Geelong Remains Undervalued
An interesting article by BMT tax depreciation specialists in which their key message is that ‘property investing in 2018 will be a little different to what we have experienced in the past.’
One of the key changes is an investors ability to secure a loan. In recent years, the Australian Prudential Regulation Authority (APRA) have implemented measures to slow investor lending. In some cases, this has resulted in investors requiring larger deposits to meet loan requirements, interest only loans are more difficult to obtain, and investors are currently being hit with higher interest rates.
Data sourced from MyBMT suggests that the average purchase price of a property in Australia is $584,000 with Loan to Value Ratios averaging 78 per cent. An investor looking to purchase a property in this price range will require a deposit of around $128,000. If successful in obtaining a loan, the median interest rates available from a bank or lender that an investor would be looking at is 4.37 per cent.
My BMT also suggests that the average rental return for a property in this price range is $450 per week, or an annual income of $23,400 showing an average yield of 4 per cent.
Why is this relevant?
Data suggests that the median value for property in regional centres has increased slightly to $355,000. There is a large disparity between regional values at $355,000, and the national average of $584,000, suggesting regional markets such as Geelong offer exceptional on-going opportunities.
There are many other factors that highlight why investing in Geelong simply makes sense. Since 2014, Geelong has continued to climb up the ladder in terms of liveability, now the 12th most liveable city in Australia. In this time, for every job we have lost in manufacturing we have gained seven. The fields of strongest job growth are education, finance, health services and retail. Lastly and most importantly, Geelong currently sits around 240,000 residents. It is proposed that Geelong has the current capacity to accommodate anywhere between 185,000 – 190,000 extra people.
The key to capitalising on this predicted growth as a property owner, investor or speculator is to research the markets with the strongest scope for improvement. These may not be the traditional highly demanded suburbs, so it is important to tap in to the knowledge base of someone who understands the current and future markets. The current confidence in the Geelong market place is also supported by the fact that there are many buyers from the major metropolitan market places ie. Sydney and Melbourne who feel that Geelong is still 10 – 15% undervalued.
Written by Nathan Ashton