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Picking a Profit-winning Investment
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Disclaimer: Every care has been taken to ensure the reliability of the information contained herein, however we do not guarantee its accuracy. We recommend readers rely on their own due diligence. All rights reserved.
May 2021
Welcome Thank you for reading this report. Freedom Property Investors is not a property company. We are a community of investors accessing the hidden market of positive cash-flow properties located in high growth locations across Australia. Led by Scott Kuru and Lianna Pan, two of Australia’s most successful property investors, we aim to provide our members with investment properties that outperform market averages for both capital growth and rental yield. Lianna Pan is one of only 3,000 qualified Actuaries in the country, and together we have perfected a detailed methodology
covering all fundamental aspects affecting the residential property market. Spending tens of thousands of dollars on our research, we also employ a full-time research team with access to property specific data not easily accessible to the everyday investor. Utilising a wide team of hundreds of experts around Australia, we work toward a common goal of helping create financial freedom for our members through property. We hope you enjoy this report and we look forward to helping you leverage our data insights to achieve your financial freedom.
Lianna Pan
Scott Kuru
Founder, Director of Research
Founder and CEO
F
ollowing a record-setting month for price growth in February, the Australian property market accelerated again in March, setting a new record for growth with a 2.8% increase in home values – the fastest rate in 32 years.
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Picking a Profit-winning Investment
It wasn’t too long ago that property market commentators, along with chief economists and financial institutions, were predicting a prolonged crash in dwelling values. With all the challenges brought about by the then unfolding COVID-19 pandemic, many would have understandably thought the same. However, Freedom Property Investors Co-Founders Scott Kuru and Lianna Pan knew that this period in time would soon become one of the best opportunities that property investors have seen since the 2008 Global Financial Crisis.
Fast forward to April 2021 – the pendulum has well and truly swung in the opposite direction to what past media headlines had proclaimed, and now the market is on the cusp of what could be one of the biggest property booms of our time. Experts are signaling that there is still much more room to grow, and for those who may be thinking that it’s too late to capitalise on the boom, you will be glad to know that there is still ample opportunity to enter the market A summary of recent housing market predictions for 2021 (pictured to the right) shows that the banks are now forecasting some significant price growth ahead. Scott and Lianna look at macro-economic, as well as major external factors, to determine the best times and places to invest; “In my experience as an Actuary, I know that the data always tells us the real story and combined with our Four Pillars of Prediction, we are able to accurately pinpoint areas of significant growth potential.” says Lianna. Sydney was the top performing capital city, leading the country at 3.7% growth over the month of March, hitting a median value of $928,028. This level of increase is equivalent to approximately $32,000 more than the previous month.
Banks Forecast for National Property Price Growth in 2021 CBA
WBC
9%
10%
NAB
ANZ
8%
17%
Additionally, CoreLogic reports that Sydney dwelling values are now 2.6% higher than their July 2017 peak. The other stand out performer was Melbourne which continued its strong rebound in home values following an extended period of stagnant growth as it dealt with the health crisis. Melbourne’s median dwelling value increased around $18,900 in the month of March to reach $736,620 and record a full price recovery with annual growth now of 0.7%.
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Change in Dwelling Values as at 31st March 2021 Month
Quarter
Annual
Total Return
Median Value
Sydney
3.7%
6.7%
5.4%
7.9%
$928,028
Melbourne
2.4%
4.9%
0.7%
3.6%
$736,620
Brisbane
2.4%
4.8%
6.8%
11.3%
$548,260
Adelaide
1.5%
3.2%
8.6%
13.1%
$486,555
Perth
1.8%
5.0%
6.0%
10.8%
$505,850
Hobart
3.3%
7.6%
12.5%
18.0%
$548,686
Darwin
2.3%
5.4%
14.2%
19.9%
$451,408
Canberra
2.8%
6.0%
12.1%
16.7%
$727,032
Combined Capitals
2.8%
5.6%
4.8%
8.1%
$693,936
Combined Regional
2.5%
6.3%
11.4%
16.6%
$448,819
National
2.8%
5.8%
6.2%
9.7%
$614,768
Source: CoreLogic
One of the key drivers of this boom in Australian house prices is the record low interest rates, and on the 6th of April the RBA decided to maintain the cash rate at 0.10%. In its statement, the RBA highlighted that “the economic recovery in Australia is well under way and is stronger than expected”, and indicated that the cash rate will remain at the current level until 2024, in order to continue its stimulating effect on employment and wages. With interest rates at historic lows, and a shortage in dwelling supply across many property markets around Australia, our data insights and macro-economic research points to a very profitable window of opportunity for those who are in the market to buy and/ or invest.
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Picking a Profit-winning Investment
Australian Home Value Index at 31 March, 2021
In fact, those who were actively investing throughout 2020 are already starting to see this swing in market conditions turn significantly in their favour. “We have members now that are able to secure premium, newly-built properties at pre-boom 2020 prices. It’s incredible because almost overnight their equity has increased – some as much as $35,000!” says Lianna. As buyers continue to flood the market, competition for property remains fierce, and sellers are beginning to raise their asking prices. Also adding upwards pressure to house prices is the dwindling supply of housing stock across the nation, with levels in March further declining to around 82,000 units below the 10-year average.
“...the economic recovery in Australia is well under way and is stronger than expected.” – Reserve Bank of Australia
National Property Stock on Market Stock on market
10-yr average
350,000
300,000
250,000
M ar 2- 0 21
M ar 2- 0 20
M ar 2- 0 19
M ar 2- 0 18
M ar 2- 0 17
M ar 2- 0 16
M ar 2- 0 15
M ar 2- 0 14
M ar 2- 0 13
M ar 2- 0 12
200,000
M ar 2- 0 11
Property Stock on Market (n o.)
400,000
Source: SQM Research
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“We have members now that are able to secure premium, newly-built properties at pre-boom 2020 prices. It’s incredible because almost overnight their equity has increased – some as much as $35,000!” – Lianna Pan This combination of increasing demand with decreasing supply will continue to guarantee price growth of real estate, as evidenced by the leading indicator of housing asking prices, with the national asking price of houses up 11.1% (or $65,084) above its 3-year average, and up 7.7% (or $29,797) for units. In the rental market, the latest data for asking rents has grown significantly in recent years. The average weekly rent for a house nationally is currently sitting at 13.8% above the 3-year average. These increasing rents combined with lower mortgage repayments due to low interest rates, can turn the right type of investment property into an excellent source of passive income.
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Picking a Profit-winning Investment
With rental vacancy rates across the country remaining at current lows, there is a surplus of quality tenants readily available to take on a lease. Because of this, landlords in some markets now wield more power than ever and, in some cases, are achieving above average returns as more and more prospective tenants are prepared to offer a higher amount on a home that they are determined to secure. With the interest rate at 0.1%, (reduced by 1.4 percentage points in less than 2 years), which is likely to remain until 2024, the housing market looks to be set for a period of sustained price growth moving forward. Many property investors are already seeing significant profit throughout many regions across Australia. As the economic rebound continues at a growing pace, it makes sense to partner with a leading property investment team that will tailor a strategy to suit your individual goals. Whilst our research supports the latest surge in media coverage of positive growth in Australia, it’s important to note that this won’t be the case in all regions.
13.8% Above the 3-year average for weekly rent (houses)
National Asking Prices Houses
Houses 3-year Avg.
n U its
n U its 3-year Avg.
700,000
Asking Prices
600,000
500,000
400,000
b2- 0 21 Fe
ov 2- 0 20 N
Au g202 0
M ay 2- 0 20
b2- 0 20 Fe
ov 2- 0 19 N
Au g201 9
M ay 2- 0 19
b2- 0 19 Fe
ov 2- 0 18 N
Au g201 8
M ay 2- 0 18
300,000
Source: SQM Research
National Weekly Rents Houses
Houses 3-year Avg.
n U its
n U its 3-year Avg.
550
450
400
350
Jan 2- 0 21
Oc t 2- 0 20
Jul 2- 0 20
pr 2- 0 20 A
Jan 2- 0 20
Oc t 2- 0 19
Jul 2- 0 19
pr 2- 0 19 A
Jan 2- 0 19
Oc t 2- 0 18
Jul 2- 0 18
pr 2- 0 18
300
A
Weekly Rents
500
Source: SQM Research
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Case Study
McDowall, QLD The suburb of McDowall in Queensland is an affluent, family-friendly pocket that has been described as one of Brisbane’s ‘best kept secrets’. Our research indicates this region of Brisbane as having excellent growth potential due to its infrastructure and proximity to the CBD, in addition to a current under-supply of housing as evidenced by the extremely low vacancy rates. Since the onset of the COVID-19 pandemic, the vacancy rate of McDowall has been trending towards levels that are below 1%. Landlords have needed only minimal time on market when leasing their properties and are able to secure tenants swiftly, with some increasing rents. Likewise, the asking prices for townhouses in this region have been steadily increasing over the last 12 months, growing around 12% (or approximately $50,000) through this period.
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Picking a Profit-winning Investment
“By leveraging our data insights and large investor community, we have helped many of our members capitalise on this opportunity, many of whom are already seeing the benefits.” says Scott Kuru. In times like these where asking prices are on the rise, we are in the fortunate position to offer our members pre-negotiated prices on premium property that were locked-in prior to the current property boom. Members of ours who are purchasing in McDowall have been able to secure investments at pre-negotiated prices, some at as much as $35,000 less than what is currently advertised. As a result, even before settlement, those who invested here have already secured astonishing equity gain almost overnight.
b2- 0 20
ov 2- 0 20 D ec 2- 0 20 Jan 2- 0 21 Fe b2- 0 21
N
Au g202 0 Se pt 2- 0 20 Oc t 2- 0 20
M ar 2- 0 20 A pr 2- 0 20 M ay 2- 0 20 Jun e202 0 Jul y202 0
Fe
Vacancy Rate %
Vacancy Rate – McDowall, QLD
2.0
1.5
1.0
0.5
0.0
Source: SQM Research
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Case Study
Farley, NSW This is unique in the fact that the local council in this area allows for the building of dual-key properties. Dual-key properties are effectively one main property divided into two dwellings. When built in the right locations, these dualkey properties are an exceptional addition to any investors portfolio as they offer both capital growth and higher-than-average yields of 6-7% thanks to the dual rental income. The Hunter region of NSW has long had attractive investment fundamentals due to the strong and diverse local economy, which has resulted in consistent capital growth and high rental returns. Throughout 2020, we witnessed a mass migration toward these regional areas, in turn increasing the demand for suitable property. For example, in the suburb of Farley (one of the satellite suburbs surrounding the central hub at Maitland), we have been helping our members build dual-key properties to satisfy
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Picking a Profit-winning Investment
the need for adequate and quality housing in this region. Through our negotiations with vendors in the area, we were able to secure a premium allocation of land with lot sizes ranging from approx. 550sqm to 600sqm. While land values in the area have been growing at a consistent rate over a long period, including throughout the COVID-19 pandemic, there has been a sharp upswing in asking prices of about 13% in the last 3 months alone. Our unique method of securing land in this highly sought-after region again means that our members have been able to enjoy outstanding capital gain in only a very short period of time.
Asking Prices for Houses – Farley, NSW
600,000
550,000
500,000
M ar 2- 0 21
Jan 2- 0 21
ov 2- 0 20 N
pt 2- 0 20 Se
Jul 2- 0 20
M ay 2- 0 20
450,000
M ar 2- 0 20
Average Asking Prices
650,000
Source: SQM Research
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What our members are saying... Freedom Property Investors simplify investing while helping you every step of the way toward achieving your freedom through property. Our dedicated research team utilise a data-driven approach to selecting the best locations across the country, which enables our members to navigate the property market and find excellent investment opportunities.
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