With the average city house price now sitting at around a half a million dollars where are Australian house prices headed in the short to medium term?

All states across Australia have seemingly weathered the storm of financial devastation that has swept much of the rest of the world including America and Europe. So why is it that our property prices have held up so well and even risen in many areas (particularly in Melbourne and Sydney) over the last few years? Sure there has been some losses particularly in the above $1 million dollar price range, but this has more been a direct result of business failures and over extended finance commitments during the times when banks were throwing money at any property deal in the past.

However middle range well located properties have held up very well. I have always said that you are better off investing in 2 or 3 middle of the road older properties than 1 expensive executive residence for he following reasons:

• When times are tough average people still require average quality, well located properties
• and the rents on such properties more often pay a larger proportion of outgoings (i.e loan repayments and rates bills)

So where are Australian house prices headed?

I believe that in the short term investors will get the best returns from well located properties that are in cities which are seemingly undervalued and more affordable, but with strong growth prospects through employment and planned infrastructure improvements. For these reasons South Australia and Queensland are my two predictions for the largest percentage gains over the coming year.

I also believe that any houses, especially those on large blocks near hospitals across Australia will do exceptionally well over the next 5 years as local councils rezone these well located properties to allow for buildings suited towards aged care.

Australia has many fundamentals to support future sustained growth across the board in years to come and I believe that we will see average Australian house  prices in the vicinity of 1 million dollars by 2015.

In an Australian first, the draft ‘blueprints’ for South East Queensland’s three new master-planned communities have been released.

Deputy Premier and Minister for Local Government Paul Lucas was today joined by Ipswich Mayor Paul Pisasale and local MPs Rachel Nolan and Wayne Wendt for the unprecedented simultaneous release of the proposed master plans for Yarrabilba, Ripley Valley and Greater Flagstone Urban Development Areas (UDAs).

“This is the first time a community building program of this size and scale has been undertaken in Australia and it coincides with the one year anniversary of our government’s Growth Management Summit,” Mr Lucas said.

“Today marks the start of delivering the necessary planning framework to progress development of these three key areas as model communities.

“Over the next three to four decades, Yarrabilba, Ripley Valley and Greater Flagstone will provide more than 130,000 homes for around 330,000 residents.

“These developments will deliver affordable and sustainable housing for first home buyers and key workers such as nurses, teachers and police.

“A percentage of homes in each UDA will be sold at or below the median house price for that region.”

Member for Ipswich Rachel Nolan said employment was a major focus of the planning for the three new communities.

“This is about creating vibrant communities where people can live, work and play,” Ms Nolan said.

“There are already substantial existing and planned employment generators for the western and southern growth corridors, including-Swanbank, Bremer, Ipswich Central, Logan Central, Yatala and the future enterprise precincts at Bromelton State Development Area and North Maclean.

“In total these employment areas and the employment generated within the UDAs are projected to create around 280,000 jobs in their lifetime.

“With so many new jobs coming online this is another great incentive for people to move to and live in a booming region like Ipswich.

“It will also ensure the sons and daughters of local residents have jobs for the future and can stay living in the area where they grew up close to their families.”

Member for Ipswich West Wayne Wendt said the flow on effects of these three new communities would benefit the whole Ipswich region.

“Not only are these new communities about improving housing availability and affordability but they’re also job generators,” Mr Wendt said.

“So far six development applications in early release areas for 1,400 lots have been submitted for approval across the three UDAs.

“Approval has already been given to for up to 132 new homes in Flagstone as part of the MTAA’s residential development, and construction is expected to start mid next month and pending approval, early civil works could be underway by the end of this year on most of these sites.

“This is great news for the local building and construction industry.”
Member for Bundamba Jo-Ann Miller invited the public to have their say on the draft ‘blueprints’ for SEQ’s three new master-planned communities.

“The public has 30 business days to make a submission on the proposed development schemes and I would urge anyone interested to do so,” Ms Miller said.

“It’s very important that these model communities are developed with the needs and the input of the local community in mind and that’s why this consultation period is happening.

“While development is necessary to manage the growth in SEQ, the government is also working to protect the environmental values in the area.

“The ULDA development schemes will ensure that development in the three areas will protect the ecological values and natural systems and maintain and enhance significant vegetation, including the retention of significant vegetation.”

Ipswich Mayor Paul Pisasale welcomed the new communities which combined represent almost 10 per cent of the project dwelling demand needed in SEQ by 2031.

“It is pleasing to see the extensive work that council and its key stakeholders had already done for the masterplanning of Ripley Valley have been incorporated in the ULDAs development scheme,” Mr Pisasale said.

“The Ipswich region is a growth region and a destination of choice for many people moving from interstate or even within Queensland.

“The release of the proposed development schemes is an important step to meeting the future housing needs of the western corridor.

“An infrastructure funding framework has also been devised to ensure that these areas can be serviced by appropriate infrastructure as the communities grow and major access roads are already being built.”
Logan Mayor Pam Parker said today’s release was good news for Logan residents looking to buy their own home.

“I want the people of Logan to be able to be able to realise the dream of owning their own home while still living close to family and friends,” Ms Parker said.

“Logan is a growing region and these new communities will take pressure off by increasing housing availability and affordability and ensuring our key workers can live close to where they work and play.

“These new communities themselves will be jobs generators as a result of all the homes that need to be built but they will also generate long term employment opportunities in their town centres and industrial areas.”

The three areas were declared as UDAs on 8 October 2010 as an outcome of the Queensland Growth Management Summit in March 2010 and in response to the growth needs identified in the South East Queensland Regional Plan 2009 – 2031.

Responsibility for planning and development within the UDAs lies with the Queensland Government’s Urban Land Development Authority (ULDA).
The declarations of the UDAs in October provided for ‘early release’ precincts that allowed for immediate lodgement of development applications so that development could start prior to the finalising of the development schemes, getting houses to market quickly.

These early release areas were chosen on the basis that they were consistent with the local councils’ previous consultation process or approved structure plans.

ULDA Chief Executive Officer Paul Eagles said a focussed consultation exercise had been undertaken in the run-up to the release of the draft development schemes.

“We have also held a number of meetings with state agencies and other stakeholders regarding these new master-planned communities,” Mr Eagles said.

“Workshops have been held with town planners, social planners, parks and reserves officers and specialist engineers from Ipswich and Logan City Councils.

“However, now broader community consultation will take place following the release of these draft documents.

“This consultation program will include community information sessions at various venues in Yarrabilba, Ripley Valley and Flagstone, plus website updates, newsletter distributions and public advertising.”

The draft schemes are available to download from the ULDA’s website at: www.ulda.qld.gov.au

Latest figures show that Australian house prices are again on their way up, if this trend continues the average house price has only fallen by 3 per cent compared to 30 per cent in the US. How can Australian residential property prices hold up so well in this massive global downturn? It all comes back to the most significant property price driver, which is the law of supply and demand. Put simply, America has more dwellings than needed and Australia has not built enough.

Well located properties are currently being snapped up by first home buyers who have suddenly found that owning a home is now often  cheaper than renting. First home buyers are the ones to watch as they affect the market more than any other group. In a typical property cycle upswing first home buyers will hit desirable suburbs by purchasing the affordable properties within these areas. Investors will then follow, then once that area becomes seemingly less affordable due to competition the first home buyers turn to the next affordable surburb,  and on it goes.  The cycle always starts close to capital cities and then ripples out.

So if we are  now at the bottom of the next upswing, it makes sense to start buying property in well located areas before the herd arrive. Once they do, move to the next well located suburb you can find, always staying ahead of the first home buyers.  I do believe that we will see double digit growth again by the end of this year. If you wait until property becomes the flavor of the month again  you will most likely miss the boat as many did in 2003. Stick to the basics by purchasing the best possible located properties you can at the right price and watch your asset grow.

With interest rates falling to the lowest levels that many of us have ever seen, we are now presented with the opportunity to buy well located  capital growth investment properties that will cost you next to nothing to hold. Some will even put weekly cash-flow in your pocket from day one.

To find cash-flow positive investment properties in last six years, you would have to go a fair way inland to areas of low population, no jobs and little infrastructure. Not the best mix of attributes to base a secure property portfolio on. But in recent month the tables have started to turn. Lack of supply in sort after areas with great fundamentals, such as schools, employment and transport has increased rents significantly.

I have just fixed a few of my property loans with one of the big four banks  at 4.99% for 3 years, and in coming months we may see other lenders offering similar rates or even lower. I am finding properties on the market now in areas with  great fundamentals between Brisbane and the Gold Coast for sale that achieve 6%+ rental yields. With figures like these the rent achieved could cover the mortgage, rates, and outgoings, leaving you with a property that takes care of itself.

  Throw in the mix some creative strategies, like a quick cosmetic renovation to boost the rent and property value even more and then just count the dollars coming in week after week. Ah, isn’t residual income sweet.