equity
gain
Property Investment
IPSWICH SPECIAL
- A view from the expert -
What’s Inside
Ipswich – South East QLD
Ipswich Postcode Report
Ensure to claim depreciation deductions for your investment
property
Property Investment via SMSF
Property Investment in SEQ
December 2015 Issue
equity
gain
Property Investment
- A view from the expert -
IPSWICH South-East Queensland
The Ipswich corridor is now well-known as a growth region. Prices rose strongly in the five
years to 2009 (before tapering off), giving the suburbs of Ipswich City the strongest capital
growth averages in the Greater Brisbane region.
Ipswich has shown strong growth in the past but we believe its evolution into a headline
hotspot of national standing will continue well into the future. There remain many suburbs
that are attractively affordable for first-home buyers and investors on a budget.
Big infrastructure developments, including the $2.8 billion upgrade of the Ipswich Motorway
and the $1.5 billion rail link to the Springfield master-planned community, have added to the
area’s appeal.
ECONOMY and AMENITIES
A large portion of the state infrastructure planning has been directed to the south-western
corridor linking central Brisbane to Ipswich. Transport infrastructure projects recently
completed, under way or planned total many billions of dollars.
These projects include upgrades to the rail connection to Ipswich, a rail line to the Springfield
master-planned community, the expansion to the Ipswich Motorway and an upgrade to the
Centenary Highway.
$2.8 billion Ipswich M’way upgrade
$12 billion Springfield community
$1.5 billion Springfield rail link
$1 Billion Citiswich Industrial Park
Orion Shopping Centre
RAAF Base expansions
Large Industrial Estates
Strong Economy
Multiple Jobs Nodes
Affordable Real Estates
Commercial/Retail – The $12 billion master-planned community of Springfield, covers
2,860ha and is projected to be home to 60,000.00 people in 15 years.
Health & Education – Established in 2006, the University of Southern Queensland campus
expects to have 10,000 students by 2016. An “education gateways” complex was announced
in 2012, with $49 million is Federal funding.
In November 2011 work began on a $130 million expansion of Ipswich Hospital. Stage two
was completed in October 2013. A further $41 million was allocated by Queensland Health in
its 2013-14 budgets for additional work on the Ipswich Hospital.
equity
gain
Property Investment
- A view from the expert -
Residential Development –
Major New residential is taking place within Ipswich City, particularly in the area around
Springfield, near Redbank Plains and also in the merging new residential precinct around
Ripley, south of the Ipswich CBD. There are extensive tracts of undeveloped land in both
areas.
Defence –
A $750 million expansion of the Amberley RAAF Base was completed in January 2015. The
seven-building complex at Amberley provides logistical products and services to the navy,
army and air force in South-East Queensland.
Tourism –
Tourism contributes $136 million to the Ipswich economy each year. One of the main
attractions is the Workshops Rail Museum which was named the best heritage and cultural
tourism experience in the state at the 2014 Queensland Tourism Awards.
Communications –
Many eastern suburbs are now connected to NBN. They include Goodna,
Redbank, Redbank Plains, Bellbird Park and parts of Collingwood Park. Construction is under
way at Bundamba, Booval, Coalfalls, Riverview, New Chum, parts of Blackstone, Ipswich, West
Ipswich and Woodend.
IPSWICH PROPERTY PROFILE
“It is particularly appealing to first-home buyers and young families who are looking to establish
themselves in the market”.
Dr Andrew Wilson, senior economist for Australian Property Monitors, has predicted Ipswich
price increases of 5% in 2015. It is also becoming a popular midway-base between Toowoomba
and Brisbane. His prognosis was based on several factors including Ipswich’s affordability, close
proximity to Brisbane and its appeal to investors.
Several Ipswich suburbs have recorded price growth above 5% in the past 12 months, including
five suburbs with double-digit growth. The Ipswich LGA is dominated by couple-with-children
households with an above-average proportion of single-parent households. The average age
of 33 is younger than the Brisbane average and the average income is lower.
Ipswich market has grown strongly at times over the past 10 years. Median house prices in
Greater Ipswich produce double-digit annual growth in the five years to 2008. In 2008 most
of the Ipswich City’s suburbs grew 15%-plus and some managed around 25% to 30%. Growth
rates have tapered off more recently and in some suburbs, median prices fell in 2011 and 2012.
There are few units in the area, with
houses making up 90% of dwellings in
the Ipswich LGA (compared with 75% in
the Brisbane LGA). But this is changing,
with more apartments being added to
the Ipswich dwelling mix. This is a
potential area of opportunity for
investors, given that prices are
affordable and Ipswich units have a
solid track record for growth in rentals.
Rental market remains strong throughout Ipswich City, with vacancy rates generally
between 2% and 2.5%, according to SQM Research. REIQ CEO Antonia Mercorella says
Logan and Ipswich are emerging as the south-east’s rental hotspots as tenants move
further afield from inner-Brisbane in search of more affordable rents.
It was reported that Ipswich had 15 of the most affordable places to rent in the
Brisbane region. It also identified 14 Ipswich suburbs among those with the lowest
median house prices in the Brisbane region. Rental returns are strong, with a dozen
suburbs of Ipswich City producing median yields in the 5.5% to 6.1% range. The Ipswich
region will continue its strong population growth due to the expansion of Springfield
and the upcoming Ripley Valley development (expected to house 120,000 residents on
completion).
The Future of Ipswich City
A Federal Government report has predicted Ipswich will
become the fastest-growing region for population and
jobs in South-East Queensland. The Department of
Infrastructure and Transport report forecasts that 56,000
jobs will be created in Ipswich’s central suburbs by 2006.
The report predicted that most of the new jobs would
come on the back of the manufacturing sector, spurring a
retail and services boom.
The Ipswich region holds 43% of Queensland’s available
industrial land, which allows great potential for future
development. The Ipswich land values had increased
460% in 10 years: from $2.6 billion to $12.12 billion.
The State Government allocated $29 million in the State Budget for the FY2015 to upgrade
roads in the region. This included $17 million to complete works on the Blacksoil Interchange,
$5.5 million allocated to a dangerous intersection onthe Warrego Highway and $4.3 million to
Brisbane Valley Highway upgrades.
New schools are also being built at Deebing Heights, South Redbank Plains and Spring
Mountain (in Springfield Estate).The Deebing Heights primary school is under construction
and set to open for the start of the 2016 school year. It will ultimately accommodate 953
students and 100 staff.
Why Invest in South-East
Queensland in 2016
Sydney Market performed well
over the last 24 months; Australia’s
largest city has focused on strong
capital growth. Though this will be
a good year for New South Wales,
Queensland is projected to
outperform not just NSW but all
other states in Capital growth in
2015. The price growth will total
13% and 12% (5% and 4% in real
terms) over the three years to June
2018, estimates BIS Shrapnel.
QLD median house price is $480,000, compare this to NSW at $810,000 and VIC at
$660,000. Investors have more available options for them and significantly more
buying power at $500,000 price point. Opportunities abound for typical investor
particularly in the South East Queensland hotspots of Brisbane, Gold Coast, Logan,
Ipswich, Toowoomba & the Sunshine Coast. Sydney has relatively weak rental yields
(3.0% on average), while Victoria (2.9%) also weakened as rental prices failed to keep
pace with property prices in 2014.
The bright spot for some years now is Queensland where average rental prices have
remained higher at 4.1% and looking at South East Queensland in isolation, this figure
is likely in excess of 4.8% or some 40% more than key Sydney or Melbourne locations.
Why constrain yourself to a $1 million apartment in Sydney returning $600 per week
with similar capital growth potential as a 4 bedroom house in South East Queensland
for $480,000 returning $500 per week?
The Queensland economy has continued to improve despite a slowdown in the
resources sector... Overall unemployment (5.3%) is less than both NSW (5.8%) and
Victoria (6.0%). The weak Australian dollar has already had a positive impact on
exposed industries such as tourism and also retail which now represents $60 billion
to the Queensland economy.
Queensland Projected Growth
10-30 years from now
The Gold Coast will double its population to 1.2 million people by 2050, and the city
must be willing to make the most of the growth —that’s exactly what demographer
Bernard Salt plans to do. Armed with remarkable new data on the nation’s fastestgrowing city, Mr Salt is embarking on national and international tours to sell the Coast
as the future capital of entrepreneurism, capitalising on our ambitious, energetic
population.
Southeast Queensland needs a dozen mega- developments like Springfield
if it is to cope with the extra 2.2 million people over the next three decades, a respected
urban geographer has told Fairfax Media. Professor Bob Stimson, Emeritus Professor
in Geographical Sciences and Planning at the University of Queensland, told Fairfax
Media there would be 5.5 million living between Noosa and Tweed Heads within three
decades.
Professor Stimson said between "10 and 12" large
masterplanned communities like Springfield or
North Lakes - on Brisbane's northern-edge - would be
needed for the extra 2.2 million people. Greater
Springfield is a privately- owned 2680 hectare master
planned community south of Ipswich that has around
20,000 residents in two suburbs; Springfield and
Springfield Lakes. It started around 1995 and is
planned to have 80,000 residents by 2030.
The Gold Coast will need another 133 apartment
towers to help it cope with its forecast population
boom in the next 20 years.
New research has revealed its population will jump by about 76 per cent by 2036 and many
of those people will need to be housed in high rise apartments. Report author Matt Gross of
the National Property Research Co said the predicted population growth would mean
demand for 156,000 new dwellings to cope with the influx. Property powerhouse John
McGrath says there’s only one place in all of Australia to be buying real estate right now. And
that’s in South-East Queensland.
The founder and CEO of McGrath Estate Agents - who has 64 offices all over Australia – also
think Sydney’s housing boom has almost run its course. McGrath stated, “South-East
Queensland is my top pick of everywhere to buy in Australia at the moment”. Sydney has
experienced 40% growth in the last few years and I hope it’s almost topped out or else we are
all going to have issues. You can live a multi-millionaire’s lifestyle on the Gold Coast without
being a multi-millionaire. You can walk, go for a swim at the beach and go to any number of
restaurants. You can buy a unit or a house on a Gold Coast canal for $700,000 which is the
John McGrath identifies South East Queensland’s property golden triangle to buy now for
capital growth same as people are paying to buy a onebedroom unit in Sydney. And people
are lining up to pay those prices in Sydney but you can get 400sqm on a canal in Queensland,
and some change. There are great opportunities on the Gold Coast, and there’s a lot of
discretionary income.”
BMT Tax Depreciation
QUANTITY SURVEYORS
ENSURE TO CLAIM DEPRECIATION DEDUCTIONS FOR
YOUR INVESTMENT PROPERTY
For most investors, choosing the right property is a big decision. There are many
factors a potential investor will think about prior to making a purchase. Astute
investors will consider the potential rental returns, the property’s location in proximity
to local services, employment drivers and the likelihood of capital growth in the
foreseeable future. Unfortunately, one thing many investors still forget during the
process of purchasing an investment property, is finding out how much depreciation
they will they be able to claim.
According to the Chief Executive Officer of BMT Tax Depreciation, Bradley Beer, 80% of
investors fail to maximise the deductions available from property depreciation.
Property depreciation can be worth thousands of dollars in additional cash flow for the
owner of the property, so it is very important to ensure no deductions are missed.
Investors who purchase both new and older properties can take advantage of
depreciation. In most cases newer properties will incur a greater deduction, as the
investors will be able to claim the cost of the building structure for the entire forty
years of its depreciable life. Depreciation deductions for plant and equipment assets
are not dependent on the properties age, so every investor can benefit.
Before purchasing any investment property, it is always advisable to contact a specialist
Quantity Surveyor such as BMT Tax Depreciation. They can provide an estimate of the
likely deductions available on a perspective purchase, saving you thousands in the long
run.
Real deductions, real returns – new and old properties
The table below outlines real deductions found for our clients:
Investors can estimate the likely deductions using the BMT Tax Depreciation Calculator
online or via the free app which can be downloaded for iPhone or Android phones. If
you would like a free estimate of the likely deductions for a property or further
information, please contact your local BMT Tax Depreciation office today on
1300 728 726.
Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Chief Executive Officer of BMT Tax Depreciation.Please contact 1300 728 726 or visit
www.bmtqs.com.au for an Australia-wide service.
Property investment
via self-managed super
Key SMSF Borrowing Rules:
Borrowings must be under a limited recourse
loan (ie. there is no recourse for the borrowing
against other assets of the fund).
Borrowings can only be used to purchase one
single property.
Borrowings cannot be used to improve or
renovate a property.
Residential property cannot be purchased
from or rented to a related party.
Why invest in property via self-managed super
Self-managed super has always been a great vehicle for those
people who want to control and manage their retirement savings.
It was made even better in Sept 2007 when the Superannuation
Industry (Supervision) Act 1993 (SIS Act) was changed to allow
Self-Managed Super Funds (SMSFs) to borrow to invest in property.
Under current legislation, one of the big advantages of property
investment via a SMSF is when the property is sold it attracts
significantly lower capital gains tax, and there is no capital gains tax
if you are in pension phase.
A specific trust structure is required to borrow and hold
property within a SMSF:
Commercial property must be “Business Real
Property” as defined by the SIS Act.
Property cannot be owned by the SMSF, it
must be owned by a Bare Trust with a
separate custodian.
Borrowing terms:
For residential property, lenders with
generally only loan up to 70-80% of the
property value.Commercial property is
lower at around 60%.
Lenders require personal guarantees from
SMSF members.
There are usually higher loan
establishment costs (to review trust
deeds) and higher ongoing interest rates.
How we can help
We specialise in property investment via self-managed
super. Our network of professionals can assist and
guide you through every step of the process including:
Setting up your SMSF
Rolling over your existing super into your SMSF
Creating a suitable investment strategy
Identifying a range of suitable investment properties
Setting up the necessary trust structure to hold the
property
Arranging the finance to buy the property Assisting with all other related matters
including such as ongoing accounting and audits, or life insurance within your SMSF.
This information is general in nature and anyone intending to apply this information to practical circumstances should first seek
professional advice.We accept no responsibility for persons acting on this advice without consulting us first. This information is issued as a
helpful guide to clients and for their private information.