The Australian state attracting savvy investors is not where you think
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The Australian state attracting savvy investors is not where you think

Property investors are targeting cheaper markets for capital growth and positive gearing

By Bronwyn Allen
Sat, Jun 15, 2024 10:13amGrey Clock 3 min

More property investors are seeking to buy in cheaper capital city markets amid high interest rates and inflationary pressures on holding costs such as insurance, repairs, utilities and strata levies. This is a key finding of Australian Property Investor (API) magazine’s Q1 2024 Sentiment Report, which canvassed the views of more than 600 Australians over the first three weeks of April.

The report also found that just three states are dominating investors’ interest, with 75 percent of survey respondents squarely focused on Queensland, Western Australia and New South Wales, which they say offer the best prospects for capital growth. Queensland is the favoured market, followed by Western Australia, which is soaring in popularity. Interest in Western Australia has doubled with 25 percent of respondents identifying it as the best growth market in 2024.

“Perth is not showing any signs of a slowdown, with population growth, housing supply shortages and high rents driving the capital growth, said Julie Kelley, Global Sales and Marketing Manager ataussieproperty.com.

The east coast investor contingent is also hungrily purchasing property at rates we haven’t seen since the mining boom of the 2000s. Buyers recognise Perth is extremely affordable, offers high rental yields, sub-1 percent vacancy rates, has a strong economy, and the fastest housing value growth nationally.”

While Queensland and Western Australia offer relative affordability, investors remain interested in Australia’s most expensive market, New South Wales. It appears Sydney’s ongoing price growth is attracting wealthier investors who have the capacity to pay the highest median house and apartment prices in the country.

Interest rates, access to finance, affordability and rental yields are the four key elements influencing investors decisions this year, and likely contributing to the popularity of Queensland and Western Australia. With rents racing higher around the country, there is an opportunity in cheaper markets to purchase properties that are not only rising in value but are positively geared. This means the landlord receives rental income exceeding the costs of holding the property.

Meantime, it seems Victoria has lost its appeal among investors due to weak capital growth over the past year and a perception that government policy is weighted against landlords. Victoria has introduced higher land taxes, enhanced tenants rights, and is now considering new minimum energy efficiency standards which may require costly upgrades to insulation and appliances.

Mike Mortlock, Managing Director of MCG Quantity Surveyors, said based on investment loan data, Victoria was likely to lose more than a net 5,000 rental properties (or 1 percent of the state’s rental stock) over the next 12 months as investors sell up and new buyers look elsewhere.

“Landlords are increasingly cautious about entering the Victorian market,” Mr Mortlock said. It’s not just about those who are leaving. Many potential investors are now avoiding Victoria altogether, seeking opportunities in other states with more favourable conditions.”

Despite high interest rates and inflation making investment holding costs such as insurance, strata levies and repairs higher, more than one in five survey respondents intend to buy an investment property over the next 12 months. This was the most popular investment goal at 22 percent, followed by positioning for retirement at 18 percent, reducing loan debts at 14 percent and benefitting from capital growth and passive income at 8 percent.

High interest rates remain the primary concern of investors. More than half of respondents said a single 25-basis point rate rise would alter their buying and selling intentions.

API says affordability constraints have driven more people to the unit market than ever before. However, 39 percent of survey respondents say they are targeting houses for investments, with 23 percent targeting units and 18 percent seeking to buy a townhouse. Investors are also preferring capital cities to regional areas, even though the regions are outperforming over the year to date.

It appears investors are thinking more strategically over the long term, given their preference for houses in capital cities. Houses typically record higher capital growth than apartments over the long term because of their land value, and capital cities tend to outperform over the long term, too.

More than eight in 10 respondents believe property prices overall will continue to increase. CoreLogic Research Director Tim Lawless says more price rises in most markets are likely due to a lack of stock for sale to meet the strong demand.

“Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year,” he said. “Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices.”



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Though golf courses offer long acres of lush grass, tall trees and rippling ponds, they’re not the most popular venues among environmentalists. Citing their effect on wildlife and the potential impact on a venue’s water table, those worried about conservation and sustainability find much to dislike on any 18-hole tract.

For more than a decade, 1995 U.S. Open champion Corey Pavin has worked to improve golf’s relationships with the world hosting it. Known as one of the more amiable and self-effacing players on the PGA Tour (and, currently, the Champions Tour), the 64-year-old native of Southern California remains one of the leading proponents of sustainability in golf.

During preparations to play the 2024 Senior PGA Championship at Michigan’s Harbor Shores—a course built on a reclaimed industrial dumping ground in Benton Harbor—Pavin explored what brought him into the sustainability movement and why he continues to push more environmentally responsible golf courses.

Penta : You claimed a Major Championship, won 15 times on the PGA Tour and captained a Ryder Cup team during four decades of professional golf. How did you find an interest in sustainability along the way?

Corey Pavin: I grew up in California, so recycling was always a big deal there before the movement expanded across the United States and around the world. So, I came into golf already aware of the need to recycle and look after the environment.

What brought you into a leadership position working toward environmental sustainability in golf?

I do most of this work due to my association with Dow Chemical. I’ve been with them for 15 years now, and they started a big program for sustainability and recycling. They’ve done a lot to make me aware of what needs to be done and helped me to reduce my own carbon footprint. … I also worked with the nonprofit GEO Foundation for Sustainable Golf, which is dedicated to making golf and the golf community ecologically friendly.

Have you found there to be tension between the sport of golf and the environmentalist movement?

I knew growing up the environmental effects of golf and golf courses was a huge concern and a cause of a lot of conversation. There were debates over the chemicals used on a course and how they can affect groundwater and other elements.

I think a lot of strides are being made with what materials get used on a golf course with an eye toward what effect they could have on the environment. There’s been a lot of work in the last two decades to make courses less harmful.

What advancements have golf operations made in course design, building, and management?

First of all, there’s been a push for years now with course designers to avoid bringing in any outside species such as grass or other plants that could change the ecology of an area. You’re seeing so many more courses now that use only native elements. There’s also been a lot of strides made on how courses are maintained, what grasses they use, and how the greens crews treat the grasses.

Is it difficult to balance environmental factors with efforts to provide a quality golf course?

You want to design and build a quality course and keep it in good shape, but we have the means now to eliminate negative environmental impact from a golf course being built or operating. For example, concepts such as using recycled, non-potable water for the grass or choosing salt-resistant grasses that can be fed with brackish seawater keep fresh water preserved and entirely off the course.

Beyond water usage, what positive effects can a modern golf course have on the environment?

You also have to consider the adjacent land near a course. The presence of golf near a forest or marshland can lead to an effort to preserve that space that wasn’t a priority earlier.

Are you seeing efforts to update or reimagine golf courses built before the environmental movement came to the fore?

Yes, there are so many modification ideas a golf course can use to limit or reduce the amount of grass that needs to be watered. I’m seeing courses add natural waste areas of plants that require very little water or more sandy areas that require no water at all. Over the last decade, I’ve seen courses all around the world shifting to those designs. Beyond saving water, those ideas also reduce the amount of necessary maintenance and save energy.

Way back when, crews used to just bulldoze everything and transform an area into a course without giving thought of what that could do. Once it became clear that we could build golf courses that can involve more of the natural habitat and disturb much less of the natural environment that was already in place, I think it became obvious there was no reason to design or build courses any other way.

As a player, does it just make you happy seeing these sustainable changes?

I love seeing it, not just because I’m aware of how important clean water is, but because I’ve always liked golf courses that have a natural look to them.

The 2024 Senior PGA Championship was at Harbor Shores this year—a course developed on wetlands reclaimed from an industrial waste site. Could we see golf actually restoring the environment in cases like we find in Benton Harbor, Mich.?

I think that’s a great example of responsible course building and management. Initially, [Harbor Shores] was more a case of recycling and reclamation, but it operates now within those wetlands as a sustainable model. We can see more cases of dump sites becoming courses because you’re dealing with land that can’t really be used for much else. Once the ground is cleaned and treated, I can’t think of any better place to build a golf course because just the act of creating the venue cleans that garbage from the land.

We can now make golf courses that look like they were always supposed to be there from the beginning.

This interview has been edited for length and clarity.

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This stylish family home combines a classic palette and finishes with a flexible floorplan

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