If 2018 was an unsettled year for the property market in Australia, then what will 2019 turn out to be?
Some may say we need to wait and see, others may say it is time to pick up property at the lowest prices. No matter whether your view is conservative or optimistic, one thing investors certainly need to bear in mind is the need to re-adjust strategies to suit circumstances and prepare for future volatility.
Any past routes to success can no longer guarantee triumphs in the future. Let’s listen to the insiders’ prompts to re-focus on land and housing – but not just apartments and high-rises. A wise pick of land in the best location can not only benefit investors with substantial returns but will also bring forth enormous growth when a boom returns to the property market.
When? In 2019.
At the beginning of the year, different analyses all pointed towards gloomy prospects for the global property market. According to “The January Home Value Index Forecasts” jointly compiled by Moody’s Analytics Australia and CoreLogic, Australia is expecting to see a further 6% drop in its local property market.
Real estate gurus and virtuosos all echoed this sentiment and helped to orchestrate a market downslide. Little did they notice that in this report, a beam of promising light is glittering at the far end of the tunnel, awaiting both investors and first-time buyers to take action.
2019 is inevitably a year of downturns. However, when the worst has passed, the property market in Melbourne is expected to pick up again, steadily moving ahead to a more encouraging year in 2020.
Photo by kevin laminto on Unsplash.
In other words, insiders have not lost heart in the Australian property market. Especially with continuous demand due to population growth and other reassuring factors such as economic growth, many agree that property price in Melbourne will witness another surge in the long term.
This explains why 2019 shouldn’t be an idle year. Rather, it should be considered as the right time to plan and buy. But the question remains: “Whereabouts should we invest?”
Where?
If you are a non-Australian resident, you may be wondering if now is the right time to purchase property. Yes, it seems that the Australian government has tightened a lot of rules in efforts to put up barriers to overseas investors – escalating stamp duties to 12.5%, restricting overseas buyers to only acquire brand-new properties, and banks stiffening home loan approvals, among other measures.
However, to many overseas investors, Australian property is still pretty as a picture. Just look at the recent plunge and slump of the Australian dollar – following the height of 3.4 to the Malaysian ringgit in September of 2017 – then you will agree that the cost of buying a house in Australia is much lower than in previous years.
As an overseas buyer who purchases the property using the currency of your own country, not only is the capital paid saving you heaps, the growth potential for the foreseeable future will be just as rewarding.
Additionally, in some other districts, the mortgage rates offered by local banks are much more attractive. If one can secure a home loan under these special rates, it means the investor can enjoy the benefit of high rental returns minus low mortgage expenses. For overseas buyers, investing in Australian property is still a sensible opportunity and that sentiment is still prevailing in 2019.
What kind of property should you be investing in?
According to experts, there are two choices to be made. One of these is to invest in commercial property where the 7% extra stamp duty is not applicable. However, such sectors are not suitable for every buyer to partake in.
Photo by Steven Groeneveld on Unsplash.
If you feel more comfortable with residential property, then you should put your focus on the second option – looking for land and housing in areas of significant growth potential.
The recommendations made by experts do not imply that all land and housing packages are treasures to be explored. The criteria for making a wise choice of investment depends on the location, cost, and potential of the land.
Photo by Sean Colclough on Unsplash.
Location in the sense that the driving time from central business districts (CBD) is within 20 to 45 minutes – the shorter the distance, the more attractive the land is. Cost is, of course, the amount you are going to pay right now: the lower the cost, the higher the growth can be. Potential is all about return: when you want to resell the property in the future, will the price be surging, leaving you a contented pocket of profit to savour and be proud of?
Let's put that back into the perspective of an overseas investor. When purchasing a brand-new land and housing package, only the land counts for that 12.5% stamp duty. The portion for the house is non-taxable as it has not yet been constructed. In other words, investors can save about half of the taxation cost (under certain conditions).
What if the buyers are not investors but end users? The total amount in buying a new piece of land with a ready-built home in suburban Melbourne approximately equals to the cost of a 2-bedroom apartment in the centre of Melbourne.
Photo by Denise Jans on Unsplash.
Though urban life can be a plus and the rental returns seem to be more attractive, for family users, this same amount of money will indeed bring you a lovely stand-alone house with a tranquil private garden on a 20 square metre piece of land.
What’s more, one day, when you decide to resell the house, you will be stunned by its enormous capital gain as compared with that of an apartment. As family users seek properties suitable for families to grow and enjoy, such demand will sustain the growth of suburban house prices.
Take the above example of a land and housing package located within 20 to 45 min drive from the CBD as a model. Its existing cost is about $500,000 to $700,000. With more facilities to be added and amenities to add to the area’s sophistication, the selling price will climb to about $700,000 to $800,000 three years later. Such expected growth is far more sizeable than that forecast for apartments.
Where? The Toorak of the North
We have come to an astute conclusion that land and housing packages are where we should look in 2019. But whereabouts should we be looking? The answers according to research and analysis converge on north-western Melbourne, where Greenvale stands out from its counterparts.
Greenvale has long been a desirable and sought-after suburb for local families, earning it the title of “The Toorak of the North”. The original Toorak, an affluent suburb of Melbourne, boasts the highest average property values in Melbourne and the neighbourhood has the nation’s second-highest average income level. As the moniker implies, Greenvale prides itself on its ample greenery and being in the vale of nature, making it an exquisite choice of neighbourhood.
Another gem is Craigieburn. Well supported by an extensive public transportation network, together with a reasonable median house price at the moment, Craigieburn embodies the kind of potential that investors like to keep an eye on.
So are there any upcoming land and housing projects available in this district that investors can inspect? M. Greenvale is the answer. M.Greenvale is another masterpiece by renowned Malaysian public listed developer Matrix. Their debut project, M.Carnegie, has won the accolade of “The Best Investment Property Award” by Des Prix Infinitus, endorsing Matrix’s efforts and insights in bringing significant returns to investors.
M.Greenvale is situated in the cosy and relaxing suburb of Greenvale, adjacent to the tranquil Greenvale Reservoir Park. Travelling to and from the Melbourne CBD is speedy and convenient.
A mere 25 minutes’ drive can transport residents to their workplace and the vibrancy of the city. For those who don’t want to steer a car, the Roxburgh Park train station is only a stone’s throw away. In M. Greenvale, life is not just about work and living, but about soul and enjoyment.
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