What is a Depreciation Schedule?

What is a depreciation schedule?

Property depreciation is a legal tax deduction related to the ‘wear and tear’ of an investment property over time. A tax depreciation schedule outlines the deductions you may be entitled to claim each year of ownership on the Building Allowance (the structure itself including bricks, concrete, etc.) and, if eligible, on the Plant and Equipment items (internal items like ovens, carpets, blinds, etc).  

As with any tax deduction, claiming property depreciation reduces your taxable income. That means more money in your pocket to reinvest or to spend on yourself or on your family.

A depreciation schedule from Washington Brown is a fully-comprehensive, ATO-compliant report that helps you pay less in tax. The amount the depreciation schedule says you can claim effectively reduces your taxable income because it’s taking into account how much it costs you to own and maintain the property.

While you may be used to claiming on such items as council rates or property management fees where you have paid money towards an item or service, depreciation is a “non-cash deduction.” This is because it’s the ONLY deduction that you don’t have to pay for on an ongoing basis – its already ‘built’ into the purchase price of the property.

If you’ve purchased an investment property, request a free quote for a fully comprehensive, ATO-compliant depreciation schedule today and save.

The Ultimate Auction Guide to Getting Lower Prices

Ultimate Auction Guide

You Could Bag a Great Investment Property in Australia at Auction

Trying to buy an investment property in Australia at an auction is something of a mixed bag. On one hand, you have the chance to snap up a bargain. A lot of sellers use auctions as their last resort. As a result, they may ask for less than the value of their property. As long as you don’t get caught up in the heat of the moment, you may get a great investment property in Australia at auction.

However, you also have to consider the other possibility. Auctions are emotional places. If you get caught up in a bidding war, you could end up spending more than you intended. That makes it much more difficult to generate a good return on your investment property in Australia.

So how do you get the most out of your visit to a property auction? We have a few tips that should help you.

Tip #1 – Prepare Your Finances

Did you know that you have to pay the deposit for any properties you win on the same day as the auction? There’s no cooling down period, which means you need to be prepared financially.

This means you need to prepare yourself financially for the auction. Firstly, make sure you have a budget, and enough cash available to pay the deposit relevant to that Depreciation Calculatorbudget.

You also need to consider how you’ll buy the investment property in Australia. If you’re buying using a trust or self-managed superannuation fund (SMSF), you need to make sure it’s organised for the purchase.

Finally, lodge a home loan application and get it through to the pre-approval stage. This means the lender is confident that they’ll approve your loan, barring a couple of extra checks. Having pre-approval means you can feel more confident in your bidding. It also places you in a good position to negotiate if the property doesn’t meet its reserve price, and you’re the highest bidder. The seller will see that you’re serious about buying if you have pre-approval, which may help you pull the price down.

Tip #2 – Look the Part

Impressions play a bigger role than you might realise at an auction. There are going to be all sorts of people there, so you need to play to the crowd a little bit.

Make sure you look the part. Ideally, you should arrive in business wear, so you look like the investment professional that you are. Bring a small notebook to jot things down. You may not need to write anything important, but it’s a little thing that could make inexperienced bidders wary of you.

The key is that you need to look confident, so people think you’re an experienced auction-goer. If you look like you have money to burn, a lot of people will refuse to bid against you. This gives you a distinct advantage, so you may secure an investment property in Australia for less than it’s worth.

Tip #3 – Bid Early

Depreciation Quote ScheduleMany people try to lodge late bids when buying an investment property in Australia at auction. This tactic seems to make sense. You wait until the last second before making your bid. You rattle the other bidder, which lends you an advantage.

That tactic can work, but it has some risks attached. If you leave it too late, you may miss your bid. The auctioneer will bang the gavel, and you’ve lost out on a great property.

It’s much safer to bid early. This puts you in the running straight away, plus the auctioneer will start paying attention to you. As a result, you may get a touch more time to make that last bid count. Furthermore, jumping straight in with a strong bid can unnerve your opposition. This can reduce the bidding pool, so you face less competition.

Tip #4 – Don’t be Afraid to Walk Away

Walking away from a property you want is one of the hardest things you may have to do. However, it’s sometimes necessary.

Remember that you have a budget, and that every property you buy has to offer a good return on your investment. The bidding may get heated, and there may be people who can top every bid you make. It happens. You just have to make sure to react in the right way.

Stay calm and walk away if it looks like you’re going to spend more than you’re comfortable with. This protects you financially and ensures you have more money left over for any other properties you may be interested in.

Conclusion

You can make a lot of great purchases at property auctions. However, you need to avoid getting caught up in the emotion of the event.

If you follow these tips, you’re sure to bag some bargains eventually.

Personalised Investment Strategies

Investment strategies

Having invested in several properties myself, I always believe you need sound and smart strategies. And I’m not just talking about good capital growth and high rental yields. It’s also about improving your cash flow as an investor.

Every property investor has his or her own strategy. Some investors prefer negatively geared properties, while others look to positively gear for ongoing income. Many buy for the short term, others see property as a long-term asset.

Claiming depreciation

Whatever the strategy, the first thing an investor should do is ensure they claim depreciation on the property. Depreciation helps investors by reducing their taxable income, therefore helping
their cash flow. Based upon depreciation and other rental property deductions, investors can vary the amount of tax they pay during the year if they apply to the ATO to do so.

One easy way to work out whether you can claim depreciation, is to simply visit the Washington Brown website and use the free depreciation calculator. By entering simple data about a property, an investor can quickly determine if they should be claiming depreciation or not.

Depreciation CalculatorMany investors think their property is too old to claim depreciation deductions and in most cases this is simply not the case. It is possible to backdate a claim if an investor has forgotten to claim depreciation. However, only only two previously lodged tax returns can be amended in this case.

If you have a medium-term strategy, it is advisable to understand what’s in the depreciation schedule for the property. As time goes on, and you update or repair part of your property, you should ensure that you claim any ‘balancing adjustment’ you are entitled to. For example, if you purchase a unit for $300,000 and the carpet is valued at $3,500. Let’s say, seven years later the carpet was replaced but within the depreciation schedule the carpet still has $1,000 left to run. You can claim that $1,000 in full the moment the carpet is replaced. And, of course, you can start claiming the value of the new carpet as well.

Work out how much you save using our free property depreciation calculator or make it happen and get an obligation free quote for a depreciation schedule now.

This blog is an extract from CLAIM IT! – grab your copy now!

Back-to-basics on Property Depreciation

How does investment property depreciation work?

Holiday Home Depreciation AirBnb

What is depreciation?

Let’s start right at the beginning. Depreciation is basically a tax deduction available to property investors. Your investment Depreciation Quote Scheduleproperty earns an income (in the form of rent from your tenants). So, as with any activity that produces an income, there are various tax deductions available to you.

Normally these tax deductions are things you’ve spent money on, such as property management fees, council rates and other miscellaneous items. You pay an amount of money, you receive a tax invoice and receipt, and you use that piece of paper to claim a tax deduction when tax time rolls around.

Property depreciation

However, property depreciation is what the tax office calls a ‘non-cash deduction’. This means you don’t physically fork out cash in order to claim a deduction. I have also heard it referred to as ‘on paper deductions’ for the same reason. Depreciation allows you to claim a tax deduction for the wear and tear on an investment property over time.

This tax deduction recognises the fact that the building itself will become worn out over time and eventually need to be replaced. This also includes its plant and equipment; for example, air-conditioners, blinds, and carpet, etc. It doesn’t matter that these items were paid for by someone else – a developer or previous owner – you, the current owner, can continue to claim deductions as they continue to depreciate in value.

(Note: Deductions for these plant and equipment items may only apply if you bought the property prior to May 9, 2017 – Read about the Budget changes here).

As with any tax deduction, depreciation basically reduces your taxable income. So if your income was $100,000 for the year, and you claim $10,000 worth of deductions, you only pay tax on $90,000. The table below shows you the difference depreciation can make to monthly returns from your property investment.

Of course, these calculations are for the purposes of illustration only. The exact amounts depend on the age of your property and various other variables. This is all covered in my book, CLAIM IT!

Depreciation Calculator

Work out how much you save using our free property depreciation calculator or make it happen and get an obligation free quote for a depreciation schedule now.

This blog is an extract from CLAIM IT! – grab your copy now!

When do you need a Quantity Surveyor?

Unless your property is very unusual, there would generally be no reason to speak to a quantity surveyor before purchasing a property.

While you’re hunting for potential investments, you can work out the estimated depreciation for a property by using Washington Brown’s free online depreciation calculator.

Once you have committed to purchasing the property, it is time to start thinking about contacting a quantity surveyor.

The ideal time for a QS to do an inspection is straight after settlement and just prior to the tenant moving in. This is to make sure that we don’t disturb the tenant and we also get to see exactly what you have purchased and the condition that it is in.

Why is that important?

quantity surveyor

Case Study

Jenny Jones owned a unit in a complex at Hastings Parade, North Bondi. This property had substantial damage to the structure due to the surrounding elements (rain, wind, ocean spray, etc.). To fix the problem, the strata body raised a special levy of $80,000 from each of the six unit-holders and engaged a builder to carry out the work.

Once the building work was completed the strata manager engaged Washington Brown to differentiate between work that was capital in nature and work that was considered to be repairs.

The Result

In general, special levies raised are not deductible, but Washington Brown was able to break down the construction costs into repairs and capital works (i.e. eligible for building allowance depreciation). In the end, we estimated approximately $57,000 of the client’s $80,000 expenditure, or close to 80% of the overall spend, could be Depreciation Quote Scheduleconsidered as an immediate deduction.

The client’s accountant thought this figure was too high and asked for a private ruling from the ATO.

The ATO ruling read as follows:

“The Tax Commissioner accepts the classification of the work carried out as per the report prepared by Washington Brown”.

I can proudly say that the $57,350 deduction was approved in full, as opposed to claiming the work over 40 years at 2.5%.

The Australian Institute of Quantity Surveyor’s (AIQS) website www.aiqs.com.au gives a detailed description of the major works and services of quantity surveyors. The list is quite detailed and informative, so you may find this helpful when you’re considering whether to consult a quantity surveyor.

Work out how much you save using our free property depreciation calculator or make it happen and get a free quote for a depreciation schedule now.

This blog is an extract from CLAIM IT! – grab your copy now!

Why do I need a Quantity Surveyor?

quantity surveyorYes, builders are good at building. However, that doesn’t necessarily make them good at maximising the depreciation allowances you, the
developer or investor, are entitled to.

That’s why if you have contracted a builder to construct your investment property, it definitely pays to have a quantity surveyor prepare a depreciation report for you.

In my two decades of being a quantity surveyor, I’ve never seen a builder’s depreciation schedule that I could not improve upon and thus, significantly increase the claim for the investor.

Some of the common mistakes I see in builder-prepared depreciation schedules are:

The last mistake is by far the worst, as this can cost you considerably.

(NOTE: Deductions for these plant and equipment items may only apply if you bought the property prior to May 9, 2017 – Read about the Budget changes here).

Let me give you an example;

Depreciation Quote ScheduleYou see, when a builder buys an oven for $800, that’s not what you pay for it. By the time the investor pays for this item, a range of other fees would have been included,
such as the architect’s design, transportation, installation and supervision. Next thing you know the real cost of this oven to you is $1,100, and it’s the real cost we’re after, not what the builder paid.

Now, that extra $300 on the oven depreciates at 20% per annum, rather than at the 2.5% building allowance rate. This means you can claim the depreciation much faster.

So at the end of the day, let builders build and let quantity surveyors save you money.

Work out how much you save using our free property depreciation calculator or make it happen and get a free quote for a depreciation schedule now.

This blog is an extract from CLAIM IT! – grab your copy now!

Grow Your Investment Portfolio

Stuck on your first investment property? Here’s how to grow your investment portfolio:

 

A FEW months ago a news story was circulating about a former pizza deliveryman who reportedly semi-retired at the age of 28 after accumulating a 13-strong property portfolio, giving him sufficient rental income to fund his lifestyle.

As with any news story, the average punter had plenty to say in the ‘comments’ section, and most of it came from naysayers who just couldn’t believe it was possible.

Irrespective of the particulars of this young man’s situation, there seems to be a common belief that property investing is too hard or even ‘impossible’; that it doesn’t reap the financial rewards that many claim it does.

The fact is that it’s not easy to invest in property and grow a portfolio; many people in fact never get past their first property, with Australian Taxation Office figures showing only 8% of Australians own an investment property, and of those just over 72% have only one.

While it’s not easy to grow a portfolio, it certainly is possible. You just have to know how to overcome the potential barriers, and as always, knowledge and research are crucial.

Housing Market

Do you need more than one investment property?

Investing in property is now more important than ever, with increasing uncertainty over traditional income safeguards, such as superannuation and government pensions.

Super is of course subject to fluctuations and with global volatility this is no longer guaranteed – a lesson we learnt from the global financial crisis. Depreciation Calculator

We don’t even know if the Age Pension will exist in years to come; at the very least it could become harder to access due to increasing demand from Australia’s ageing population.

Even if you do end up on the pension, at a maximum basic rate of less than $400 per week for a single person proves difficult to live the lifestyle you want. It doesn’t allow for luxuries.

Many Australians seem to recognise the need to invest for their future financial security, and bricks and mortar is seen as one of the safest ways to do that, but they don’t know how to go about it, or how many properties they need.

Unfortunately many investors do stop at one property, and often this is because they’ve had a bad experience, such as a nightmare tenant, or the property hasn’t gone up in value and caused them financial stress.

Is there a need to own more than one property? The answer is yes, is you want to be self-funded in retirement and enjoy life’s little luxuries.

There’s no set rules for how many properties you should own, or what the value or your portfolio should be, since it will depend upon your individual circumstances and how much income you want in retirement.

Often investors want an annual income of $100,000-plus, which will usually require a debt-free multi-million dollar property portfolio.

Housing Market

What are the barriers?

Fear is obviously a big factor in preventing people from moving forward and building a sizable property portfolio.

We know that many people have a bad – or less than impressive – experience with their first property which puts them off from investing further. They either sell that one property or hold onto it without buying more.

Theoretically there’s plenty to be scared of; you’re investing a huge sum, so what if you get it wrong?

Apart from being scared, some investors simply don’t know how to get past their first property. In particular, this relates to the financial side of things – how do you continue to get the finances to fund your purchases?

Some also think they’re too old to invest, or perhaps they even think they’re too young.

Finances

How to get past your first property

So we know it’s important to invest in property to fund our lifestyle in retirement, but how do you build a substantial portfolio, with more than just one property?

The key to overcoming your fears is to eliminate the uncertainty. How do you do that? Get educated. Depreciation Quote Schedule

Knowledge is the key – plan ahead and know:

If you buy the wrong property you will – at the very least – be delayed in progressing your portfolio, and at the worst you’ll be stuck forever.

If you buy the right property in the right location, that is in demand and grows in value, you’ll be able to access the equity to buy again.

You can buy the right investment property by doing research and thorough due diligence to find a property that has all the right fundamentals, and provides both capital growth and good rental returns.

If you do buy a property that performs under your expectations, either sell it (after carefully considering its future potential) or hang in there – property is a long-term proposition so time in the market, rather than timing the market, is key.

History has shown property rises in value over time, and it’s extremely unlikely you’ll get 20 years down the track and look back and wish you had sold.

Have you ever heard someone say ‘Gee, I wish I sold that property decades ago’? More often that not they’ll lament selling too early as the market continues to rise.

As well as planning ahead, having the right knowledge and doing your research, another key factor in building your portfolio will be surrounding yourself with like-minded people who will support you in your endeavours, rather than naysayers who will make you want to throw in the towel.

Is Housing in Australia Affordable?

Ahhhhhhhh, housing affordability. That old chestnut. It’s a topic that’s been hotly debated a million times over! And will no doubt continue to be for many years to come.

The general consensus is that property in Australia is unaffordable. The results of a recent survey seemed to confirm this, with the proportion of adults who own their own home falling from 57% in 2002 to 51.7% in 2014.

Housing in Australia Affordable

The annual Household, Income and Labour Dynamics in Australia survey, authored by Professor Roger Wilkins from the University of Melbourne, also found that the rate of home ownership is expected to keep falling, and may drop below 50 per cent as early as next year.

So, is home ownership falling because Australians simply can’t afford to buy properties due to hugely elevated prices, or is it due to other factors?

Property prices have significantly grown

It’s certainly true that property prices have significantly risen in Australia over recent decades.

The median dwelling price for the combined capital cities is currently sitting over $500,000, according to CoreLogic. But prices of course range widely between the capitals. Hobart is the cheapest at around $300,000 and Sydney being the most expensive at nearly $800,000. Depreciation Calculator

This decade so far prices have risen across the board by 35%, and over the previous decade they rose by around 140% according to CoreLogic figures.

But since the beginning of 2010, it’s been the two major capitals of Sydney and Melbourne that have seen the majority of growth. Prices are increasing by around 60 and 40 per cent respectively (as at May this year). The other capital city markets have seen either little growth or have fallen in value, so theoretically, in some places affordability is actually improving.

This is especially the case when you consider interest rates; in this regard 2016 actually presents quite a good time to buy with the cash rate now sitting at a record low of 1.5%; very different from the double-digit interest rates investors experienced decades ago.

We, of course, also need to consider incomes in relation to price growth. Depending on who you ask, there can be a case to say housing has or hasn’t become more unaffordable. It’s clear, however, that house prices have risen faster than incomes, making it harder to save for a deposit.

 

Priorities are changing

While property prices have clearly risen, it’s also the case that priorities for more recent generations have changed.

Once upon a time – not that long ago really – youngsters left school and got a job, with their primary objective being to save for a deposit to buy a home.

Nowadays, however, younger generations seem to have different priorities. They often leave school with the intention of travelling abroad for a gap year (or two or three). Or if they go straight into a job they’re not necessarily saving, but buying the latest gadgets; in our modern society it’s about instant gratification.

So does that have an impact on affordability?

It makes sense that it likely impacts on the ability to save for a deposit.

We need to consider which is the cause and which is the effect, however. Some – including a Sydney real estate identity recently – argue that this generation is simply too selfish to make the necessary sacrifices, such as cutting back on commodities such as widescreen televisions and designer clothes, to save and get a foothold in the market. Depreciation Quote Schedule

But on the flipside others argue that priorities have changed simply because it’s impossible to save the huge deposit required for property these days. So younger generations are instead deciding to spend their money on something else because property is out of their reach.

But are the expectations of younger generations now just too high? When they complain about property being unaffordable, is that because they want to buy a flash pad in inner Sydney as their first home, rather than buying something further from the city in a price bracket they can actually afford? Essentially, many want to buy what would traditionally be their last property – often what their parents have worked their way up to – first.

Add to all this the fact that renting has also become more socially acceptable. The Great Australian Dream perhaps fading a little, and we have a little more insight into the affordability debate.

Consider your options

It’s clear that the debate around housing affordability isn’t clear-cut; there are many aspects to consider. As the debate continues to rage, demands for reform or government measures to curb price growth will persist.

While Australian property prices have risen and are unlikely to fall (despite claims from doomsayers), leading many to feel as though it’s impossible to break into markets such as Sydney, there are always more affordable opportunities within each capital city if you care to look. Consider buying further from the city, or a unit instead of a house. Scale down your expectations and buy where and what you can actually afford.

And if you don’t want to scale down your expectations, become a ‘rentvestor’. This means you choose to rent where you want to live and invest where you can afford to buy.

For investors, it’s of course better to buy where there’s more potential for growth. Chances are that’s in an area that hasn’t already seen huge growth. Yet where there are lower prices with more room to move.

Striking Property Gold After The Olympics

Will you strike property gold after the Olympics by investing in the cities?

WITH the Rio 2016 Olympic Games having recently come to a close, it’s the perfect time to talk about whether there are opportunities for property investors in the host cities of sporting events such as the Olympics and Commonwealth Games.

On face value it seems as if the answer would absolutely be ‘yes’. Surely the high of such an event would last well into the future, spurring on the city and its economy, and in turn, pushing up housing prices?

The reality isn’t as clear-cut though. There are a multitude of factors determining whether there’s an increase in housing prices in the host city after – or perhaps even before – such an event.

What does history tell us?

It’s difficult to measure the impact of the Olympics or Commonwealth Games on a property market. While in some cases there has been a boost after the event, it’s hard to qualify what this is due Depreciation Calculator to – is it a flow on from the sporting event or the result of something else?

There has been some research on what’s happened to property prices in host cities in the past, but the results aren’t exactly conclusive.

According to Goldman Sachs there’s evidence to suggest hosting the Olympics can push up local house prices. Their analysis only looked at two Summer Olympics (Los Angeles in 1984 and Atlanta in 1996) and found that the impact was felt in the few years after the event, rather than immediately.

Since their analysis was restricted to only two cities, Goldman Sachs stress it may not apply to all host cities or Olympic events as there are country and city-specific factors to take into account.

Property Gold After The Olympics

They argue that theoretically house prices should rise due to the host city experiencing a high, with optimism flowing through to the economy. It can also be due to the greater profile enjoyed by the city, with a boost to tourism and the economy, but the other major factor is the inevitable improvement in infrastructure in the host city.

Indeed, some studies suggest the biggest impact on the real estate market is felt in the host cities that are smaller and less developed, such as Athens and Barcelona. The 1992 Barcelona Olympics led to a complete revitalisation of the city, along with significantly improved transport infrastructure, which is believed to have had a direct positive impact on property prices.

In contrast, it’s argued a bigger and more developed host city, such as Sydney, which held the Olympics in 2000, is less likely to experience a boost to its property market. Outside of the gentrification of Homebush, in the vicinity of Sydney Olympic Park, the consensus is that the sporting event had little direct impact on Sydney’s real estate market, with any price rises likely due to other market factors.

Likewise, while there was a rise in Melbourne’s property prices in the two years after the city hosted the Commonwealth Games in 2006, it’s not attributed directly to the event.

As seasoned property investors know, a whole host of factors can determine whether a property market experiences a boom, and while an event like the Olympics or Commonwealth Games can have an impact, it can be overshadowed by wider economic conditions or housing supply.

Other factors such as the stability of the country can also have an impact by either encouraging or deterring investment, particularly from foreigners.

Olympic Games certainly aren’t always good news for host cities – in Montreal, for instance, things went pear-shaped in 1976, with the event costing more to run than it made and taxpayers were stuck with a bill that wasn’t paid back until 2006!

Are there opportunities on the Gold Coast?

With all this in mind, investors might be wondering whether they should consider buying on the Gold Coast ahead of the 2018 Commonwealth Games. Depreciation Quote Schedule

While research indicates that the impact on house prices seems to be evident after the event rather than in the lead up, many property professionals are claiming that the Gold Coast market is already experiencing a boom in anticipation of the Games.

It makes sense that the region will experience a boost from the event, especially since there’s an estimated $950 million in development underway to provide the necessary infrastructure and a likely $2 billion injection into the local economy.

The profile of the city has already been lifted and will continue to be in the lead up and during the event, with confidence also having been boosted.

Recent figures from PRDnationwide indicate values in suburbs around the Commonwealth Games venues already significantly rising, by an average of almost 10 per cent over 2015.

But is growth being witnessed on the Gold Coast actually due to the Games or is it simply part of the natural property cycle, with the city now bouncing back after suffering in the aftermath of the Global Financial Crisis?

Property Gold After The Olympics

We won’t know the impact until a few years after the Games of course, but investors considering buying in the region now should do their due diligence and ensure there are plenty of drivers pushing ahead growth in their chosen suburb over the long term, rather than the short term.

Certainly it’s clear the Gold Coast is growing, with predictions it will double its population to 1.2 million people by 2050, and there are a few major projects such as the light rail, providing a boost.

The city’s affordability also being a drawcard for buyers, along with an improvement in the economy, which has created jobs.

Some experts, however, believe the market will abruptly slow post the Commonwealth Games, with less activity and weaker price growth due to a desertion by investors after the event.

To buy or not to buy?

If you’re a property investor trying to capitalise on the potential in the host cities of major sporting events you’ll need to do thorough research before you buy, as with any purchase.

While it’s true that there can be a boost to real estate markets after the Games are held, there’s no guarantee, so investors should always ensure there are long-term drivers for growth in the area in which they’re purchasing.

The fundamentals need to be right – it should have a diverse and strong economy, employment, population growth (permanent, not just short-term) and infrastructure, including transport links.

While an event such as the Olympic or Commonwealth Games can provide extra incentive for purchasing in a particular city, all of the fundamentals – or most – should be there to safeguard your investment and ensure growth.

Where to Buy in Queensland

What property areas will shine in the Sunshine State this year?

WHEN it comes to property the past few years have been all about Sydney and Melbourne. Now it might finally be Queensland’s time to shine!

The state’s capital saw price growth last year of around 4%. This was moderate compared to the 11%-plus its southern counterparts clocked up. However, this year Brisbane tipped to be one of the strongest performing capitals.

property

The wider South East Queensland (SEQ) region is also expected to perform well. Particularly what’s dubbed as the ‘Golden Triangle’. This stretches from the Sunshine Coast in the north to the Gold Coast in the south, and out to Toowoomba in the west.

Affordability is one of the key attractions for SEQ. The latest CoreLogic RP Data figures show Brisbane’s median dwelling price is a huge 35% less than the most expensive capital of Sydney.

Yields in Brisbane are also a drawcard for investors. CoreLogic RP Data statistics found the gross rental yield for units is currently the equal highest with Darwin of all the capitals at 5.3%. For houses it’s sitting at 4.2%, around 1% higher than Sydney and Melbourne.

The slow and steady growth traditionally seen in the Sunshine State is predicted to continue this year. Already Brisbane is proving to be a standout performer, recording one of the strongest growth rates over February.

According to CoreLogic RP Data the capital’s median dwelling price rose by 1.8% over the month. Placing in third behind Adelaide (1.9%) and Hobart (2.9%).

There’s no doubt plenty of investors are turning their attention to Queensland. But where exactly should they be looking to buy? We’ve asked the experts to name their top picks.

 

Brisbane

Hotspotting.com.au founder Terry Ryder says this year the focus will move away from the two bigger cities of Sydney and Melbourne. 2016 will be the “year of smaller cities”, and in line with this Depreciation Quote Schedulehe expects Brisbane to perform well.

Brisbane has been touted as the next city ‘due’ for growth for several years now. While some would argue that those predictions haven’t yet really come to fruition, Ryder says there has in fact been growth in the city’s property market.

“There hasn’t been across the board double-digit rises, but some precincts have had double-digit annual growth,” he elaborates.

Ryder says the city’s middle-ring suburbs are the ones investors should now consider. As growth will ripple out to those areas from the inner city.

Buy Property in Queensland

Brisbane is buyers’ agent and CEO of www.propertybuyer.com.au Rich Harvey’s first pick when it comes to growth areas for 2016. He says the fundamentals are good, with affordability being one of the major drivers.

“The price isn’t the only reason to buy though,” he says. “Brisbane is in the earlier stages of the growth cycle and yields are around one per cent higher than other capital cities.”

Property lecturer and author Peter Koulizos also believes that of all the capital cities, Brisbane is one that will perform relatively well this year. He says the “relative” part is key. This is because the other capitals are unlikely to perform well, so even if Brisbane grows by around five per cent, it’s likely to be higher than Sydney.

Growth will be “steady as she goes” in Brisbane, according to Koulizos. He advises investors to stick to the fundamentals of buying close to the city.

Some of his standout suburbs are Kelvin Grove and Herston in the inner north – which are close to the Royal Brisbane Hospital and a campus of the Queensland University of Technology – and Woolloongabba in the inner south. Koulizos says investors should focus on buying character housing in those areas.

 

South East Queensland

Buyers should target areas in SEQ with growth drivers, says Ryder. Right now there’s momentum in several regions surrounding Brisbane including Logan, Moreton Bay and Ipswich, where there’s affordability, good infrastructure and plenty of job nodes.

He adds, however, that the biggest price growth in SEQ this year “will definitely be on the Gold Coast.”

The city, which will host the Commonwealth Games in 2018 and is expected to double its population to 1.2 million by 2050, has the greatest momentum with rising sales, but investors need to be aware of the risks.

In particular Ryder warns that the high-rise market is hurtling towards oversupply. He says it’s best for investors to therefore avoid this market. Instead stick to the coast’s residential areas situated inland, where there’ll be a better chance of long-term growth. Depreciation Calculator

He adds that the suburbs in the Gold Coast’s northern corridor such as Coomera, Oxenford and Pimpama, are experiencing growth at the moment.

Logan is one of Harvey’s favourite SEQ regions at the moment. The area offers opportunities for not only capital growth, but good yields.

“You can buy a house in the $300,000 to $400,000 price range and get a six per cent return,” he says.

Koulizos, meanwhile, urges those investors considering buying in the growing regions around Brisbane to consider the demand/supply equation.

He says in many areas more homes are being built. This increase in supply will result in less pressure on housing prices.

 

Areas to avoid

It’s well known that there are areas around Australia where there’s a potential oversupply of apartments. The experts agree this applies to parts of inner Brisbane.

As such, investors are warned to be wary of buying off-the-plan apartments. Especially in suburbs such as West End and Fortitude Valley.

The experts also advise investors to stay away from areas in Queensland impacted by the downturn in the resources sector, such as Moranbah, Mackay and Gladstone.

While Ryder notes that Gladstone has been going backwards for a few years and has more to go before it bottoms out, he believes its long-term prospects are good, so investors shouldn’t shy away forever.

“When it does bottom out sharp investors will be buying, because it has a massive future,” he says.

Rather than reading media reports and buying in an area touted to be the next big thing, Harvey says investors should do their own research and get independent advice from professionals, who can help you formulate a strategy and get the best results.