Where to buy? QLD, NSW or VIC?

Introduction

• builderbuilder provides House and Land and Dual Occupancy packages

• builderbuilder uses REI online tools to develop individually researched property deals

• builderbuilder and REI will compare the three major states on the eastern seaboard

• We will provide deal examples in each state that you can purchase now

Market Overview

Property CyclesWhen to Buy

Market Cycle - Brisbane

• Brisbane home values have increased by 1.3% over the past 3 months to Nov 16

• Over the past 12 months they have increased by 4.1%

• Over the past 5 years they have increased by 17.0%

Market Cycle - Sydney• Sydney home

values have increased by 2.9% over the past 3 months to Nov 16

• Over the past 12 months they have increased by 10.6%

• Price growth peaked in July 15 at 18.4%

Market Cycle - Melbourne

• Melbourne home values have increased by 4.6% over the past 3 months to Nov 16

• Over the past 12 months they have increased by 9.1%

• Price growth peaked in Sep 15 at 14.2%

Land Supply• Melbourne remains the most affordable market

for land• The median lot price in Melbourne grew by

2.8% for the September quarter to $228,000• Melbourne average lot price is 51% less than in

Sydney and 14% less than in South East QLD• Forty percent of the nation’s land sales is in

Melbourne and the median price is 18% less than the national median

Land Supply• Sydney - 8,174 lots released in 2015 with 9,960

lots per annum required to meet demand• Sydney median lot size 454m2

• Melbourne – 19,774 lots released in 2015 with 11,358 lots per annum required to meet demand • Melbourne median lot size 430m2

• South East QLD – 11,344 lots released in 2015• median lot size 488m2

Brisbane Sydney MelbourneMedian house price(1)

$568,170 $1,128,510 $904,240

Rental yield range houses

4.75% - 5.00%

4.50% – 4.75%

4.0% - 4.25%

Overall vacancy rate(2)

3.0% 1.7% 1.9%

Median Price & Yield

(1)CoreLogic 31 Oct 2016(2)SQM Research Oct 2016

Growth Drivers

Growth Drivers QLD

• Population to grow to 4.3m up 105% (2011-51)• Trend unemployment 6.4% May 2016• Economic growth forecast to be 4.0% in

2016/17• International exports will be the key driver of

economic growth as LNG projects ramp up• Infrastructure spending for next 4 years

totaling $35.0b

Growth Drivers NSW• Population to grow to 7.7m up 67% (2011-51)• Trend unemployment 5.2% May 2016• Economic growth forecast to be 3.0% in 2016/17• Mining, allied industries, construction and

transport will be the key drivers of economic growth

• Infrastructure spending for next 4 years totaling $73.3b

Growth Drivers VIC

• Population to grow to 7.8m up 86% (2011-51)• Trend unemployment 5.8% May 2016• Economic growth forecast to be 2.75% in

2016/17• A rapid growth in the financial sector has

been the key driver of economic growth• Infrastructure spending $7.4b per annum for

next 4 years totaling $30.0b

Stamp Duty and Concessions

Stamp Duty

• Stamp duty payable on $250,000 land for an investor

• QLD $7,756.00 (3.1%)• NSW $7,512.60 (3.0%)• VIC $10,860.60 (4.3%)NSW and QLD have the lowest stamp duty rate

Concessions QLD

• There are various concessions available in each state which can boost the property market

• QLD First Home Owner Grant on new property purchased from 1 July 2016 - $20,000

• Must be buying or building a brand new home under $750,000

Concessions NSW

• NSW First Home Owner Grant reduced from $15,000 to $10,000 from 1 Jan 2016

• Must be buying or building a brand new home under $835,000

Concessions VIC

• VIC First Home Owner Grant $10,000 for buying or building a new home up to $750,000 from 1 July 2013

• Stamp duty concession of 50% on new or established homes up to $600,000 after 1 Dec 2014

QLD and VIC have the highest concessions for FHO

Town Planning

Town Planning QLD

• Dual Occupancy dual living allowable in:• Moreton Bay• Logan• Ipswich• Townsville

• This allows you to rent out each dwelling to separate third party tenants

• No head works charges as 2 lots on 1 title

Dual Living Overview• A purpose built house with two separate dwellings

internally

• Cannot strata

• Town planning limited

• Building regulations same as duplex

• Finance similar to a house but better cashflow up to 95% LVR

• Valuations issues if too large

Dual Living Example Plan

Dual Living Strategy• Price point $475,000-$650,000

• Price 10-20% higher than a house

• Great cashflow with yields 30-40% higher

• Some equity gain possible

• Ideal to increase serviceability in existing portfolio

• Ideal for first home buyers who can rent out secondary dwelling as an investment property

Dual Living Example – Ipswich QLD

3 bedroom house + attached 2 bedroom

dwelling Land: $180,000Build: $269,000Total: $449,000Market Rent: Appraised at $550-570pwGross Yield: 6.4%Total dwelling size 200m2

Town Planning QLD

• Dual Occupancy duplex allowable in established (infill) areas and master planned estates

• Difficult to find in Brisbane Council Area in master planned estates

Duplex Overview• Purpose built two dwellings on one property

• Strata title upon completion to obtain 2 dwellings

• Attached or detached

• Higher density zoning required

• Finance up to 90% LVR (half 80% half 90%)

• DA or MCU as of right

Duplex Strategy• Price point $630,000 +

• Advanced strategy for a client who has already done a dual living or house package

• Strong yields and cashflow

• Flexibility of 2 properties in 1

• Equity release upon strata title

Duplex Example – Pimpama QLD

Attached 2 x 3 bed, 2 bath single garage Package Price: $640,000

Land Settlement: 07/11/2014Construction Complete: 24/11/2015

Appraised Value on Completion$720,000 - $760,000 (03/2016)

= 12.5%- 18.8% Gain

Market Rent: $750/wk (5.9% Yield)

Town Planning NSW

• Dual Occupancy dual living allowable on residential lots throughout NSW under SEPP

• Available on land over 450m2 and 12m width• This allows you to rent out each dwelling to

separate third party tenants• Most councils do not charge s149 contribution

charges (aka head works) and councils who did are now repealing earlier decision

Town Planning NSW

• Dual Occupancy duplex allowable in established (infill) areas and master planned estates

• Becoming increasingly difficult to find in Newcastle and Central Coast

• Very difficult to find in master planned communities in Western Sydney

Town Planning VIC• Dual Occupancy dual living only allowable if

your grandma is living in the secondary dwelling

• Dual Occupancy duplex is very difficult (almost impossible) to find in master planned estates

• There is a trend to buying an existing home and building another dwelling at rear

Building new in Victoria is therefore entirely limited to house and land only

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