When it comes to buying in hotspot markets new properties offer investors many advantages.
Scott Northcott from Property Hotspot says while in the past he has bought many existing properties for investment purposes in hotspots markets (those predicted for superior long-term price growth), he thought new property was the better investment.
“Part of the advantage of buying new is you get that control,” he says. “You get control of the build, you get control of the outcome and you can start from a clean slate.
“There are some big advantages apart from the tax advantages through depreciation, which is important because you shouldn’t be investing just for a tax advantage.”
Northcott says new properties in hotspot locations are more likely to meet the criteria needed for future price growth.
Tenants are generally prepared to pay a higher rent for new properties leading to higher rental yields, the maintenance costs are lower and there are more substantial depreciation benefits.
Northcott says when looking at hotspot areas worth considering for investment the Sunshine Coast is at the top of the list.
The region is No.1 on Terry Ryder’s latest National Top 10 Best Buys report and Northcott says it has gone “gangbusters” in recent years and in particular during the past six months.
Massive infrastructure spending on a hospitals precinct, roads, a new CBD and an international airport has substantially improved the region’s property market prospects.
Northcott says buyers are abandoning the big capital cities “like rats jumping off a sinking ship” during the pandemic period and regional hubs such as the Sunshine Coast are in their sights.
He says it’s an affordable market and the Federal Government’s HomeBuilder grant has led to a rush of land sales in recent weeks with whole estates selling out.
Terry Ryder of Ryder Research Resources, publisher of hotspotting.com.au, says the pre-pandemic drift to affordable lifestyle markets has turned into a stampede during the pandemic and he does not expect the trend to slow any time soon.
Another highly rated market is the Moreton Bay Region which encompasses Brisbane’s northern suburbs, Ryder says.
The region benefits from a new university campus and the new Redcliffe Peninsula train line. The area offers housing affordability and proximity to major employment nodes.
After recent quiet years, demand is now lifting. “That is why it’s one of our hotspot locations,” Northcott says.
Ryder says that, within the Moreton Bay Region, the precinct including Lawnton and Petrie has good prospects.
“They are next to the new university campus, they have good infrastructure including commuter train stations and there are some major green spaces with recreational lakes,” he says.
Median house prices remain affordable with many suburbs in the $400,000s and some even lower than that.
Outside of Queensland, Ryder says Adelaide is the most under-rated city in Australia.
It had become the high-tech innovation capital – the Silicon Valley – of Australia.
“We regularly see major national and international enterprises moving their national headquarters to Adelaide for that reason,” he says.
This includes Elon Musk with his Tesla battery enterprise, Technicolor and Australia’s new space agency.
Northcott says Adelaide has manufacturing, access to water and the ports, plus major wine districts nearby.
“It was always the city of churches and now it’s probably the city of opportunity,” he says.
Adelaide has extremely low vacancy rates and its median house prices are still very affordable, particularly in the northern suburbs which have the most affordable real estate in any capital city in Australia and are close to major jobs nodes.
Northcott says there has been a definite mindset change on where people want to live and many are seeking opportunities which give them a good lifestyle which is affordable and leaves them with little debt.
“All of that makes those affordable northern suburbs of Adelaide, with those great yields, of interest to property investors,” he says.
Another regional hotspot continuing to perform well is Ballarat in Victoria.
“It’s been one of the outstanding markets in Australia over the last 2-3 years,” Ryder says.
“It’s one of the best examples of the success of the early phase of that Exodus to Affordable Lifestyle pre-pandemic.”
Northcott says affordability, good infrastructure and strong links to the state capital is driving areas like Ballarat.