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The best holiday destinations around Australia to also invest in

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Good news moving into the Christmas holidays: there is a way to buy property where you love to vacation and make money in the process.

Many property investors usually steer clear of tourism destinations, but property research site LocationScore has crunched the numbers and identified the top holiday hotspots for property investment across the nation.

The new research scores each suburb out of 100, using eight key indicators that measure the level of supply and demand as well as growth prospects.

LocationScore co-founder and research director Jeremy Sheppard said the research showed the long-held perception that holiday homes were a bad property investment did not always hold true.

“Ordinarily I’d advise investors to buy in great growth locations, not simply a place they’d like to live in or where they like to go on holiday,” Mr. Sheppard said.

“According to Location Score, though, there are holiday locations around the country that stack up investment-wise, including having much more demand than supply, which is essential for capital growth.”

Mr Sheppard admitted some of the suburbs that made the list were not necessarily popular holiday destinations themselves but were within close range of those that were.

“Another point to consider is that not everyone wants to holiday in the middle of classic tourist locations. These areas are often close to popular spots but removed enough that the local property market appeals for investors.”

NSW

In NSW, units in Banora Point, just south of Coolangatta, had a remarkable Location Score of 79 out of 100, while houses in nearby Bilambil Heights scored 75.

Both suburbs were popular with holidaymakers from the north and south, as well as being within striking distance of the Gold Coast.

Mr. Sheppard said Banora Point units were being snapped up quickly by eager buyers.

Views for miles: Bilambil Heights, NSW.

Views for miles: Bilambil Heights, NSW. Photo: Sophie Carter Exclusive Properties

“Our measure for this is days on market. On average, units there spend about six weeks on the market, which is pretty quick – about three times faster than the national average of about four months,” he said.

“And rentals have a vacancy rate of less than 1 percent  which is very low — 3 percent is the widely accepted ‘balance’ point. So renters are obviously under pressure and landlords are licking their lips.”

Closer to Sydney, houses in Kanahooka scored 78, which Mr. Sheppard put down to its Lake Illawarra location and short commuting distance to Wollongong.

He added Gosford and the Central Coast were great markets in general for growth, having a holiday feel but just a short drive from Sydney.

Houses in Berkeley Vale on the Central Coast also made the cut, scoring a solid 75.

Queensland

Mr Sheppard said though Queensland had a plethora of holiday destinations, not all of them made wise investment locations.

“Just because a suburb or town is desirable, doesn’t mean it’s in demand,” he said. “They might be really glamorous locations but are they going to go up on price? Is there demand?

“To get the price growth you need people at auction bidding or making offers, driving prices up — there needs to be the competition.”

The Gold Coast was Queensland’s top holiday destination worth investing in, the research showed, with a number of suburbs ticking investment boxes like strong local employment.

The Gold Coast has rated well as a holiday hotspot for investment

The Gold Coast has rated well as a holiday hotspot for property investment. Photo: Supplied

“Houses in Worongary scored 77 out of 100, perhaps partly due to the recent announcement that a new train station is earmarked for the suburb,” Mr Sheppard said.

Elanora had nearly 100 people searching online per property listed for sale. The vacancy rate was 0.46 percent.

Currumbin Waters had over 100 people per property searching online and a healthy yield of 4.74 percent.

On the Sunshine Coast, Currimundi recorded a Location Score of 71 for November, which Mr Sheppard said was partly due to its location just north of the major employment node of Caloundra.

Victoria

It may not be as glitzy as the Gold Coast, but Clifton Springs near Geelong was kicking its own property goals with a Location Score of 76.

Mr. Sheppard said it had a very impressive auction clearance rate of 92 percent: “That’s the extreme end of demand,” he said.

Port Phillip From Clifton Springs, where the auction clearance rate is an impressive 92 per cent.

Port Phillip from Clifton Springs, where the auction clearance rate is an impressive 92 percent. Photo: Richard Cornish

Nearby Torquay was also a beneficiary of the strong Geelong market, scoring 70.

The charms of Swan Hill, located on the Murray River near the NSW border, resulted in it scoring 71 out of 100 for November with much more demand than supply of property, according to the LocationScore research.

Its most impressive metric was its yield of 5.88 percent. That was enough rent to cover all expenses, including mortgage interest, Mr. Sheppard said.

Tasmania

Tasmania’s property market had strengthened thanks to demand from local and interstate investors. Mr. Sheppard said Hobart and Launceston were the top picks for holiday investment, with both locations backed up by robust local economies.

West Launceston and Invermay were two suburbs showing strong growth prospects, he said.

Great for holidays and property investment: Launceston, Tasmania.

Great for holidays and property investment: Launceston, Tasmania.

“When you think of all the fantastic holiday destinations around the country, it’s pretty obvious from our list that great capital growth and great investments don’t often go hand-in-hand,” Mr Sheppard said.

“Although there are some fantastic places to holiday in Australia this summer, don’t be tempted to buy in one as an investment just because you like to visit every now and then.

“You either buy a holiday home or you buy an investment property, which are two different goals, but our research shows that sometimes you can combine both — if you’ve done your research.”

Originally Published: www.domain.com.au

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Opinion

Would Australian Households Be Better Off if We Ditch Negative Gearing?

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Would Australian Households Be Better Off if We Ditch Negative Gearing

Economic modelling undertaken by University of Melbourne economists, and presented to the Reserve Bank last month, shows that three-quarters of Australian Households would be better off if negative gearing is abolished.

The study was posted on the Reserve Bank website for public release on Friday.

The paper explores the implications of negative gearing – including a 30 per cent collapse in the supply of rental properties – and found that abolishing negative gearing would lead to an overall welfare gain of 1.5 per cent of GDP.

Negative gearing is a policy that largely benefits landlords, and for the 17 per cent of the Australia population that have property investments – out of which 70 per cent are negatively geared – would be worse off.

The study estimated that thirteen per cent of the population would be directly influenced by the removal of negative gearing, and likely to quit their holdings.

“The housing prices fall because removing negative gearing takes a significant amount of housing investment out of the property market,” the report said.

“Both the proportion of landlords and the amount of resources allocated to housing investment, given by the average expenditure, have fallen significantly after the policy reform.

Importantly, removing negative gearing increases the average homeownership rate of the economy from 66.7 per cent to 72.2 per cent.

The improvement in homeownership was observed most predominantly among poor households, where the fall in house price and the rise in rent reduce the price-to-rent ratio in the economy by 4.2 per cent.

“This has direct implications on housing affordability as the fall in house price lowers both the downpayment requirement for mortgages and the size of mortgages required to purchase a house, making it easier for households to own a home.”

If negative gearing was to be scrapped, the average mortgage size held by homeowners would likely decrease 21 per cent.

“Eliminating negative gearing takes young landlords who were rich enough to meet a downpayment requirement for investment properties away from the market.

“This reconciles a recent trend in the property market that there has been a rise in investment housing debt holdings by young and rich 35 households who would have benefitted the most from negative gearing concessions.

“The aggregate welfare for the economy improves upon the repeal of negative gearing … around 80 per cent of households are better off after the policy reform.”

Australia’s negative gearing regime stands alone against comparable OECD countries. Only New Zealand and Japan allow the unrestricted use of negative gearing losses to offset income from other sources.

The report’s authors, Yunho Cho, Shuyun May Li, and Lawrence Uren said that along with their findings on negative gearing it would also be worth considering some partial restrictions, such as allowing tax deductions for mortgage interest payments only.

Originally Published: www.brisbaneinvestor.com.au

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Opinion

It’s boom time, but life’s not always a beach for holiday homeowners

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It’s boom time, but life’s not always a beach for holiday home owners

December and January are usually busy times of the year for holiday home buyers. Picture: iStock. Source: Supplied

HOLIDAY home owners are tipped to reap financial rewards this summer, but it’s not always sunshine and souvenirs for buyers.

INVESTORS who own holiday homes in Queensland are tipped to reap the financial rewards this summer with new figures revealing the strong demand for the prized beach shack.

Lured by the promise of capital gains and a steady income stream via the sharing economy, agents are seeing an increase in investors looking to the coast as occupancy rates rise during the peak period — and sellers are also looking to cash in on the rise in inquiries.

LJ Hooker holiday managers in Currumbin on the Gold Coast reported an occupancy rate of 98 percent over the Christmas/New Year peak, with nine out of 10 bookings coming from domestic travellers.

“We already have 85 percent of our holiday rentals booked out for the next Christmas and New Year season,” LJ Hooker Currumbin principal Alex Passos said.

It’s even better just south of the border in Byron Bay and Kingscliff, where 100 percent of houses and apartments the group manages are rented for the holiday break.

“Depending on where you live in Brisbane, you can be at Kingscliff within an hour, which is why it’s such a popular option for purchasing a holiday investment,” according to LJ Hooker Kingscliff principal Paul McMahon.

“For most holiday home purchasers, it’s a serious investment.

“They want to optimise the returns around the Easter and Christmas period, when you can make half your yearly income, so they avoid staying there at those peak periods, and instead choose to visit and enjoy their investments outside of those periods.

“Averaged over a year, we aim for 65 per cent occupancy.”

December and January are usually busy times of the year for holiday home buyers who combine their annual leave with securing a new property.

According to LJ Hooker research, affordability is the main priority when it comes to choosing a holiday rental.

But holiday homes can bring headaches such as ongoing cleaning and maintenance costs, management fees and the volatility that comes with investing in coastal markets.

Real Estate Buyers Agents Association of Australia QLD representative Zoran Solano warned buyers not to get caught up in the holiday hype.

“It’s definitely a phenomenon we see influencing the market while people are on holiday,” Mr Solano said.

“Try and maintain that enthusiasm, but maybe not do it at that time of year — head back there in winter.”

Surfers Paradise on the Gold Coast is a popular holiday destination. Picture: Mike Batterham.Source:News Corp Australia

Surfers Paradise on the Gold Coast is a popular holiday destination. Picture: Mike Batterham.Source: News Corp Australia

Mr Solano, who is a buyer’s agent with Hot Property Buyers Agency, said coastal property markets were notoriously volatile.

“Although we are seeing a lot of positivity around the Gold and Sunshine Coast markets, historically those markets do ebb and flow a lot more than capital city markets,” he said.

“I do still think certain investments in those coastal areas are speculative and higher risk.”

Mr Solano said beachside homes often required more maintenance and there was a risk of other holidaymakers’ bookings dashing hopes of a spontaneous weekend away for the property’s owners.

But if your heart is set on a holiday home by the water, he advises buying a property in a complex with plenty of amenities and which will generate a consistent rental return.

Mr Solano suggested looking in areas that had a life outside of tourism, such as Main Beach and Broadbeach on the Gold Coast, and Noosa on the Sunshine Coast.

“We’re seeing a lot of activity in Broadbeach and seeing a bit of a decline in the appeal of Surfers Paradise,” he said.

“On the Sunny Coast, you can’t go past Noosa. It’s an area where we’re seeing a lot of opportunity.

“It’s somewhere that’s always top of mind for interstate visitors and internationally has a profile as well.”

Main Beach at Noosa, which is a popular spot for holidaymakers. Photo: Chantay Logan. Source: Supplied

Main Beach at Noosa, which is a popular spot for holidaymakers. Photo: Chantay Logan. Source: Supplied 

Kollosche Prestige Agents managing director Jordan Williams said the holiday letting business on the Gold Coast was going gangbusters.

Mr Williams said demand for rentals from high profile, high net worth individuals was particularly strong, prompting he and his business partner to set up a boutique holiday rental division this year for exclusive, high-end homes and apartments.

Jordan Williams of Kollosche Prestige Agents in Surfers Paradise. Picture: Mike Batterham. Source: News Corp Australia

Jordan Williams of Kollosche Prestige Agents in Surfers Paradise. Picture: Mike Batterham. Source: News Corp Australia

“We have people contacting us willing to pay $50,000 a week for some residences,” Mr Williams said.

“We find a lot of our high net worth clients who are looking for executive holiday rentals are from Sydney, Melbourne, Hong Kong and Singapore.”

Mr Williams said Broadbeach Waters, Mermaid Beach, Isle of Capri and Paradise Waters were popular destinations.

Broadbeach Waters is a good place to invest in a holiday rental. Photo: Google Maps. Source: Supplied

Broadbeach Waters is a good place to invest in a holiday rental. Photo: Google Maps. Source: Supplied

He advised investors considering buying a holiday home on the Gold Coast to look for something brand new, facing north or east to the water and with an occupancy rate of around 80 per cent.

“You also need to have the kayaks and other little bits and pieces for guests.”

Sydney-based property investor John Collis owns a number of holiday units on the Gold Coast and is about to settle on another five units in a block of eight apartments in Surfers Paradise.

Mr Collis said he did his research before buying the properties and made sure they could generate returns of between six and eight per cent.

John Collis is a Sydney-based investor who owns a number of apartments on the Gold Coast. Picture: Nigel Hallett. Source: News Limited

John Collis is a Sydney-based investor who owns a number of apartments on the Gold Coast. Picture: Nigel Hallett. Source: News Limited

He rents them out himself via Stayz.com.au or Airbnb, including a unit with water views in the Chevron Renaissance building at https://www.stayz.com.au/227841.

“The aim is for me to buy two or three apartments per annum for the next five to six years so that way when I relocate from Sydney when I eventually retire, I’ll have a great rental return,” Mr Collis said.

“With Sydney, you’re paying triple the price for the same returns, and while you don’t get the capital growth on the Gold Coast that you do in Sydney, the market there is starting to ease up so I think investing on the Gold Coast and getting an eight per cent return is pretty good.”

The view from the unit at 3346 Chevron Renaissance, which has just been bought as an investment property. Source: Supplied

The view from the unit at 3346 Chevron Renaissance, which has just been bought as an investment property. Source: Supplied

At a time when family members take advantage of jointly owned holiday homes, buyers are also being warned to establish the rules of engagement for the use, management and maintenance of a shared investment property.

Raine & Horne executive chairman Angus Raine said it was important for all parties to agree to an accommodation schedule for the holiday home to manage peak periods, as well as responsibilities for cleaning and maintenance.

“Some weeks such as Christmas and Easter, which is just 12 weeks away, are more prized than others, but by taking a common-sense approach, it’s possible to come to a solution that’s suitable to all parties,” he said.

HOLIDAY HOTSPOTS FOR UNITS

Suburb Median Asking Rent 12 month change

BROADBEACH WATERS $450 15.4%

BILINGA $450 12.5%

SUNRISE BEACH $450 12.5%

PALM BEACH $400 11.1%

TUGUN $418 9.9%

PORT DOUGLAS $360 9.1%

CURRIMUNDI $420 9.1%

MERMAID BEACH $430 7.5%

SUNRISE BEACH $430 7.5%

GOLDEN BEACH $363 6.6%

(Source: LJ Hooker Research / CoreLogic)

HOLIDAY HOTSPOTS FOR HOUSES

Suburb Median Asking Rent 12 month change

PORT DOUGLAS $550 22.2%

MAPLETON $450 21.6%

SUNRISE BEACH $573 19.9%

DOONAN $750 17.2%

SURFERS PARADISE $700 16.7%

CURRUMBIN $670 14.5%

MAIN BEACH $698 14.3%

TUGUN $570 14.0%

AIRLIE BEACH $430 13.2%

PEREGIAN BEACH $600 9.1%

(Source: LJ Hooker Research / CoreLogic)

Originally published: www.news.com.au

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Opinion

Our house price surge to top of southeast

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NOOSA reigns supreme in southeast Queensland’s with its world-class beaches and lifestyle helping drive median house price increases above all others.

REIQ CEO Antonia Mercorella said the annual growth for Noosa of 9.6 per cent outstripped the Gold Coast with 7.3 per cent while the Sunshine Coast came in at 6.8 per cent.

“Tourism is one of the largest contributors to Queensland’s gross state product, with almost 8 per cent of GSP coming from tourism,” Ms Mercorella said.

“This is roughly $25billion in the year to June 2016, which means when that sector grows it offers employment opportunities and this attracts workers who need somewhere to live,” she said.

She said the strong performance of the southeast corner’s coastal markets has helped drive Queensland’s growth in the last 12 months, with more than 58,000 houses sold and an annual median price growth of 2.4 per cent.

Ms Mercorella described Noosa price growth “a whopping” result taking it to $655,000 – $100,000 more than the Sunshine Coast.

“These two markets have powered ahead through the past 12 months,” she said.

“These markets are clearly offering buyers exactly what they’re looking for and the REIQ’s prediction is that when the Bruce Highway is improved, to the point where comm- uting to Brisbane becomes more reasonable, we will see demand balloon.”

The REIQ said the unit market has been positive, growing 3.7 per cent on the Sunshine Coast and just 0.4 per cent over the past 12 months for Noosa’s annual unit median price.

“Looking ahead to 2020, house prices in the southeast corner are tipped to rise, with the QBE Australian Housing Outlook report projecting growth for Greater Brisbane of seven per cent, the Gold Coast six per cent and the Sunshine Coast four per cent,” she said.

“This is consistent with the southeast corner’s moderate growth in recent years.

“This level of growth, and these projections, reduce the risk of speculative buying behaviour and this increases the likelihood for continued steady growth.”

Originally Published: brisbaneinvestor.com.au

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