Planning legislation is triggering shortage of NSW land

Wednesday 04 Mar 2015

GUEST OBSERVATION

Although 'fad' and 'trend' are considered synonyms, in practice they have very different meanings.

A fad implies something fleeting and of little value that will pass soon without importance.

Trends, however, while they might be equally temporary, can provide us with valuable insight about where something is heading.

It's therefore worthwhile for any Australian property investor to have a closer look at some of the trends and hot topics which are defining the current market.

We found one of the most noticeable trends is the amount of investment activity in real estate at the moment.

Investors are becoming key drivers of growth and purchasers of new stock, which was the domain of first home buyers.

Investors have a natural advantage over first time buyers, due to their access to a greater amount of equity and income, and the fact that the expenses involved are tax deductible.

As a result, virgin buyers are finding it increasingly hard to compete with them.

A segment of the investor market which is becoming particularly more prominent is that of self-managed super fund (SMSF) investors.

The number of SMSFs in Australia is growing - 29% over the last five years, according to the Australian Taxation Office - and with it are the number of SMSF holders considering property as an investment.

Part of the appeal lies in the fact that investors can leverage their superannuation monies to fund themselves through retirement without relying solely on accumulation-based savings.

Also additional purchases are becoming increasingly common.

It's becoming almost a sport.

While buyers were previously happy to buy a single investment property and stick with it, more and more people are thinking in terms of multiple properties or portfolios.

When it comes to the most popular topics in the world of investment over the last three months, one of these was the record demand for high yield assets like dual income properties, duplexes or high rent properties.

While buyers were desperately looking for properties with yields of 7% or upwards, he warned that the search may not be so easy.

That market has been quite exploited, so it's really down to who you know as opposed to tripping over them now.

Land needed for a dual-income property - 450 square metres or greater in New South Wales - is getting tighter.

Because of a shortage of land, most of the lots released fall short of this number and unfortunately, legislation hasn't changed to fit this new state of affairs.

It seems that while investors are finding it ever more advantageous to enter the property market, getting the ideal investment property is still no piece of cake.

 

 

http://www.propertyobserver.com.au/forward-planning/investment-strategy/market-trends/40735-planning-legislation-is-triggering-shortage-of-nsw-land-sam-khalil.html

- Strathfield Partners