Mount Isa Income Property
Westpac’s City Versus Country Investment Snapshot reveals that despite the downturn in the mining industry, Mount Isa and Mackay investors are enjoying top returns.
Based on annual capital gains over the past decade and gross rental returns, houses in Parkside and Winston in Mount Isa where almost half of the city’s available housing are rental properties, are commanding total returns of 24.7 per cent and 22.5 per cent respectively. In Mackay, units return 20.3 per cent.
The takeaway message is Queensland mining towns boast best return when it comes to property investment opportunities.
Westpac general manager of retail banking Gai McGrath said there were pros and cons to investing in metropolitan and regional suburbs.
“Properties in dense city areas are more likely to secure tenants and in turn steady rental returns, however the price point may be out of reach for many,” she said.
“Regional properties, as a rule, tend to offer lower entry prices. But it’s important to note that they are more at the mercy of the health of the local economy.”
While Mackay performed strongly in the snapshot, the city’s real estate agents disagree with the figures, citing job insecurity and the increase in fly-in, fly-out workers as the main reason for high vacancy rates.
Harcourts Mackay principal Mandy Hall said the rentals market was presently worse than the sales market: “We’ve got very high vacancy rates across the board, with 887 rental properties available in Mackay at the moment.”
RBA Cash Rate – What Experts Predict Ahead
The latest finder.com.au survey of 34 high-level national bank and finance operators shows more than half expect the RBA to sit on its hands. “However, 21 experts are expecting at least one cash rate cut by the end of the year,” spokeswoman Michelle Hutchison said. Of these 21 experts, six are forecasting two cash rate cuts this year.
The cash rate cuts are expected to occur alongside an increase in property prices, according to the majority of respondents. It’s also anticipated by almost one in three experts that fewer first-homebuyers are expected to enter the market this year.
Our research revealed that this year saw the lowest proportion of first-homebuyers in the past decade, with less than 14 per cent of all home loans financed. It’s important for prospective borrowers to be careful with their budget as the majority of experts from our survey are expecting the cash rate to start rising next year.
Mortgage Choice agrees with the majority that recent economic data suggests the levers aren’t there to warrant another rate cut right now.
The latest CPI results found underlying inflation were slightly above economist predictions, rising the annual growth rate. Furthermore, the recent Labour Force figures from the Australian Bureau of Statistics found the unemployment rate actually fell slightly defying market expectations.
These two factors would suggest there is less urgency to cut the cash rate again. Of course, that is not to say we won’t see further easing of monetary policy in the near future.
Speaking against the majority, RateCity spokesman and banking analyst Peter Arnold said a number of key economic indicators, including inflation, the Australian dollar and commodity prices, were all pointing to a rate cut.
“But the messages are still mixed. Sydney house prices remain high, as does household debt, so it will be another tough decision for the RBA,” Mr Arnold said.
“On top of that, the RateCity database also shows fixed rates continuing to fall, which is another indicator that rates are dropping.”
“We track these rates every day, and despite no RBA cuts, we’ve seen fixed rates trending down, a sign that the banks are betting on a rate cut, too.”
Sign Of Good Times Ahead
According to CoreLogic RP Data’s latest Market Trends Report, homes in the suburb Payneham South in Adelaide, spent an average of 32 days on the market in the past year. The Adelaide average was 52 days.
The median house price in Payneham South to the end of April was $586,250, up 9.6 per cent compared to the same time last year.
Elders Real Estate Athelstone principal Paul Arnold said Payneham South and Glynde had a wide range of houses, which made them so popular.
“The market is really good at the moment and there is a mix of townhouses and good, large homes in those suburbs,” Mr Arnold said.
Next 5 Years Housing Trends – Experts Predictions
According to Cameron Kusher, CoreLogic RP Data’s Senior Research Analyst, “the standout message” is that Sydney, and to a lesser degree Melbourne, has been the star performers over the past five years. All the other capital cities have been fairly muted, Kusher says.
One question people often ask is – why haven’t all the markets grown equally when recent interest rates cuts are national ?
Well the reason we have seen such strong growth in Sydney and not in other markets is more because of overseas migration to Sydney, which has been fairly strong due to its job opportunities, and New South Wales’s migration has been low since 2010, also because there’s a shortfall in housing.
It is these factors that have all contributed to its price rises, whereas Brisbane and Perth both experienced losses. In South Australia, the Olympic Dam extension didn’t go ahead and that impacted Adelaide’s market.
Hobart has been weak economically for the past decade and Darwin and Canberra are both strongly tied to government spending, which has been largely curbed in recent years.
The takeaway message is Australia’s property market is far from a one-size-fits-all.
While interest rates stay historically low, Sydney and Melbourne’s house prices will continue to grow, but there’s also some likely upswing ahead for Hobart and Brisbane, Kusher says.
Investor Nathan Birch, Co-Founder of Binvested, agrees there’ll be “a couple more years of solid growth” in Sydney.
I see Victoria, Western Australia and the ACT staying flat or maybe even coming down a bit from current levels.
Stefan Miraglia, Director of Independent Property Consulting, thinks the outlook for Adelaide is positive. The New York Times named Adelaide a top ‘place to go’ earlier in the year.
“Many experts are tipping that we should see some good growth over the next five years if you buy in the right areas and invest wisely,” Miraglia says.
Record low interest rates have tempted many investors to get back into the market and more potential first home buyers are looking to get into the market.
This alone should see median house prices move up over the next five years but also throw into the mix the Chinese who are looking to invest abroad and we should see some good growth of around 5% per annum.
You will probably start to see some growth in these cities, particularly as Sydney and Melbourne prices push higher and some homeowners decide to sell up and retire to cities with lower price points.