Our "industry insider" champions the value of house and land packages in the areas like Strathpine and Churchill in Ipswich over the purchase of a property like a hi-rise apartment in markets like Gold Coast or Brisbane.
Some of these house and land packages are priced lower than 500k.
Our calculations are based on a growth of 4% per anum and rent of $500 per week. Previously that growth may have been calculated as high as 10% per anum.
In fact our industry insider scoffs at the notion of an investment in an apartment is actually an investment.
Purchasing an apartment on the Gold Coast could be regarded more as a life style choice once the follow factors are taken into account -:
New properties attract generous tax concessions.
Negative gearing will allow you to claim approximately 40% of all costs.
Projections over the next 15 years indicate the population growth of the South East corner will influence the available land.
There is going to be a lack of available land.
Let's keep it simple
At 4% growth (not including compound) your property would be worth 700k in 10 years.
Diminishing Returns on properties over 500k
For the average taxpayer earning between $80,000 - $100,000 per year our insider suggests a cost of $0-20 per week at current interest rates. Even for incomes in the $50,000 mark the tax benefits still flow through. There is what is termed "Diminishing Returns" on properties over that price. Put simply wages are not increasing steadily in Australia. There is not enough people who can actually purchase property over the 500k mark.
3 Key Factors in the Sydney and Melbourne capital growth over the last 8 years -:
1. Non resident Chinese investment
2. Immigration intake has dramatically increased 100k - 300k per year
3. Reserve Bank decreased interest rates from 4-5% to 1.5% (puts pressure on prices)