budget repeated the previously announced ambition of building 1.2 million new homes over five years, but did not nothing to address the current rental shortage, nor to deal with housing affordability – something politicians often talk about, but continually make worse with their policies and decisions.
The Real Estate Buyers Agents Association of Australia (REBAA for short) summed it up when it commented:
“The Federal Budget featured plenty of promises to somehow improve housing supply over the long-term, but failed to recognise one of the most simple ways to remedy the rental crisis.”
They were referring to the reality that mum-and-dad investors provide over 90% of the homes that people rent in Australia and they need to be encouraged and incentivised to solve the dire shortage of rental properties – at a time when all the costs of owning real estate have risen.
REBAA President Melinda Jennison said the Federal Government had again refused to accept the fundamental role that property investors have long played in the provision of rental housing in this country.
“Again, we have been presented with a variety of measures to supposedly boost housing supply at a time when building approvals and completions are at decade-lows,” Jennison said.
“For decades, property investors have shouldered the burden of providing rental supply for successive governments. However, it's evident that this is no longer the situation. The rental crisis is the end result of this changing dynamic.“The volume of investors currently active in the market is well below where it needs to be to significantly improve rental supply, but the Federal Government still won’t do anything to encourage more investors into the market.”
I agree with Jennison when she says that it's surprising that the budget has provided incentives to foreign investors to purchase established Build to Rent developments, but no incentives have been offered to the resident investors who provide homes for millions of renters throughout our country.
Aidan Collyer of Collyer Property Investments said the move for foreign investment tax breaks “will price young people who want to invest out of the market”.
“This is already an incredibly competitive market, Labor is allowing international investors to make a quick buck at the expense of the great Australian dream,” he said.
Elsewhere there have been plenty of critics of the Budget’s response to the nation’s housing crisis – or the lack of it.
The Daily Telegraph reported widespread criticism of the Budget’s failure to “shift the dial” on the housing shortage.
It said the Albanese government’s much-championed $6 billion pledge to address the housing crisis has fallen flat with the bulk of the money going towards infrastructure and not actual homes.
Almost $2 billion has been channelled into a rental assistance scheme, the same amount has been given to charities to build 40,000 social and affordable homes, while more than $1 billion to help states and territories with the construction of roads, sewers, energy and community infrastructure.
Despite the cost of building a new house rising more than 50% in the past three years, the Budget did not include assistance to help homebuyers with the cost of buying a property.
Everybody’s Home, a national campaign seeking to fix the crisis, said the budget failed to tackle rising housing costs.
It said: “The government’s ‘new’ funding for social housing is a repackaging of existing initiatives, offering loans instead of providing real funding, and the continuation of a funding agreement with the states and territories - something the Commonwealth routinely renews for other essential services like education and health.”
Everybody’s Home said the increase to Commonwealth Rent Assistance would provide some short-term relief, but was not a lasting fix.
And that is the failing of this Budget – it provides short-term relief on a number of issues, but does not provide any lasting solutions.
The West Australian newspaper commented that the increases to the Commonwealth Rental Assistance scheme contributes only a pittance to housing costs, with the weekly boost enough to buy only two cups of coffee.
The Budget offers a maximum of $12.50 per week to recipients of the assistance scheme, according to analysis by CoreLogic.
CoreLogic economist Eliza Owen echoed the comments of many others when she said the Budget missed an opportunity.
Yes, indeed, this band-aid Budget is a massive, missed opportunity. It could have provided real and lasting solutions to the rental shortage, to housing affordability and to many other core problems for Australian households – but it failed to do so.
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Catch the replay of our latest webinar hosted by Tim Graham, General Manager of Hotspotting, featuring Tyron Hyde, the visionary founder of Washington Brown and a master of property depreciation.
Dive into the invaluable insights of "7 Lessons from the $26B Man," a presentation inspired by the legendary real estate mogul Harry Triguboff.
In this compelling session, you'll explore the powerful strategies that fuelled Harry Triguboff's ascent to billionaire status, with a focus on the transformative impact of compounding in real estate investment.
Discover practical advice and nuanced strategies that every property investor should consider:
The Power of Compounding: Learn how small, consistent investments can grow over time and how to leverage this in the property market for significant returns.
The 1% Rule: Uncover minor adjustments you can make that yield substantial improvements in investment outcomes. Whether it's negotiating a slightly better interest rate or enhancing property features to boost rental appeal, these small changes can dramatically increase your portfolio's value.
Annual Reviews: Understand the importance of reviewing your home loan rate annually to ensure you're getting the best possible deal. We'll also discuss the benefits of cross-checking comparable rental prices to maximize your income.
For more information on Washington Brown or to connect with Tyron Hyde, please visit www.washingtonbrown.com.au
You can also subscribe to Tyron's Ten with Ty podcast here: https://www.washingtonbrown.com.au/podcasts/
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In this podcast episode, we dive into the two different approaches that state governments in Australia are taking to address the issue of rental shortage in the housing market. On one hand, Western Australia (WA) has adopted the carrot approach, offering incentives and encouragement to investors to increase the supply of rental properties. On the other hand, Victoria has decided to take the stick approach, punishing investors with new and higher taxes if they do not comply with the government's desires.
The WA government has implemented several measures to encourage investors to bring new supply to the rental market. This includes offering cash incentives to property owners who convert their short-term rental properties, such as Airbnb, into long-term rentals for permanent tenants. They have also relaxed regulations around building granny flats, providing interest-free loans to help builders complete unfinished properties, and offering cash incentives to owners of vacant homes to make them available for long-term rent.
In contrast, the Victorian government has scrapped the Victorian Home Buyer program, which was aimed at helping young people get into home ownership. They have instead turned to new and higher taxes on property investors to generate revenue and alleviate the state's debt. However, this approach may further exacerbate the rental shortage in Victoria.
It is clear that the WA government's approach is more constructive and will bring new supply to the market, while the Victorian approach may have negative consequences. The WA government has also allocated significant funding towards social and affordable housing initiatives to not only increase supply but also support those in need.
So, why are property investors now more likely to buy in Perth and key WA regional markets, while selling in Victoria? The difference lies in the government's actions – WA is encouraging investors, while Victoria is discouraging them. This highlights the importance of government policies and their impact on the housing market.
In conclusion, governments have two options when it comes to creating significant change – the carrot approach or the stick approach. In this case, the WA government's carrot approach seems to be more effective in addressing the rental shortage issue, while the Victorian government's stick approach may have negative consequences. Time will tell which approach will yield better results, but it is clear that incentives and encouragement go a long way in creating change.
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🌟 Leading the Way in Property Management: Corinne Bohan from the award winning Image Property 🌟
Join us on the latest episode of the Hotspotting podcast, where we sit down with Corinne Bohan, the trailblazing Managing Director of Image Property—Australia’s #1 Property Management Company for four consecutive years according to the RateMyAgent Awards. Dive deep into the world of elite property management with insights from a leader managing over 5,000 properties.
🏡 What Sets Image Property Apart? Corinne shares the secrets behind Image Property's success, focusing on their process-driven approach that handles everything from proactive maintenance to strategic tenant selection. Discover how their emphasis on exceptional client service, combined with rigorous staff training programs, leads to exceptional customer experiences and high retention rates.
🚀 Insider Insights on Overcoming Industry Challenges From navigating low vacancy rates to maximising returns, Corinne discusses how Image Property's dedication to sustainable rental incomes and a detail-oriented management strategy has carved a unique niche in the market. Learn about their innovative solutions and the critical role of problem-solving and project management in their growth trajectory.
🌐 Expansion and Impact Hear about Image Property's recent expansion into new markets like the Gold Coast, and get a peek into the future with discussions on major commercial projects impacting the real estate landscape.
🔑 Why Listen? Whether you're a landlord looking to optimise your property investment or a property management professional aiming to elevate your operational strategies, this episode offers invaluable perspectives from one of the industry’s best.
You can watch the full episode on Youtube too, and make sure to follow Hotspotting for more expert takes on the real estate market's hottest topics! 🎙️
Watch on YouTube - https://youtu.be/ryYhJEBjx_4
To learn more about Image Property or to connect with Corinne Bohan please visit www.imageproperty.com.au
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Australia has some outstanding markets which are performing on every metric, including price growth, rental growth, low vacancies and high yields.
And many of these places on not what you might expect.
Every quarter, Hotspotting publishes a report we call The Pulse, to identify 50 locations across Australia which deliver rental yields well above the average to investors.
The primary parameter of our national Top 50 list is to identify good markets with high rental yields, but our criteria also includes prospects for capital gains – and this report features locations which perform outstandingly well on price growth.
To provide an example of the possibilities, consider the regional town of Murray Bridge in South Australia.
In Murray Bridge, house rents have risen 27% in the past year, with the vacancy rate dropping further in the latest quarter to just 0.4% and the median rental yield growing from 5.4% to 5.5%. The median house price has grown 22% to $415,000 in the past year.
In Geraldton in WA, the median house price rose 11.6% to $355,000 in the past quarter, but the median rental yield remained well above average at 6.7%, following a 23% annual rise in house rents, with vacancies low at 0.8%.
This report also highlights some of the nation’s promising unit markets, in recognition of the rising trend of more and more buyers opting for apartments and townhouses – and attached dwellings now out-performing on price growth.
In Bowen Hills in inner-city Brisbane, the vacancy rate is 1.2% and the median unit rent has risen 15% in the past 12 months, with the median rental yield increasing from 6.2% to 6.6% in the past three months.
In that quarter, the median unit price has increased 7.1% from $425,000 to $455,000.
There are many other examples of this kind of outstanding performance on both rents and capital gains – all identified in the new quarterly edition of The Pulse.
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If investors had followed our tips, three months ago, in a special report we call The Pulse, they could have achieved double-digit capital growth - in the latest quarter alone - and up to 30% in the past year.
The primary parameter of our national Top 50 list of locations in The Pulse is to identify good markets with high rental yields.
But our criteria also includes prospects for capital gains – and this report features locations which perform outstandingly well on price growth.
If you have an initial rental yield of 6% or 7% and your property’s value is growing 10% or 15% (or more) per year, you’re a happy investor.
Several of the locations on our Top 50 list have recorded capital growth above 10% in the latest quarter alone, headed by the Perth suburb of Orelia which increased 18% in three months.
All of the 50 locations on our Top 50 three months recorded capital growth over the latest quarter, except one – and most experienced median price growth above 5% in the quarter, including nine locations which rose more than 10% in three months.
In the case of Orelia, this means $70,000 in capital growth in just three months, while the Perth suburb of Hillman also rose $70,000.
If you had bought a house at the median price in East Mackay, Queensland, your property’s value would have risen $50,000 in three months.
A $490,000 purchase in the southern Brisbane suburb of Kingston three months ago would now be worth $535,000, up $45,000 in the latest quarter.
In annual growth terms, 11 of our suburbs have risen by more than 20% in the past year.
This report demonstrates that it is possible to achieve an investment property that ticks every box for the owner: high capital growth and above-average rental yields in affordable locations with ultra-low vacancies and rent rising more than 10% per year.
Among the most outstanding performers identified by this report are locations where property values have risen notably, but rental yields have increased because there has been an exceptional increase in rents.
One of the stand-out markets highlighted by this report is the Queensland town of Dalby, the key regional centre for the Western Downs region west of Brisbane.
With vacancies near zero, rents have risen 24% in the past 12 months, with the median rental yield increasing from 6.6% to 7.2% in the past three months. Property values have also soared, with the median house price up 15% to $350,000.
That is the kind of performance that is possible if you get the quarterly editions of the special report we call The Pulse.
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