Devils Advocate Report – Ispwich & South Western QLD: How do they stack up

Ipswich and souther western QLD has been a ‘hot spot’ for many investment firms of late. There is a big push for interstate investors to purchase new houses in the area with the promise of strong growth and high rental yields. At suburbanite we decided to critically analyse that market and see if it stacks up against our barriers to entry and suitability score. We have compiled a detailed report on the area to answer the question… 

is this a suitable area to invest or an investment disaster waiting to happen….. Get your Full Report HERE 

– you will need to join our free education hub – the property investment vault for access to the report and much more –

Some of the things that an areas needs to score a pass in before we will invest there for our clients includes

  • Sustainable employment industries
  • Access to employment opportunities
  • The area can not be predominantly supported by tourism (as this will make it a fragile Boom and Bust market)
  • The property type in that area is not at risk of over supply
  • The area does not have a history of under performance compared to other similar locations that are used for benchmarking
  • Average days on market does not exceed 100 (this indicates a lack of demand)
  • Vacancy rate does not exceed 5%

 

Screen Shot 2017-01-14 at 2.26.50 pmThese are just a few of the key economic drivers that we will research for our investors and that all locations MUST pass. Some things that we found in the South Western QLD area that initially raised our concerns were back in May 2015 when we first embarked on our research, there were 93 houses for sale in Doolandella and only 6 had sold in the past month. As at July 2015 that increased to 171 houses for that post code and a similar number for the adjoining post code. This is not a good sign. This shows a significant lack of demand compared to supply. In the previous 6 months only 27 properties have transacted which is also very low and again reenforces the oversupply.

The other concerning factor was that in the 6 months to may 2015  there has been 21 Ha of development sites bought up by developers in the suburb of Doolandella and many more hectares in surrounding suburbs of Durak and Oxley areas. We can only assume they will be for future house and land releases.  We saw a total of over 50 Ha of development land purchased in this short period at the first half of 2015 in a market that was already suffering from supply outweighing demand. Our concerns were that this would lead developers to incentivise their sales by offering 5%-10% kickbacks to investment firm to move stock for them.  2016 has shown that we were right, many investment firms (not us, we do not take kickbacks) are now being heavily incentivised by developers to get their clients into these areas, irrelevant of how the economic drivers stack up.

Click below link to download the FULL REPORT on how the area went when critically analysed against the other economic drivers and barriers to entry, and a more detailed look into Ipswitch.

DOWNLOAD FULL REPORT HERE via our free education hub – the property investment vault.

The above report answers the question – is this a suitable area to invest or an investment disaster waiting to happen…..