Brisbane and Perth, respectively. There’s no doubt that both cities are rocketing to record real estate prices, but the question on everyone’s lips is: Will they last?

House prices in both cities rose roughly 1.5 times faster than they did the previous quarter and doubled from a year ago, according to the Domain House Price Report.

As a result of that acceleration, Perth’s annual growth reached 23.8 per cent – the highest level in 17 years – and Brisbane’s reached 16.9 per cent. In spite of this, it’s unlikely that boom times will lead to busts.

According to Domain chief of research & economics Dr Nicola Powell, this is the steepest rise Perth has ever experienced.

Despite the fact that this rate of gain won’t be sustainable in the long run, we expect strong growth to continue in the future due to a shortage of stock and strong demand from the population.

The price of houses in Brisbane will also rise, but not at such a high rate as in Sydney. Over the next quarter, they will surpass the $1 million median and it will only take an additional 2.4% increase.”

According to other experts, both cities will continue to offer good returns to investors and excellent capital appreciation for investors, with Perth’s new house price median at $852,240 and Brisbane’s at $976,464.

The population of West Australian state has grown by over 3 percent in the last 18 months, with most migrants settling in Perth, according to Damian Collins, founder of property investment company Momentum Wealth.

Furthermore, the stock is at its lowest level in almost 20 years.

“Our economy here is also very strong, and we have a lot of jobs,” Collins says. “For a long time, Perth’s property was ridiculously cheap, but we’re now rapidly catching up with other capital cities.”

In the long run, it will come back to a more sustainable level – it can’t keep growing at 20 percent a year indefinitely. It is still possible to get a 5 percent yield on rental properties, and rental laws in these states are much more balanced than they are in NSW, Victoria, and Queensland.”

Investors are also attracted to Brisbane, where strong migration is also supporting property prices, as is the infrastructure spending and soaring confidence ahead of the 2032 Olympics.

FW valuers’ Brisbane director, David Notley, says the Brisbane market is expected to continue to be strong, providing that fundamentals do not change, such as an under-supply of stock, corroborating with migration levels that drive up prices.

InvestorKit’s founder and head of research Arjun Paliwal believes most of the growth has come from the lower end of the Perth and Brisbane markets between $400,000 and $800,000.

According to him, higher-end property prices will likely rise in the future.

According to Paliwal, investors in that bracket may well benefit from further price growth between $700,000 and $1.5 million.

Although both cities have seen considerable growth already, there are still pockets that remain fairly affordable, and rents have held steady, so yields have risen as well.”

This dual living property is for sale at 16 Weston Court, Bellbird Park.

When Kathryn and Marcus Backway built this dual-living investment property two years ago, they knew they were on to a sure thing.

The property at 16 Weston Crt, Bellbird Park, has never been empty and currently generates a solid rental return of $520 a week.

One of the kitchens at 16 Weston Court, Bellbird Park.

It’s two homes on one 402 sqm title — a three-bedroom, two-bathroom house and a one-bedroom, one-bathroom home.

“We knew dual living was the way of the future,” Mrs Backway said.

“You could put a family in one side and elderly parents in the other, or a young family could live in one home and rent the other one out to help pay the mortgage.”

The living room at the larger house at 16 Weston Court, Bellbird Park.

Each home is currently rented out to separate parties.

Mrs Backway said the couple were selling to pursue other investment opportunities interstate.

Tucked away at the end of a quiet cul-de-sac, the property is in a high growth corridor with infrastructure close by, ensuring a solid investment.

One of the bedrooms at 16 Weston Court, Bellbird Park.

Inside, the homes feature a modern design with tiled, open plan living areas, carpeted bedrooms, separate entrances and fenced yards.

Both kitchens feature stone bench tops and stainless steel appliances.

Unlike some duplexes and townhouses, there are no body corporate fees.

One of the bathrooms at 16 Weston Court, Bellbird Park.

The property is also lower maintenance than owning two separate rental properties.

Mrs Backway said the majority of inquiries had so far come from investors, who recognised the growing appetite for dual living as the population aged and downsizing became more popular.

“I think it will only continue to grow as the demographics change,” she said.

• Despite rising house prices in the Wide Bay region over 80 percent since 2020, experts say they’re still comparatively affordable.
• Regional house prices and rental markets are under pressure due to migration.
• Where do we go from here? People are looking for “the next Sunshine Coast” and discovering “hidden gems” like Bargara, Moore Park Beach, and Burnett Heads.

Property prices in a sleepy beachside town have soared by more than 80 percent in four years, but an analyst says it’s still “extraordinarily cheap” compared to those in capital cities.

Moore Park Beach in Bundaberg is five hours north of Brisbane, nestled between cane fields and the ocean.

Following a lifestyle change last year, Ms King, 28, and her husband are among the area’s newest residents.

Their mortgage in Brisbane was swapped for an “oasis” complete with kookaburras and a private beach.

“We found this beautiful little town at Moore Park Beach, just 20 minutes from Bundaberg, and found this beautiful house,” she said.

Price comparison

According to PropTrack data, regional Queensland is experiencing the strongest market since the pandemic onset, with home prices surging by 66.5 percent since 2020.

Wide Bay between Gympie and Bundaberg topped the list with values soaring by 80.5 percent.

More than 70 percent of house values rose in Ipswich, Logan-Beaudesert, and the Gold Coast as well.

The median house price in Bundaberg is $522,607, Gympie is $629,775 and Maryborough is $484,153, according to Corelogic.

There is a median price of $1,461,581 in Noosa, and a median price of $817,564 in Greater Brisbane.

As a result of the pandemic, coastal areas have experienced extraordinary growth, according to CoreLogic research director Tim Lawless.

There has been an increase of 82.5% in home values at Moore Park Beach – one of the more affordable coastal suburbs in the Wide Bay region.

In spite of the increase, Mr Lawless said coastal homes in the region were still affordable.

The median or house value at Moore Park Beach or Bargara or Innes Park is still well below $750,000, he said.

“Compare that to a coastal market around south-east Queensland and you’ll see that it’s extremely inexpensive.”

Increasing prices

Migration was a major factor putting pressure on the regional property market, as well as the rental market, although it had slowed in the wake of the pandemic.

Mr Lawless said Queensland is seeing a very strong influx of migrants from interstate as well as overseas.

Despite the fact that regional Queensland is mostly driven by interstate migration, overall population growth is still very strong in the region.”

According to him, there is not enough housing supply to meet demand.

According to Mr Lawless, the number of new homes being built is insufficient to accommodate the number of people moving to the state.

“This means we are seeing … constraints both in the purchase of homes, as well as in the rental of homes, since rental rates are also rising consistently and rapidly.”

A Bundaberg real estate agent said the local market was attracting buyers who had sold and made profits elsewhere, and were seeking a beachside lifestyle at a lower cost.

He said they were looking for the next Sunshine Coast.

The little hidden gems of Bargara, Moore Park Beach and Burnett Heads are starting to gain popularity.”

A traditional characteristic of the region is its “slow and steady” market pace, which appears to be returning after the pandemic boom.

Hotspot of the future on the coast

The Sunshine Coast’s James Jenkinson has purchased land at Bundaberg’s Innes Park and plans to build a house and relocate with his family.

Coastal lifestyle and planned infrastructure projects, including the new $1.2 billion Bundaberg Hospital, attracted the owner of a pipeline plumbing construction company.

In the early 1990s, he compared Bundaberg to areas along the Sunshine Coast.

Initially, we intend to move to a rental and then start building.

The only negative I can mention is finding rentals in Bargara can be a little challenging.”

Beaches instead of Brisbane

They built their first home in Mango Hill before the pandemic and sold it last year to move to Moore Park Beach.

The experience of living here has been absolutely amazing, she said.

My backyard does not normally have turtles laying eggs, but I saw them laying eggs last December.

Through a “security swap”, Ms King said they were able to transfer their mortgage with their lender.

Mortgagees can keep their existing loan structure by changing the property used as collateral.

Our mortgage was not changed, but since the property we bought in Moore Park Beach was at a lower value than what we sold in Mango Hill, we were able to keep the same mortgage,” she said.

Despite the fact that we are not better off financially, we are in a better physical, mental, and emotional place.”

The global stock market has rattled investors over the past week, but could a major crash affect the property market in Australia?

The stock market is undergoing a rollercoaster ride, and many economists believe a recession is imminent, with 65 percent chance of occurring in the next 12 months.

Global stocks have lost a mind-numbing $6.4 trillion in three weeks.

Are those losses likely to result in a property retraction or crash, even if they are compounded?

Property prices fell in some parts of the country during Australia’s last major recession in 1990-91. Despite the decline in Melbourne real estate, the country’s property pool overall performed exceptionally well.

This was quite an accomplishment, given that the recession was one of the worst since the Great Depression.

While Melbourne’s property prices fell and didn’t recover to 1989 levels until 1996, its outlying poor performance came after a heady 1980s boom and was viewed as inevitable.

When faced with the insanely high 17.5 percent repayments that mortgagees faced back then, borrowers despairing at today’s interest rate levels would suffer paroxysms. As a result of the relatively rapid decline of those rates, property prices remained resilient during those difficult economic times.

How has Australia handled sudden stock market crashes that hit like a car crash when recessions creep up on property owners and prospective investors?

For those with superannuation, share portfolios and careers in finance and elsewhere, the Global Financial Crisis of 2008-09 was a traumatic experience.

The events that caused tremors around the world barely registered an interest in property prices. Although shares in Australia dropped more than 10 percent and the Aussie dollar lost 30 percent, it was less affected than the rest of the world.

What is property? Before dwelling values resumed their upward trend in 2010, there was a minor blip in 2009.

According to an overview co-authored by the Australian Bureau of Statistics and Reserve Bank of Australia (RBA), the Australian credit and money markets have proven to be more resilient than in many other countries, so the RBA needed to intervene much less than it had to elsewhere.

According to the report, this is partly due to the health of the Australian banking system.

Compared to other global banks, the Australian banks held almost no ‘toxic’ securities.

The health of the Australian banking system facilitated the effective implementation of monetary and fiscal policy, particularly by allowing much of the large easing in monetary policy to be passed along to interest rates on loans to households and businesses, in stark contrast to other developed economies.”

Financial landscape for 2024

In the years since the pandemic, share markets around the world have surged to record levels.

In the days leading up to this week’s bout of volatility, which saw Japan’s Nikkei Index drop 12.4% in one day and then gain back 10.4% the next, and the US and European markets contract sharply, it was buy, buy, buy.

Fourteen of the world’s 20 biggest stock markets hit record highs during the past couple of months, including New York, London, and Tokyo.

The US economy, where many international financial contagions have originated, is doing well, inflation has moderated, and corporate profits are strong, analysts said, so investors can be confident in the Federal Reserve and stocks are high. It was warned, however, that if any of those factors upset the balance, trouble could follow.

Unemployment has emerged as that factor.

The US jobs report last week shocked on the downside, raising fears of a slowdown in the world’s largest economy.

In coming months, we will know whether this result contributed to a ‘healthy correction’ in stock markets or is a sign of more turmoil to come.

Possibly expanding Middle East conflict, or even the same outcome beyond Ukraine and deeper into Europe, China’s slowing economy, unpredictable regional sabre rattling, and a global herd reaction if another large equity sell-off occurs could all throw a wrench into the often opaque inner workings of the international economy.

As Covid proved, even the complete freezing of global supply chains was not enough to bring down the real estate market when Australian property was viewed as a safe haven.

Fraser Coast Regional Council has today approved a development application for a $450 million, 18-storey resort on the Hervey Bay Esplanade, subject to a range of development conditions.

The ‘material change of use’ application is for a five-star hotel and residential apartment complex on six parcels of land between 408 – 412 The Esplanade and Freshwater Street in Torquay.

The complex would include more than 200 hotel rooms and approximately 340 residential units supported by a conference facility, retail, food and drink outlets and recreation facilities.

At today’s Council meeting, Councillors voted 6 to 5 to approve the development application, subject to conditions.

The conditions include, but are not limited to:

• The development permit is current for six years and the permit will lapse if the development is not completed within 10 years;
• The development must be reduced in height from 21 storeys to 18 storeys;
• The development must achieve a 5-star or higher luxury hotel rating;
• A best-practice lighting design plan to manage any impacts on sea turtles and shorebirds and to minimise artificial skyglow;
• A wind impact assessment of the building design;
• A detailed landscape plan;
• Major road, footpath water and sewer infrastructure works on Freshwater Street and The Esplanade; and
• The provision of sufficient permanently marked car parking spaces, onsite apartment bicycle parking spaces and onsite hotel bicycle parking spaces;

In making their decision, Councillors considered a detailed development assessment report prepared by Council officers, and added their own additional conditions with the developer’s agreement to remove three storeys from the height of the development.

This report noted that “the establishment of an integrated residential resort, incorporating five-star accommodation provided by Sheraton, will be a positive economic and community outcome that will achieve many of the aspirations of the Fraser Coast planning scheme.”

The planning report also noted that “clear provisions of the scheme do not support the bulk, scale and height of the integrated residential resort”.

However, the planning report ultimately concluded the “balance is struck in favour of approval” stating that “the development represents a unique opportunity to deliver outcomes that the current provisions of the scheme about building height would not otherwise allow”.

A copy of the report in today’s Council meeting agenda is available at https://www.frasercoast.qld.gov.au/council-meetings while residents can view a live stream of today’s Council meeting at https://youtu.be/H8c_w8qf9C0

Here are some key points to remember

• The prospect of strong capital gains is luring investors back into the market in addition to strong rental price growth.
• Australia’s rental crisis is driven by a chronic shortage of rental properties and a rapidly growing population.
• Both buyers and sellers continue to benefit from the current market conditions.
• PropTrack reports that the number of properties hitting the market has increased, and auction volumes and sales have consistently exceeded last year’s.

As well as strong rental price growth, which maintains healthy rental yields, investors are attracted by the prospect of strong capital gains.

Australia’s rental crisis is driven by a chronic shortage of rental properties and a rapidly growing population.

Eleanor Creagh, PropTrack’s Senior Economist, believes:

As a result of this situation, investors have returned to the market.

This is the third consecutive month that new lending, excluding refinancing, has increased.

New lending has followed improved housing market conditions since 2023, with prices recovering from declines in 2022.”

A buyer’s and seller’s sense of confidence

The current market conditions remain positive for both buyers and sellers.

The number of properties hitting the market has increased, and auction volumes have consistently been higher than last year, according to PropTrack’s data.

There has also been a substantial increase in sales.

New lending grew by 4.8% in April, the highest monthly increase since January 2022, and by 24.6% year-over-year, the highest since December 2021.

New lending grew by 5.6% for investors and 4.3% for owner-occupiers, with investor activity increasing by 36%.

Prices and yields of rental properties

In spite of recent slowdowns in rental price growth, rents have still increased faster than property prices.

According to PropTrack’s latest Rental Report, gross rental yields have reached their highest level in almost four years.

Further comments were made by Ms Creagh:

The strong growth in rents and increasing property prices have attracted investors, particularly in Queensland, South Australia, and Western Australia, where new lending to investors has reached record levels.”

The first half of 2024 has seen strong growth in property prices in these states.”

Rental markets are tight

Australia’s tightest capital city rental markets can be found in Queensland, South Australia, and Western Australia.

In the past year, Perth prices have increased by 20.58%, while Adelaide and Brisbane prices have increased by 14.49% and 13.69%, respectively.

Vacancy rates remain around 1% in Brisbane, Adelaide, and Perth, making it difficult for many to find available rentals.

This means properties are unlikely to sit untenanted for long, given the high demand.

Investments on the interstate

More investors are looking to buy interstate according to realestate.com.au.

Among interstate buyers, South Australia accounted for 29% of enquiries.

With 27% and 25% of enquiries, respectively, Queensland and Western Australia follow.

Due to the chronic housing shortage, investors are expected to increase their investment activity.

In the future

While population growth remains strong, Ms Creagh predicts a worsening shortage of homes due to low building activity.

Property prices are likely to rise regardless of interest rates, according to many investors.

As investor activity increases, long-term rentals will increase, helping to ease rental market constraints and the chronic shortage of rental supply that has led to record-high rental prices.

With government incentives, first-time buyers are still pursuing their property buying goals despite deteriorating affordability.

In April, first-home buyer loans rose in both number (+3.0%) and value (+3.4%)

Ongoing home price rises are likely incentivizing many to overcome affordability challenges and transact with the expectation of further price growth.

The tough rental market situation has likely encouraged some renters to purchase their own homes sooner, adding to demand.

Ms Creagh further said:

“The strength in new lending activity is expected to continue as the stage three tax cuts came into effect on July 1, supporting real incomes and boosting borrowing capacities.

Home prices are also expected to lift further, although the pace of growth may slow during the seasonally quieter winter period, particularly with the increasing probability of another rate rise this year.”

In five Queensland regions, investor hotspots have been identified as the next places to invest “before the boom”.

Based on InvestorKit’s Overvalued or Undervalued research, we’ve identified the top locations set to boom in the next 12 months based on housing affordability.

Our data-driven predictions of overvalued and undervalued cities last year proved accurate, with more than 80 percent of overvalued cities experiencing a housing price decline, while more than 90 percent of undervalued cities and regions enjoyed an average growth of more than 7 percent.

Even though the Australian housing market is going through a rough patch, our data suggests there are opportunities to find an affordable growth investment in undervalued markets with strong fundamentals.”

Among Queensland’s top investment destinations, InvestorKit recommends Bundaberg, Townsville, Rockhampton, Warwick, and Gatton.

“These regions have strong or strengthening local economies,” Mr Paliwal said.

Over the past decade, their unemployment rate has been at its lowest level ever

All of them are experiencing faster growth rates in the GRP (gross regional products) and in population growth rates.”

The high demand in the identified regions contributes to the limited supply, according to Mr Paliwal, who also noted that each of these towns is not only affordable, but also has bright growth prospects. Despite the high market pressure, inventories are really low in each of the five regions with under three months of stock.

In comparison to the pre-Covid time, there is a significant decline in stock available on the market.”

Bundaberg has a median house price of $505,000; Townsville has a median house price of $435,000 and Rockhampton has a median house price of $400,000.

There were $395,500 and $430,000 median house values in Warwick and Roma, respectively, based on suburb-level values.

Melbourne has a median house price of $1.1 million, while Brisbane’s is $1.1 million.

According to Paliwal, there has been an increase in demand in Queensland due to a tight rental market.

In the REIQ’s Residential Vacancy Report for the March 2024 quarter, vacancy rates were as low as 0% in Queensland, with rental availability remaining dangerously low.

In these regions, rents are rising rapidly, Mr Paliwal said.

“Four of the five regions are experiencing crisis-level vacancy rates, while the fifth region (Gatton) is also below the high-pressure threshold of two percent and significantly lower than its last decade average.

We expect the fast-growing rental prices, combined with the affordable housing prices, to encourage more renters to buy and attract more investors, driving housing values higher.”

Nearly one million Queensland households are suffering from financial stress due to the rising cost of living and housing crisis, according to Digital Finance Analytics (DFA).

It is estimated that more than 320,000 homeowners (45 percent) are under mortgage stress, spending more than 37 percent of their income on home loan payments. Nearly 490,000 tenants — a whopping 72 percent — are in rental stress, spending on average 36 percent of their monthly earnings on housing.

According to Finder, a Queensland school leaver would need to save for 21 years to afford a deposit.

In the past, one income earner and a stay-at-home parent could raise a family in their own home, said Graham Cooke, head of Finder’s consumer research department.

There is no way that wage growth can keep up with the skyrocketing property prices for most people.

Despite the fact that some are able to enter the property market easier with the help of their parents’ bank, not all are able to do so.

Despite both research projects’ dire results, Mr Paliwal said Queensland was still affordable compared to other east coast states.

There are a number of expensive markets in the southeast Queensland (SEQ) region, including Brisbane, Gold Coast, and Sunshine Coast.

“The majority of their hotness comes from incoming migrants from the two major capital cities, as well as from abroad.

There will be a slowdown in house value growth as prices approach an affordability ceiling.”

He said that, on the other hand, the rest of the state is much more affordable.

The median house price outside of SEQ in 23 of 26 SA3 regions is under $650,000, and in 19 it is under $500,000.

The growth in most of these regions over the last 10 years was much lower than the long-term average, so they have a lot of catching up to do.

Many of them are extremely hot because of their affordability, lifestyle, and thriving local economy, so hot that buyers are willing to pay much more than the actual value.

According to Mr Paliwal, Queensland’s economy and population are among the strongest performers among all states, as well as its property market.

“SEQ and the rest of the state, however, have very different markets,” he said.

Forbes Advisor Australia board member Leanne Pilkington, CEO and director of boutique real estate network Laing+Simmons, reviewed this article. Besides being president of the Real Estate Institute of Australia, she was also the longest serving president of the Real Estate Institute of NSW. 

Australians have turned those hours of obsession into a popular source of wealth building with residential dwelling values rising from $209.4 billion to $10.72 billion in the March quarter of 2024. There is now an eye-watering $10.7 trillion worth of property on the Australian market.

New ABS data from August last year shows that new investor mortgage commitments have grown to 35.3%, the highest level since 2017. This comes amid the RBA’s run of interest rate hikes in 2022. Western Australia and South Australia are attracting investors away from more expensive markets in NSW and Victoria.

According to Adrian Kelly, immediate past president of the Real Estate Institute of Australia, many Australians still view property as a “more stable life raft” than the stock market.

In the wake of the early 2000s stock market crash, Kelly says, many people are more inclined to put their hard-earned savings in bricks and mortar.

The RBA and Australians began to recognize that housing and housing finance institutions could help prevent future crises after the GFC.

It has caused concern among younger buyers and some policy makers, who argue that property’s generous tax breaks have made shelter unaffordable and speculative. In order to make up for a lack of retirement funds, many boomers who retired before 1992 are investing in property.

Regardless, more and more Australians are taking advantage of property’s wealth-building potential. Before you enter the ring, here are some things you should know.

In the same suburb, a $2 million three-bedroom penthouse apartment might rent for $1,500 per week, but a $2 million three-bedroom house might only rent for $850.

“If your intention is to renovate the property or knock it down and rebuild later on, then the rental yield might not be as important as making a profit on the property, therefore capital gains will be more important.

An investor will try to obtain the best possible rental yield on a property purchased to generate an instant source of income.”

The decision between a house or an apartment comes down to what your investment goal is: capital gains or rental yield. There is one major advantage of owning a house on its own title, however: you won’t have to pay strata or body corporate fees.

Are your properties owner-occupied or rented?

Investors who are simply looking for capital gains may choose to live in the properties they invest in. Meanwhile, investors looking for rental yields would have their properties rented.

CoreLogic’s latest research reveals that while the national profit-making sales rate stands at more than 90%, there is a significant difference between owner-occupied and investor resales when it comes to profitability.

During the quarter ended June 2022, investors were 35.8% more likely to experience a loss-making sale. Median nominal gains for resales of owner-occupied properties were also lower ($223,000) than for those for resales of non-owner-occupied properties ($348,000).

The difference between investing in property for residential purposes before selling versus solely investing for capital growth and rental yields is an important consideration for investors. The investor can use it to decide which type and location of property to buy.

Which suburbs are the best?

Once again, choosing what suburbs in Australia are best for investments depends on the investor’s circumstances and goals. In every state, capital city, and regional location, there will be a variety of growing suburbs, so it’s crucial to conduct extensive research. You can only predict so much, even then. As a result of a global pandemic, regional cities boomed?

According to experts, staying within 10km of the CBD can provide both good rental yields and long-term capital gains, depending on your investment goals. Since the pandemic, working from home has become more popular and commutes to the CBD have become less necessary, however, it remains that suburbs near the CBD are well-established and often highly desirable.

Moreover, you should consider the proximity to schools when selling to families; train lines and highways, as noise pollution can affect your property’s value; and other factors of the suburb that may make your property more attractive when it comes to selling, such as a suburb that is close to supermarkets and transport, or a suburb that is close to the beach.

Additionally, many property advisors do not recommend speculative investing in mining towns that are rumored to be seeing a boom in growth, nor do they recommend “hot spotting”, which involves investing in suburbs before they become popular. Despite the chance of getting lucky and buying into a gentrifying suburb, avoid the hard sales talk and hot spotter spruikers.

Property Investing Mistakes to Avoid

As well as avoiding hurdles that may dissuade prospective tenants or buyers, Brandi also advises investors to avoid cutting corners.

“Some investors don’t want to spend money on professional services or due diligence,” Brandi says.

Schnieder agrees that “speaking with financial planners, mortgage brokers, and real estate professionals will help you figure out the best investment property for your investment goals”.

Before investing in an investment property, Schneider suggests asking yourself the following questions:

• Are you planning to move within the next few days?
• Are you only planning to rent out the property to earn passive income?
• Is this your first home purchase?
• In order to sell the house for a profit, do you plan to renovate/upgrade it?

What is the maximum amount I can borrow?

Talk to your bank or broker to find out how much you can borrow. Based on the number of people going in on the loan; the number of dependents you have; whether you plan on living in the property first or solely buying it as an investment; whether the property is already built; the state in which you plan to purchase; and your current income, the bank will calculate your borrowing power.

Investing with bank loans is “risky business”, according to the Australian government-backed Moneysmart website. Loans for investment properties are also more expensive than loans for owner-occupied properties.

Borrowing to invest can give you access to more money, but it can also come with more risks, such as bigger losses and higher interest rates.

To determine which loan is best for you, speak with a mortgage specialist.

Property Investing Costs

Investing in property involves many more costs than just the purchase price or mortgage repayments. Below are some common investment costs.

Stamp Duty

Stamp duty, also called land transfer duty, is the cost of transferring a property from one owner to another. It’s a compulsory, state-imposed tax, meaning that the cost of it varies from state to state. The time required to pay stamp duty also varies depending on which state you have purchased property.

Stamp duty is calculated depending on the dutiable value of a property (generally the purchase price or market value of the property); the date of purchase; whether you are an Australian or overseas investor; if the property is a new home, an established home, or vacant land; if it will be your primary residence; and if it is your first property purchase.

To find out how much stamp duty you will need to pay, each state government offers a stamp duty calculator online.

Conveyancing and Search Fees

In a nutshell, conveyancing is the legal work involved in buying a property and the transfer of ownership from the vendor—or seller—to the buyer. It protects the buyer against nasty surprises in the future and ensures they’re aware of any potential issues with the property before they commit to the purchase.

However, conveyancing costs money, and conveyancing fees are split into two parts:

Legal fees charged by the solicitor. According to the Australian Institute of Conveyancers (AIC), conveyancing fees typically vary from $700-2500, although they can be higher for more complex transactions such as leasehold properties. You’ll usually have to pay conveyancing fees even if your purchase fails.
Disbursements charged by third parties for various searches and legal documentation. Examples include certificate of title search, mortgage registration, and inspection fees.

It’s important to note that each Australian state and territory is governed by their own individual divisions of the Australian Institute of Conveyancers, and therefore may have different pricing costs and agreements.

Property Inspections

No matter what type of property you are purchasing, it’s paramount that you have it inspected by a qualified building inspector. This will check for minor and major defects, quality of construction, structural integrity, moisture issues and the potential for termites. While costs vary depending on the size of the property and the inspector’s call-out fees, investors should expect to pay between $500-$800.

Additional Ongoing Costs

There are also a multitude of ongoing costs that individuals need to be aware of before investing in property. These include council and water rates; building insurance; landlord insurance; body corporate fees if you are buying an apartment or villa; land tax; property management fees; and maintenance costs.

Final Word

With the initial cost and the ongoing requirements, potential investors need to be aware that investing in property cannot guarantee income.

And while strong demand for rental properties may seem like an enticing prospect to investors, it’s important to do your research, talk with experts and specialists, and consider your personal finances before jumping on the property-investor bandwagon.

As CoreLogic figures, show, while the Australian property market was down in 2022, it has staged a steady recovery over the last year.

The prospect of strong capital growth and rising rents are enticing more investors back into the housing market, with investment loans up almost a third.

Investors, however, are being selective in where they park their money, preferring outperforming markets like Western Australia, Queensland and New South Wales over lagging ones like Victoria.

Australian Bureau of Statistics data on Friday showed the total value of home loans rose by a stronger-than-expected 3.1% to $27.6 billion in March, 18% higher than a year earlier.

A total of $17.5 billion in owner-occupied loans were made during the month, a rise of 2.8% over the previous month.

Investment loans grew by 3.8% to $10.2 billion in March 2023, up 31.1% from March 2023 and approaching record levels seen during the peak of 2022.

The size and number of investment loans have both grown strongly over the past year, according to ABS head of finance statistics Mish Tan.

“This is consistent with historically low vacancy rates over the same period, and CPI rental prices rising 7.8% annually to March quarter 2024.”

The Consumer Price Index (CPI) rose by a stronger-than-expected 1% during the March quarter, according to inflation data released last week.

Nevertheless, PropTrack’s director of economic research Cameron Kusher said the investor resurgence is very much a state-specific phenomenon, with Queensland (+45.3% year-on-year) and Western Australia (+63.8% year-on-year) leading the way.

According to Mr Kusher, these markets are extremely attractive to investors due to their relatively high rental yields and lower prices than Victoria and NSW.

Due to the Reserve Bank’s rapid increase in interest rates during 2022, investor lending substantially declined.

“It is likely that the stable interest rate environment and strong property price increases over the past year, along with higher interest rates improving tax deductibility from investments, low rental stock volumes, and strong rental price increases are encouraging investors to return.”

Since the pandemic, the national vacancy rate has fallen to a near-record low of 1.11%, according to PropTrack.

Despite tight rental conditions, Mr Kusher said investors are still selling out.

It is not clear whether these new investors are renting their properties long-term or short-term, as many investors are exiting the market.

The rental shortage can be addressed instantly with more rental properties and more investors, but it will take some time to show up in the supply.”

In favor of smaller states, investors turn their backs on Victoria

In March, investors borrowed more for housing in Queensland than Victoria for the first time since 2008, as weaker prices and concerns about land tax and tenancy laws discouraged buyers.

Mr Kusher said that lending to investors in Victoria has increased 6.3% over the past year, while lending to investors in Queensland has increased 45.3% over the past year.

Due to higher property taxes in Victoria, people are instead investing in places like Queensland and WA, or in other asset classes instead.

PropTrack’s latest Home Price Index shows Melbourne prices declined by 0.1% in April, which means prices are only 1.1% higher than a year ago and 3.4% lower than the previous peak.

After falling 0.1% in April, regional Victoria property prices remain 0.9% lower than a year ago.

Over the past year, Brisbane prices have surged 12.8%, surpassing Melbourne for the first time in 14 years.

April’s home price changes across the country

There was also a record high in investment lending in Western Australia, where property prices soared by more than 20% in Perth over the past year, and 10% in regional areas. Investor lending in South Australia is also approaching record levels.

According to Mr Kusher, capital cities in these states have seen the highest increases in property values, but they are still cheaper than properties in Sydney and Melbourne.

There is little new housing construction and rental listings are extremely low, making it an ideal investment environment.

The best time to invest in these markets was a few years ago, but investors still see further upside.”

Buyer’s agent Kate Hill from Adviseable cautioned those looking to jump on the booming Perth market without doing their homework.

“Perth has been going bonkers for the past couple of years. When you [buy] and it’s in the media, the bulk of capital growth has already occurred,” she said.

In contrast, she said, ‘smart’ investors were taking advantage of the weakened conditions in the south, given its solid prospects for cash flow and capital growth.

In addition to fewer buyers on the ground, property prices have remained subdued, and Melbourne’s vacancy rate is only 1%,” said Ms Hill.

As a result of the exodus of investors from the state, rents will likely increase, which is a terrible situation for renters.”

There is a hidden gem in South-East Queensland that appeals to nature lovers who need a regular fix of the city.

A quiet community surrounded by the scenic rim of Queensland, Beaudesert combines quiet living with easy access to Brisbane and the Gold Coast.

Earlier this month, the highly coveted Smart Property Investment Fast 50 ranking for 2024 named Beaudesert as one of the top suburbs in Queensland.

It aims to provide unparalleled insight into the Australian suburbs that are set for future growth, based on the insights of an expert panel of 14 and open-source data.

For those seeking a rural lifestyle but wary of being cut off from the big city, Beaudesert has long been a well-kept secret in Queensland’s hinterland.

It is located 70km from Brisbane’s central business district and just under 60km from Surfers Paradise. The town is surrounded by some of the best hiking, camping and rock climbing spots in the region, as well as the pastoral calm fostered by the local farming community.

CoreLogic data shows Beaudesert is well below the median house price of both neighbouring metropolises, yet within easy reach of them both.

There is an average home price of $500,000. The median house price in Greater Brisbane as of April 2023 was $781,881, while the median home on the Gold Coast is $945,000.

Over the past year, properties in the hinterland area have performed well, and consistently in general. The median quarterly growth rate in Beaudesert is 4.20 percent, while its average annual growth rate is 4.9 percent. There has been a 20.70 percent increase in the town’s value over the past year. On average, investors can expect yields of approximately 4.3 percent from rents that hover around $410 per week.

Just over 6,400 people live in the town, and population growth is modest but steady. Recently, two new well-planned residential areas have been established in the town – Brayford Estate, east of town, and Tullamore Downs, north of town.

Mountainous terrain forms the southern boundary of the Scenic Rim, which is dominated by the Flinders Peak Group. This area is home to Lamington National Park, Tamborine Mountain, McPherson Range, Main Range National Park, Mount Barney National Park, and landforms including Cunninghams Gap and Fassifern Valley, which are popular hiking and climbing destinations.

A “traditional” climbing method, operating without bolted routes, has become particularly popular at the Mount French peak, part of the Moogerah Peaks National Park.

There’s no wonder the small town has become a hub for creatives with such inspiring surroundings. In addition to art exhibitions and performances by acclaimed bands, singers, and dance groups, Beaudesert’s cultural hub, The Centre, screens recent release films and hosts film screenings.

Recently, it has become a popular choice among adventure lovers looking for a base to enjoy the Scenic Rim’s spectacular scenery.

In the north of Beaudesert, there is a community arts and information center that sells pottery, crafts, and art.

The Beaudesert Historical Museum in Jubilee Park displays local farming artifacts like vehicles, machinery, and tools dating back more than 100 years, as well as Pioneer Cottage, an authentic slab hut built in 1875.

It has two primary schools, two high schools, a range of aged-care facilities, and is a great place for families. Several daily needs can be met along a bustling main street, including medical services, dining, and shopping.