Warning . The information in this post is my personal opinion. I have no qualifications as a financial advisor or as real estate agent. Please conduct your own enquiries / due diligence Before you act on any information.
Where I have quoted figures, they are to the best of my knowledge, correct, However there is no warrantee that they are correct.
There has been much debate over regional areas of Queensland ( in particular the lower coastal areas ) over the last month or so . As well, people have been talking about how the market was topping , and how you couldn’t buy anywhere with the expectation of capital growth.
Before we get onto specifics , I need to state that there are lots of different ways to make money in property. I am not stating how I am approaching things is better than other ways, but as a result of my experience over the last few years , it is One Way I am approaching property investing in order to make money in the current climate. ( I am also in the process of getting approval for A dual occ in Sydney’s North ),
I have bought IP's in Rockhampton because they are giving a good yield and I expect them to give good short term capital growth.
What moves Markets
While there can be no denying that underlying fundamentals are important in determining property prices ( in particular in the long term ) , in the shorter term prices cannot be explained purely in terms of changes in the “fundamentals “ of an area. The is no logical explanation for areas like Logan doubling in value in about one year outside the explanation offered by the that of the interaction between demand and supply. Some people raise the spectre of “ southerners buying up big “ and ”Investors driving the market” as a reason for the rapid changes in prices, but the reality is that many areas have undergone similar price changes in the past . There are ( IMHO ) two reasons why some of the cheaper areas are coming under greater scrutiny. One is the awareness of a large group of investors of the attraction of cash flow properties as an attractive investment medium. This has mainly been driven by the success of Authors like Robert Kiyosaki and John Burley. The second is the presence of the Internet, which has made previously remote areas readily accessible to most active investors. Given the preoccupation many people have with wealth creation I think that areas offering high yield will continue to come under ongoing scrutiny. I don’t think this is going to go away over night.
In Mt Druitt in Sydney ( it’s a hole ) , “investors are buying dumps giving yields of five percent , and in Logan the same investors have doubled prices in the last year , so current yields are closer to 6 % ( and they’re still buying )
The reason I started looking at Rockhampton about four months ago was the high yields available there. You can get yields up to 8- 9 % ( up to three weeks ago ) though prices have probably already moved about 5-10 K in the last two months.
Waves
While most people seem to classify properties as either Capital growth or Cash Flow , from my experience over the last few years , most cash flow properties will also undergo significant capital growth at certain times of the market. I have observed that the traditional Capital growth areas start moving first, and as the Wave moves out through various areas . It reaches the traditional Cash flow areas later in the cycle, which ( as most people would agree ) is where we are now.
The out skirts of Brisbane started moving about a year ago, and subsequently the wave has been moving up the Queensland Coast. In humble my opinion the wave is just about to hit Rockhampton. As was discussed in a recent post on Maryborough the initial part of the wave has already gone through there.
Between Brisbane and Rockhampton , I looked at three towns to give me an indication of what might happen in Rockhampton . Gympie, Maryborough and Bundaberg like Rocky , are not on the Coast.
Gympie , which is closest to Brisbane , started moving late last year , Maryborough followed a couple of months later, and more recently Bundaberg started moving. Gladstone, between Bundaberg and Rockhampton does have strong fundamentals, started moving earlier because of the amount of money being invested there.
Gympie , Maryborough and Bundaberg all moved up 30-50 % in a fairly short period of time.
Rockhampton is the next major city up the coast.
Rockhampton
It is a City of some 60,000 people. It is the major city of it’s region. It is on the tropic of Capricornia , and about 30 mins inland from the the Capricornia coast , which has several smaller towns , including Yeppoon and Emu park. Two years ago these areas offered good yields but they have moved significantly since then.
Rockhampton has an airport which is serviced by Qantas and Virgin , with several flights a day. I’m not sure if it has Bunnings , but it does have Office works. It also has a University, and two large regional shopping center’s. It has the area's major hospital and numerous schools , both public and Private.
While it is not attracting the investment that some Q’land Cities have attracted, it is not in the basket case category of places like Mt Morgan ( recently promoted on TV as a place to buy cheap properties). Given the widespread publicity about the Stanwell magnesium project folding , there were few people actually employed there . Given that we are in the middle of a major drought ( Rocky is “the Beef Capital of Australia “ ) and one of the two abbatoirs is currently closed , the first thing I noticed when I started researching IP’s there, was the low vacancy rates. The first two IP’s I bought came without tenants. One had a tenant in place prior to settlement and the other one was rented within two days of settlement.
The thought has occurred to me that it is actually the lack of new house construction that is keeping the vacancies low. There are new houses being built , but these are on the outskirts of the town and cost about 200k min to buy. ( so I’ve been told ) . The IP’s I’ve been targeting are considerably cheaper than this, they are central to schools and shops , and they aint making any more like them ( not sure if that a bad thing or a good thing ) but it does limit the potential of oversupply of cheaper IP’s.
When I first went up to Rockhampton in July, agents were able to show me numerous houses , including some that had been on the market for , in one case up to one year ( this one was on the intersection of two busy roads , in a lesser part of town ). I rang up the agents and asked what had happened to the thirty odd properties I saw on that visit and one week later about 25 % had sold. On our last visit , several properties we had discussed with agents had already sold by the time my wife got up there, and one week later , all of the properties which we thought were of interest had sold. Agents are now complaining of problems getting listing, though they are still seem able to find some at the present. Of the first thirty I saw about half of these would have been very good buys in retrospect
Having seen a lot of houses up there now, I don’t trust the ability of most of the agents to adequately describe a property. One place I was told needed some minor cosmetic work , had strategically placed ventilation holes in the floor of the Bathroom , and each stump at the rear corners, was about six inches lower than the central ones just to name a few things.
While we have just bought one sight unseen ( first time ever) it is not something I would recommend there unless you really know the market.
Parts of Rocky are flood prone. Some investors do target these properties as they offer higher yields. I avoided them. You can get a flood map off the local council for under 10 dollars. This is necessary as ,again , not all agents accurately describe whether a place is flood prone or not . Both myself and another forumite where reassured by one particular agent that one particular property was not flood prone.
In previous cycles , Rockhampton has followed the same trend as Gympie, Mary ‘b and Bundaberg. As I also have an interest in Logan , I compared rocky with Logan , and in previous cycles Logan moved first and subsequently rocky caught up and overtook it.
The somersoft leading indicator
I have mentioned before my belief that we hve a fairly educated group of investors on somersoft, and if you look where we're buying , then the chances are you should look there as well.
When I started to discuss rocky with people on the forum I found that at least four of us had already started buying up there, independently of discussion with other people. The same thing happened in Tasmania and Logan , with forumites buying prior to the herd decending on the areas.
I have included two charts ( fingers crossed ) . These both chart median average prices since 1975. I couldn’t change the bottom axis to the year, but 1 is 75 , with the last year being 2003
The first one compares Gympie, Mary ‘b , Bundy and Rocky . as you can see they basically run parallel to each other. As I stated previously local enquiries indicate the three closer to Brisbane have already moved , and I can see no logical reason why rocky won’t follow them in this cycle.
The second one compares Logan with Rocky . I made this chart about four months ago , when I was first looking at Rocky so the chart of Logan doesn’t catch the sales of the last few months. In this period, prices have moved to the point where there is very little if anything for sale below 160K. When I bought in Logan I was expecting prices to double over the next two years, however it has doubled in one year. In previous cycles ROcky has moved more slowly , but given the interest in High yield properties, and the speed the previously mentioned places have moved, I expect rocky to move 30-50 % in a fairly short period of time. It has already started moving.
see change
Where I have quoted figures, they are to the best of my knowledge, correct, However there is no warrantee that they are correct.
There has been much debate over regional areas of Queensland ( in particular the lower coastal areas ) over the last month or so . As well, people have been talking about how the market was topping , and how you couldn’t buy anywhere with the expectation of capital growth.
Before we get onto specifics , I need to state that there are lots of different ways to make money in property. I am not stating how I am approaching things is better than other ways, but as a result of my experience over the last few years , it is One Way I am approaching property investing in order to make money in the current climate. ( I am also in the process of getting approval for A dual occ in Sydney’s North ),
I have bought IP's in Rockhampton because they are giving a good yield and I expect them to give good short term capital growth.
What moves Markets
While there can be no denying that underlying fundamentals are important in determining property prices ( in particular in the long term ) , in the shorter term prices cannot be explained purely in terms of changes in the “fundamentals “ of an area. The is no logical explanation for areas like Logan doubling in value in about one year outside the explanation offered by the that of the interaction between demand and supply. Some people raise the spectre of “ southerners buying up big “ and ”Investors driving the market” as a reason for the rapid changes in prices, but the reality is that many areas have undergone similar price changes in the past . There are ( IMHO ) two reasons why some of the cheaper areas are coming under greater scrutiny. One is the awareness of a large group of investors of the attraction of cash flow properties as an attractive investment medium. This has mainly been driven by the success of Authors like Robert Kiyosaki and John Burley. The second is the presence of the Internet, which has made previously remote areas readily accessible to most active investors. Given the preoccupation many people have with wealth creation I think that areas offering high yield will continue to come under ongoing scrutiny. I don’t think this is going to go away over night.
In Mt Druitt in Sydney ( it’s a hole ) , “investors are buying dumps giving yields of five percent , and in Logan the same investors have doubled prices in the last year , so current yields are closer to 6 % ( and they’re still buying )
The reason I started looking at Rockhampton about four months ago was the high yields available there. You can get yields up to 8- 9 % ( up to three weeks ago ) though prices have probably already moved about 5-10 K in the last two months.
Waves
While most people seem to classify properties as either Capital growth or Cash Flow , from my experience over the last few years , most cash flow properties will also undergo significant capital growth at certain times of the market. I have observed that the traditional Capital growth areas start moving first, and as the Wave moves out through various areas . It reaches the traditional Cash flow areas later in the cycle, which ( as most people would agree ) is where we are now.
The out skirts of Brisbane started moving about a year ago, and subsequently the wave has been moving up the Queensland Coast. In humble my opinion the wave is just about to hit Rockhampton. As was discussed in a recent post on Maryborough the initial part of the wave has already gone through there.
Between Brisbane and Rockhampton , I looked at three towns to give me an indication of what might happen in Rockhampton . Gympie, Maryborough and Bundaberg like Rocky , are not on the Coast.
Gympie , which is closest to Brisbane , started moving late last year , Maryborough followed a couple of months later, and more recently Bundaberg started moving. Gladstone, between Bundaberg and Rockhampton does have strong fundamentals, started moving earlier because of the amount of money being invested there.
Gympie , Maryborough and Bundaberg all moved up 30-50 % in a fairly short period of time.
Rockhampton is the next major city up the coast.
Rockhampton
It is a City of some 60,000 people. It is the major city of it’s region. It is on the tropic of Capricornia , and about 30 mins inland from the the Capricornia coast , which has several smaller towns , including Yeppoon and Emu park. Two years ago these areas offered good yields but they have moved significantly since then.
Rockhampton has an airport which is serviced by Qantas and Virgin , with several flights a day. I’m not sure if it has Bunnings , but it does have Office works. It also has a University, and two large regional shopping center’s. It has the area's major hospital and numerous schools , both public and Private.
While it is not attracting the investment that some Q’land Cities have attracted, it is not in the basket case category of places like Mt Morgan ( recently promoted on TV as a place to buy cheap properties). Given the widespread publicity about the Stanwell magnesium project folding , there were few people actually employed there . Given that we are in the middle of a major drought ( Rocky is “the Beef Capital of Australia “ ) and one of the two abbatoirs is currently closed , the first thing I noticed when I started researching IP’s there, was the low vacancy rates. The first two IP’s I bought came without tenants. One had a tenant in place prior to settlement and the other one was rented within two days of settlement.
The thought has occurred to me that it is actually the lack of new house construction that is keeping the vacancies low. There are new houses being built , but these are on the outskirts of the town and cost about 200k min to buy. ( so I’ve been told ) . The IP’s I’ve been targeting are considerably cheaper than this, they are central to schools and shops , and they aint making any more like them ( not sure if that a bad thing or a good thing ) but it does limit the potential of oversupply of cheaper IP’s.
When I first went up to Rockhampton in July, agents were able to show me numerous houses , including some that had been on the market for , in one case up to one year ( this one was on the intersection of two busy roads , in a lesser part of town ). I rang up the agents and asked what had happened to the thirty odd properties I saw on that visit and one week later about 25 % had sold. On our last visit , several properties we had discussed with agents had already sold by the time my wife got up there, and one week later , all of the properties which we thought were of interest had sold. Agents are now complaining of problems getting listing, though they are still seem able to find some at the present. Of the first thirty I saw about half of these would have been very good buys in retrospect
Having seen a lot of houses up there now, I don’t trust the ability of most of the agents to adequately describe a property. One place I was told needed some minor cosmetic work , had strategically placed ventilation holes in the floor of the Bathroom , and each stump at the rear corners, was about six inches lower than the central ones just to name a few things.
While we have just bought one sight unseen ( first time ever) it is not something I would recommend there unless you really know the market.
Parts of Rocky are flood prone. Some investors do target these properties as they offer higher yields. I avoided them. You can get a flood map off the local council for under 10 dollars. This is necessary as ,again , not all agents accurately describe whether a place is flood prone or not . Both myself and another forumite where reassured by one particular agent that one particular property was not flood prone.
In previous cycles , Rockhampton has followed the same trend as Gympie, Mary ‘b and Bundaberg. As I also have an interest in Logan , I compared rocky with Logan , and in previous cycles Logan moved first and subsequently rocky caught up and overtook it.
The somersoft leading indicator
I have mentioned before my belief that we hve a fairly educated group of investors on somersoft, and if you look where we're buying , then the chances are you should look there as well.
When I started to discuss rocky with people on the forum I found that at least four of us had already started buying up there, independently of discussion with other people. The same thing happened in Tasmania and Logan , with forumites buying prior to the herd decending on the areas.
I have included two charts ( fingers crossed ) . These both chart median average prices since 1975. I couldn’t change the bottom axis to the year, but 1 is 75 , with the last year being 2003
The first one compares Gympie, Mary ‘b , Bundy and Rocky . as you can see they basically run parallel to each other. As I stated previously local enquiries indicate the three closer to Brisbane have already moved , and I can see no logical reason why rocky won’t follow them in this cycle.
The second one compares Logan with Rocky . I made this chart about four months ago , when I was first looking at Rocky so the chart of Logan doesn’t catch the sales of the last few months. In this period, prices have moved to the point where there is very little if anything for sale below 160K. When I bought in Logan I was expecting prices to double over the next two years, however it has doubled in one year. In previous cycles ROcky has moved more slowly , but given the interest in High yield properties, and the speed the previously mentioned places have moved, I expect rocky to move 30-50 % in a fairly short period of time. It has already started moving.
see change
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