28 Jan Josh Masters – Australian Property Market 2016
Our guest today: Josh Masters from BuySide.com.au
Kevin: Joining me as we continue to have a look at the market 2015 looking into 2016, Josh Masters from BuySide.com.au joins me.
Josh: Good morning, Kev.
Kevin: Good morning. Just before we start, love your app, the Suburb Investor. I downloaded it and have just been playing with it. It’s a great little comparison if you’re looking at comparing different suburbs.
What’s the idea behind it, Josh? Who do you see as the ideal user?
Josh: What we wanted to show people and property investors out there was that it’s not always about the short-term gain in terms of what the rental is and how much money you’re going to get back in your pocket every week. We’re really long-term investors. We’re definitely buy and hold. We’re focused on that capital growth.
I thought it was really important to show investors how suburbs compared against each other. For example, if you have $500,000 to spend in the marketplace, over the last ten-year period, where would you have gotten the best growth out of that?
This little app, very simply, allows you to put in your investment amount, to put in your investment period, and then based on whether it’s a house or a unit, you can actually compare suburbs against each other. You compare two suburbs across the whole of Australia, so you could compare a suburb in Perth against a suburb in Sydney, for example, if you were looking to invest in either of those spots and see how they turned out over the last ten years.
Kevin: Try it out for yourself. It’s called Suburb Investor. Just go to the app store, put in “Suburb Investor” and it’ll come up for you quite easily.
Mate, because we’re well and truly into 2016 now, let’s have a look back at 2015. What do you think we’ll be saying about this year, 2016, about this time next year?
Josh: I think we’re still going to see the momentum from Sydney carrying through. I always liken the property market to an ocean liner. If you look at the stock market, it’s like a little Jet Ski. It zips up and down and it can change on a dime, whereas the property market, it’s like an ocean liner. It takes a long time to get going. It also takes a long time to stop. There is a lot of momentum in it.
I think while Sydney has had that very, very strong growth, and even Melbourne as well, we’re still going to see probably 5% to 7% growth over the period as that market slows down. There is still some money left in there.
I think we’re also going to see a rise in premium homes, let’s say above $1.5 million probably in Sydney and definitely in Melbourne. I think there is a lot of money and equity that has been generated over the last two to three years with people who have held property in that market and now have the ability to trade up or even invest elsewhere.
But I think from an investment point of view, we’re going to see probably a lot more influence from those APRA regulations, which really kicked in in the second half of 2015. The APRA regulations forced investors to do a number of things. First of all, it forced them to put bigger deposits into their investments, and it also forced them to look for more high-yielding properties because they needed stronger servicing to do that.
What we’re probably going to see is a trend through 2016 to those more affordable markets with stronger yields. For that reason, I do see Brisbane… I know Brisbane is probably 50/50 at the moment for a lot of people because we expected to see a lot happen in 2015 and it really didn’t take off, but I do see that Brisbane market and even the Gold Coast market for some of the infrastructure projects that are going in there.
It’s been flat for so long, it’s a very affordable market especially compared to a lot of the eastern coast cities. I think we’re seeing a lot of strong yields there, which are 5.5%, 6.5% there, which are really going to be attractive for investors through 2016.
I think coupled with infrastructure projects from Toowoomba to Sunshine Coast down to the Gold Coast, I think that’s going to be a real hot spot coming up into 2016.
Kevin: Are they the ones you highlight around Australia as the ones to watch in 2016 – Gold Coast and some of the southern suburbs of Brisbane?
Josh: I do. Gold Coast is definitely coming onto my radar now for affordability, and not only that, for the interest that it’s getting from the Chinese market on the residential level. You have that $1 billion Jewel residential and wholesale being built there. You have the Commonwealth Games coming in there. The light rail link from Southport to Broad Beach is improving connection there. Not just that, but the Toowoomba bypass is happening one hour west of Brisbane.
Brisbane has had about $19 billion worth of infrastructure put into it in terms of roads and connections through to the airport, which has been fantastic. We’re seeing that university hospital being built up in Sunshine Coast, 3500 jobs being put into there, and I think it’s going to be a real hub for activity in the coming year.
Look, coming into this period where we’re going to see slow economic growth for the country overall because of the mining decline, I think we’re going to have to look to areas that have that infrastructure injection into the economy because that’s really where growth is going to be created.
The same goes for Sydney, as well. We’re seeing $1 in every $2 spent in that triangle in the western suburbs of Sydney, $26 billion between Parramatta, Penrith, and Liverpool and down to Badgerys Creek. That area is really going to be probably the future center of growth for Sydney as it moves through its current growth cycle.
Kevin: Great view there, Josh. Thank you so much for your time. Josh Masters from BuySide.com.au. Check out that app, as well, Suburb Investor.
Josh, great talking to you, mate. All the best for 2016. I look forward to talking to you as the year unfolds.
Josh: My pleasure, Kevin. Thanks for having me.