Property predictions for 2018

Stephen LazarInvestment Property, Property Education, Property Investment, SMSF PropertyLeave a Comment

Australian Capital City property predictions for 2018

 

Here are the latest capital growth predictions from Louis Christopher, SQM Research and he’s predicting more growth in 2018.

The table below provides a summary of his estimates for the main capital cities. He also gives different scenarios depending on whether interest and exchange rates change

Melbourne has been the leading capital city throughout 2017 for Capital Growth, the outlook for 2018 being similar. The reason for this would be a sound Victorian Economy, high employment, exceptionally high population growth and a low supply of dwellings across most postal codes. The Victorian Government has also been opening its purse and implemented some of the much needed new infrastructure to cater for a rapidly expanding population

“Hindsight always demonstrates that wherever a Government Invests, they want a return on investment and create jobs. Industry are attracted to invest and they too want a return on their investment and create new jobs. New jobs attract population growth which places upward pressure on the supply of dwellings to own or rent. This upward pressure inevitably is the cause of property value rises and strong rental yields = your investment opportunity.”

We continue to advocate for Melbourne inner suburbs and House and Land in the outer ring and also advocate for South East Queensland which offers as much potential for growth as Melbourne with the upside being higher rental yields whilst getting into the market at lower values (ie. more property for your investment dollar)

South East Queensland has the highest investment into infrastructure in the history of Australia, hence the increasing demand for new dwellings, resulting in strong rental yields and capital growth potential as described above

Challenging decision as to whether one secures a one bedroom apartment in Melbourne for around $450k (at 4.5% rental yield) or a House with land in South East Qld for $500k (at 5% rental yield). Our logic leans to stronger growth on a house with land than a 1 bed apartment of 45 sq/m. What do you think?

See SQM table below :

The figures speak for themselves and pretty much align with other industry analysts. If you dug deeper you will note that where there is continued growth these capital cities have sound economies, high employment and ongoing population growth

Thinking of putting your investment on hold / or do you also identify the incredible opportunity a combination of the following will give you?

Following the basic principle of Investing to help accelerate your financial planning strategy by :

  • The power of Leverage; using other peoples money to leverage up your capital growth (banks money)
    • Ability to only invest 10% of the asset value YET achieve capital growth on 100% of the asset value
  • Harnessing the power of Compounding Growth
    • Growth upon Growth over a 7 – 10 year period further minimises risk
  • Having a tenant pay towards your own Financial Planning goals
    • Rental yields of 4.5%, 5% and even 6.5% are realistic covering most of your outgoings
  • Inviting the Tax Man to also contribute to your wealth by paying less income tax than you would otherwise have paid away anyway
    • Even if you are cash flow positive in your investment, you can still deduct Depreciation saving you around $7,000 pa of monies you would be giving away. Why not give it to yourself?

 

How the numbers could work on securing a new property :

  • Investing a 10% deposit
  • At 5% Interest Only
  • At a 5% Rental Yield
  • Achieving 5% Capital Growth
  • On a taxable income of around $100k

 

The results could be :

  • 38% Return on your Investment per annum
  • $53 Dollars per week Cash Flow Positive
  • Saving you around $7,000 pa as a tax credit
*this is a generalisation and each property and personal circumstance will vary results

A significant achievement you would agree and this is only using a 5% capital growth figure. Most people are comfortable that owning property over 7 – 10 years minimises the risk. And with your money working for you at over 30%, where demand for property is outstripping supply … it is a ‘no brainer’ and only takes commitment to ones own goals  

The alternative is acknowledging and accepting your current fate of not going to be able to retire in the lifestyle you want for you and your family. Work out “how much do I need at retirement” and then “what are the implications of you not having enough at retirement?

Start by working out how many pay days you have left to when you prefer to retire click here to further your knowledge on how to work out how much you will require …

 

We want to work with people who are committed to taking calculated strategies in wanting to improve their financial lot in life. We will demonstrate that not all property is worthy of investment and will work with you saving you time, stress and money in coming to your own informed decisions

Why wouldn’t you want to ?

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