Tax benefits, depreciation and government incentives can make brand-new property look appealing, but should they be the reason you choose one investment over another?
In this episode of the Brisbane Property Podcast, Scott and Melinda examine the difference between buying new property for tax benefits and selecting an asset for long-term growth.
They discuss:
- The hidden taxes, regulatory costs and infrastructure charges built into new property prices
- How land value, scarcity and owner-occupier demand influence long-term growth
- The risks of buying in areas with large volumes of similar housing stock
- What a 25-year comparison between North Lakes and Geebung revealed
- Why even a small difference in annual growth can have a major effect on long-term wealth
- The questions investors should ask before purchasing a new build
This episode is not a warning against every new property. It is a warning against allowing tax policy, incentives or marketing to choose the property for you.
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Transcript
0:00: Tax benefits, incentives, and depreciation can be helpful, but they should never override property fundamentals.
0:06: A property decision should always be led by location, land value, scarcity, owner occupier appeal, or owner-occupier demand, the asset quality and the long-term growth potential.
0:18: We’re gonna be covering this and more in today’s episode of the Brisbane Property podcast.
0:23: Hi everyone, and welcome back to another.
0:25: Episode of the Brisbane Property podcast with Scott and Melinda Jannison, and today we’re going to have a bit of a chat about new build incentives versus long-term growth.
0:34: Yes, of course, off the back of the federal budget here in Australia for 2026, we understand that the incentives or the tax incentives are going to be skewed towards brand new properties.
0:46: So today we’re going to unpack what does that mean for Brisbane.
0:50: And in fact, we’re going to share some information.
0:53: Now, if you were an attendee at the Brisbane Property panel recently, where you came along to Ballymore Stadium, you would have heard some of these results.
1:01: We’re gonna take a deep dive into this because in-house, our team have actually studied the capital growth performance over the last 20 to 25 years in areas that brand new estates.
1:13: Versus established locations, and we’re going to reveal some of those results today, and we’re also going to talk about just what you’re paying for in the cost when you are purchasing a brand new property.
1:25: So hopefully, the intent is to educate, to help you understand all of those hidden costs that you may not even be aware of as a property buyer that come with buying brand new properties.
1:35: Yeah, I think.
1:36: When we always talk about property, we talk about location.
1:39: I mean that that’s probably the key I think when we, when we look at good asset locations is picking the right location for that long-term growth.
1:47: Not about a tax saving.
1:49: So we’re never looking at the tax saving side of things.
1:52: And and obviously the, a poor selection, so not not picking a, a good property in a in a good location can really, really sort of, Set you back or you won’t get the benefits over that 1015, 20 year time period.
2:03: Can I just make it very, very clear though, this is not an anti-new property episode, that’s not what this is about.
2:10: This is about ensuring that investors don’t make knee-jerk reactions off the back of changes to tax policy, because there are circumstances for some people where buying a brand new property might be a good option, depending on their circumstances.
2:25: So this is informational, it’s just to help you understand all of the layers of.
2:29: Additional taxes and infrastructure charges and statutory charges that are attached to brand new property, but also to really dive into that long-term performance, so that we can compare, well, what is the difference in capital growth between established versus new markets, and, and based on Brisbane data and looking back in the rearview mirror.
2:49: I think the biggest thing, and the biggest concern probably, and as you said, Linda, it’s not an anti-new property podcast at all, but it’s people getting caught up in all the headlines that are out there, and, And all of a sudden buyers pivot and and they purely buy because of tax.
3:04: Because of depreciation, because of grants and incentives and things like that as well, and marketing, you know, people get out there and you get caught up in all that marketing those feeds come in about buying this and making money, but it’s, it’s more about understanding obviously there’s different strategies for each individual.
3:20: So that long-term property wealth, that that growth over long-term and picking the right asset and the right location, and it’s not as simple as just buying new off a marketing or because of tax benefits.
3:32: That’s right, and you know there’s going.
3:33: To be so many property spruikers out there now off the back of policy change that incentivizes taxpayers to purchase brand new property.
3:42: For some reason, even our team, our inboxes have been filling up with developers wanting to offload their stock and pay us a hidden commission.
3:51: Now, of course, we will not, and will never accept commissions from builders or developers to effectively sell their stock.
4:00: But unfortunately, there are some people out there that Will take a double dip, they’ll charge their client, and they’ll take that, that additional fee from builders and developers to promote their product, and you need to be super wary of that if you’re partnering with anybody for a purchase.
4:17: But, why are people attracted to brand new property?
4:20: Well, of course, brand new property feels fresh, it feels clean.
4:23: From an investment perspective, there’s great depreciation benefits, both capital works and fixtures and fittings, all depreciable for, property investors when you purchase brand new properties.
4:35: So, from a tax perspective, there’s some good returns that you can receive, and, of course, now, also, you retain the negative gearing benefits when you do purchase brand new property.
4:45: And also, you’ll have the option to either rely on the 50% capital gains tax discount, or the indexation model when you go to sell.
4:55: Now, when you rent a brand new property, also, it’s likely that you’re going to generate a premium.
5:02: Rent, so, and simply because tenants pay for the number of bedrooms and the number of bathrooms and the quality of that home.
5:09: Where the issue might unfold is if there’s too many brand new properties, all available to rent at the same time, because the rental market, just like the housing market on the sales side, it relies on a, an even balance between the supply of rental properties and the number of tenants in that particular market looking for a rental property.
5:27: So, if you start to tip the scales a little bit more in favor of the tenant.
5:32: Meaning, you start to purchase more and more properties in brand new estates, the landlords accumulate in those locations.
5:39: All of a sudden, you’re increasing the supply of investment properties in that location.
5:43: So, whilst you might get a good rent for the 1st 12 months, if that new estate continues to expand, and perhaps 60 or 70% of property owners are landlords, every time a property Becomes available for rent, the supply of those rental properties is more saturated in areas like that, and that can put downward pressure on rents over time, and that’s very important for property investors to understand as well.
6:08: Yeah, I think some people are also attracted to new because they presume it’s low maintenance.
6:12: You know, everyone, they do sort of say, and they assume that new means better than an existing home, but then also, You know, the way that it’s marketed so developers and the marketers will obviously make it feel like it’s easy, as you touched on somebody’s getting paid.
6:27: So when people come along and say look I don’t get paid by you for for this sort of property, somebody’s getting paid and that’s probably going through the developers to the acquisitionists I suppose if you want to put it that way.
6:38: But again, you know, there’s there’s the tax tax changes and those incentives make it feel nice and easy and make it feel quick.
6:45: I, I guess a question on that one when we, when we look then at the tax side of it, so would, would you still buy, Would it still be the right property if the, the tax benefit disappeared?
6:57: And I think that’s the question people need to ask themselves, because property investing, rightly so, should never be about the tax benefit.
7:04: It should be about building wealth for the future or building income for the future, and I think that a lot of the messaging that’s out there in the market at the moment has become very muddied simply because people are now very focused on the tax benefit because the tax benefits are changing.
7:21: The, the reality is that the, the fundamentals for property investing have not changed, and without professional advice, people might find themselves purchasing something that is an inferior asset that potentially won’t deliver the long-term outcomes that they might be looking for.
7:36: I do want to cover before we talk specifically about the long-term capital growth differences here in Brisbane, about the hidden costs that sit inside brand new property, because there’s some charts that, we’re going to pop up on the screen for those that are watching here on YouTube, that talk to the estimates in, in how much of the purchase price goes into government charges.
8:04: For example, for a new greenfield house and land package in Brisbane, Total taxes, regulatory costs, and infrastructure contributions were estimated to be around $348,000 and that represents about 41% of the total outlay for a brand new house and land build.
8:26: Just take a moment to think about that.
8:28: 40% of the purchase price that you’re paying for, being on average, or a median amount of $348,000 is going towards taxes.
8:39: The government, regulatory costs, and infrastructure contributions, and these are taxes at all levels of government.
8:46: So, that’s a lot to actually, obviously pay a premium for if you are purchasing brand new properties.
8:53: So it’s not a surprise that government are incentivizing people to purchase brand new properties, because they actually make more money.
9:00: When people buy brand new properties because of all of the taxes that are built into that purchase price.
9:05: Now this is information from CIA reports, as I mentioned, some of the charts will be shown on the screen throughout the episode.
9:14: So 41% goes to nothing you’ll actually see.
9:18: Correct?
9:18: That’s right, yeah, it’s just hidden in the purchase price and You know, of that, so if we’re gonna break down a house and land package, 59% of what you’re actually paying is for the resources, that’s the house and the block of land itself.
9:30: 15% goes towards regulatory costs, 21% statutory taxes, and 5% for infrastructure charges.
9:39: So, you know, that’s a lot, and, and the scary thing is that the same applies for infill development, that’s those high density developments, or unit complexes, or townhouses.
9:51: Complexes, so, in Brisbane, infill apartments, for example, the contribution from taxes, regulatory costs, and infrastructure contributions, is estimated to be around $256,000 which is about 34% of the total outlay.
10:08: So, not as much as the brand new house and land packages, but still a significant portion of the overall purchase price that a consumer pays when buying these types of products.
10:20: So.
10:20: So for those infill or higher density developments, on average, 66% of the price you pay will go towards the dwelling itself, 2% towards regulatory costs, a massive 24% towards statutory taxes, and 8% towards infrastructure charges.
10:39: So it’s, is it any wonder that, you know, it costs more to buy brand new property compared to established property?
10:47: And the other thing to mention is that, When you are buying a brand new house and land package, for example, you’re spending a lot more on the house or the dwelling itself, and a lot less on the land, usually because of where these are located.
11:01: And what that means is that the house often loses value at a faster rate, because, remember, the building depreciates.
11:08: That’s why you get to claim depreciation as an offset against your tax.
11:12: But quite often the depreciation benefits move ahead.
11:16: At a faster rate than the land appreciation happens.
11:19: And, and quite often you might see that property values can go backwards initially in new estates before they go forward, because of that imbalance between the depreciation of the building and the appreciation of the land that takes place simultaneously.
11:34: Yeah, I think that really matters there.
11:36: I mean, the long-term capital growth is driven by the land component, OK, because that’s the scarcity, your location and.
11:42: The demand side of things, the building will get old.
11:45: That’s right.
11:45: It, it will, it’ll appreciate.
11:46: It’s only once.
11:47: I, I guess if you want to put it this way, it’s like, driving out of the, the showroom in a brand new car, it goes down in value pretty much straight away.
11:54: That’s right.
11:55: So you’ve got a brand new house, it will go down in value because it gets older, but the scarcity, as you talked about, is, is in the land, and that’s the bit that, it drives that long-term capital growth side of things.
12:05: And the other thing, you know, to mention there, of course, is that when You are purchasing that brand new property, when you become the owner, you now have an established property.
12:15: So, in the event that you do need to sell, or in the future when you sell, you will be automatically wiping out that segment of the market that would be purchasing for the same benefits that you’d be looking for, because you no longer are able to sell to an investor that can rely on those negative gearing benefits.
12:35: That you perhaps had as the property owner.
12:37: So, a lot to consider if you are going to pivot to brand new property, and my advice is to actually seek professional advice before making a knee-jerk reaction to ensure that it is going to be the right strategy for you.
12:50: I, I know we’re going to jump onto a bit of a case study that you’ve done some research on.
12:54: If I just jump back to that last, that previous question I asked a little while ago, you know, would you still, would it still be the right property?
13:02: If the tax benefit disappeared tomorrow, and governments can change this.
13:08: We’ve had we’ve we’ve seen this all our life, where a government can actually change the policies and change through a budget and they can change these types, so it’s not set in stone, and that’s the thing that we have to be aware of that just because there’s a tax benefit at the moment, will it be there in 25, 10 years’ time, or will, will something change again, and that’s not something.
13:27: We can actually control.
13:29: No, whereas studying the fundamentals of any property market around the country, really understanding the supply, future supply, pipeline, and the demand and what those drivers of demand are, that makes much more sense before you’re actually making an investment decision and also understanding why are you looking to buy.
13:47: Is it for long-term capital growth or is it for income?
13:51: because you need to understand the answer to those questions before you’re even considering what and where you should be investing your money.
13:57: Now, as we, we mentioned earlier, we did a, a seminar, a live event at Ballymore, recently, and everyone was, I think, blown away by this, this.
14:05: Next section, which I’m basically gonna hand it over to you to Melinda to talk about this because as you explained at the event, when you get a little bit bored or you you’re just a bit not sure what to do with your spare time, you, you research, because that is your background, being a researcher.
14:21: and you did a bit of a study on, and I’ll let you explain in a bit more detail, on, on a new estate compared to an existing estate, I guess, properties in different locations.
14:32: I’ll let you go through it if you like.
14:33: Of course.
14:34: Well, look, I, I think once the budget was announced, it was important for us as an investment firm working with property investors and home buyers here in Brisbane.
14:44: And to really understand what is likely to change as a result of the budget announcements.
14:51: And so, the only way to accurately answer a lot of the questions that we were getting asked is to validate the information through research.
15:01: So, that is my background.
15:03: So, I’m fortunate to have the skills and ability to be able to take a data.
15:07: Sample, analyze that data sample, and then talk through the results.
15:11: So, what I did in conjunction with Stacey from my team is I looked at what areas in Brisbane were new estates between 20 and 25 years ago, and what were established locations back in that time.
15:25: Now, I’m definitely old enough to remember exactly which locations were in The, the development stage back 25 years ago.
15:34: So, the area that I chose to study was North Lakes.
15:38: It was close to where I lived.
15:39: I understood that as a location, and for any people that were living in Brisbane back in the early 2000s, you will know just how big of an estate North Lakes has become compared to what it used to be back, you know, 26 years ago.
15:54: I also chose an established suburb that had a similar median value at the, the start of the study period.
16:03: So, as I said, back in the early 2000s, the median value for the properties that we looked at in North Lakes was 245,900.
16:14: Dollars.
16:14: Now, that is made up of all of the properties that were brand new builds that sold within a period of about 4 years, between the year 2000 and the year 2024.
16:26: So the median for those properties was 245,900.
16:30: In Geebung, which was an established location.
16:33: Where it was predominantly made up of single lot homes, so a very similar layout to North Lakes.
16:39: In the early 2000s, we saw a very similar median value, 268,000.
16:46: and that was for properties that sold across a, a 3 to 4 year period from the year 2000 through to about 2004 as well.
16:56: So, I wanted to ensure that I had a level playing field to start.
17:00: We then looked at of those properties that sold, which of those have recently sold in the last 3 years, and therefore, what we could calculate is, on a per property basis, exactly what the capital growth rate has been for specific properties, and therefore, we could calculate the median value, or the median.
17:21: Capital growth rate for all of the properties that transacted in North Lakes within the study cohort, and the same for all of the properties that transacted in Geebung.
17:30: Now, I hope you’re keeping up.
17:31: I’m trying to simplify the explanation here.
17:34: What we found in the more recent sales in North Lakes, that the median recent sale price for properties that have transacted in that same 2 to 3 year period as, So, sorry, just in the last 2 to 3 period, the median value there was $1,050,000.
17:54: Now, for properties that actually sold in Geebung in the last three years, it also sold back between the year 2000 and the year 2024.
18:03: The median value in Geebung for the more recent sale was $1,262,500.
18:11: So what does all of this mean?
18:12: We then were able to calculate an average compounding annual growth rate for both of the data sets.
18:20: For North Lakes, that annual, sorry, the average compounding annual growth rate became 6.38% per annum.
18:28: In Geebung, which is the more established location, the average, Compounding annual growth rate calculated to be 7.55%. Now, for many people that perhaps are data analysts that may be listening to this podcast, I know I can hear you screaming at me right now.
18:45: You’re saying, Well, we don’t use averages for property data.
18:48: So, what we’ve then done is calculate the median compounding annual growth rate.
18:52: So, for those that understand statistics, you’ll know Know that the average is simply all of the data sets divided by the number, and the median is the middle score.
19:03: So, it, it really smooths out the data so that you don’t have outliers that influence the data set to the high level or to the low level.
19:11: So, the median compounding annual growth rate for North Lakes over that period of time was 6.22%, slightly lower than the average.
19:19: And for Geebung, the median was 7.32% per annum.
19:24: So regardless of whether we chose the average or the median value, the compounding annual growth rate was still significantly higher for the established location that we chose, which was Geebung compared to the brand new location.
19:40: Now, over a period of 25 years, that actually is a significant sum of money.
19:48: A lot of money, and yet, we’re only talking about a difference of 1.1.12% of change.
19:55: So, this is, is, it’s incredible to see the compounding effect of a 1.2% change in compounding annual growth rate over time.
20:05: Now you also, I know you went a bit further into that and you actually put in there the allowed for the current proposed tax changes as well, and, and also did the, did some work on that as well.
20:16: Yeah, so obviously then, you know, regardless of what has happened historically, we, we assumed that if you could achieve the same levels of compounding annual growth in a new estate today versus in an established estate, 25 years.
20:31: From now, what would that look like if we chose to sell?
20:34: Because, of course, if we retain the benefit of the 50% capital gains tax, by purchasing brand new property, versus having to rely on an indexation model model when we’re buying established property, what does that look like?
20:47: Now, I’m very aware that the cash flow position on the two asset types would vary and would be quite different for that holding period.
20:54: So this is purely on long-term wealth creation modeling.
20:58: And even if the brand new property was actually relying upon the 50% capital gains tax discount, which is going to be an option available to those people that purchase brand new properties, assuming that those new estates continue to grow at a similar level of long-term growth, despite the fact that the composition of the subsequent, Buyer must change, because it would be an established property at completion, whereas we haven’t had those policies in place in, in the historical data that we sampled.
21:32: And assuming that the, the new, sorry, the established location that we choose has a similar growth rate to Gbunk over the last 25 years.
21:39: So, again, there’s a lot of assumptions here, but regardless of that, the outcome would have still resulted in a significant Sum of money, improved wealth, even if the capital gains tax discount was relied upon for the new build at sale, compared to the established property at sale.
21:57: So, I guess the message is that you really should not be making any knee-jerk reactions before you understand what the long-term implications might be if your intention is to build wealth into the future.
22:10: So So I guess then, and I hope everyone kept up with all of that.
22:13: I, I did, I’ve heard it before as well, so that probably helps me.
22:17: Established you know why established landlocked locations out can outperform.
22:22: and if I just jump back onto simply what you were just talking about then, and those that know Brisbane as well, you’ll probably struggle to find much brand new in Northlakes at the moment.
22:32: That was back in early 2000s.
22:34: So.
22:35: You’ve got to understand that now North Lakes is an established estate.
22:39: That’s right.
22:40: It’s not a brand new estate like it used to be 20 odd years ago.
22:44: So now we’re moving further and further away.
22:46: So your established suburbs are obviously closer to the CBD OK, there’s less ability to add more competing supply.
22:55: OK, so there’s that scarcity again that comes into play, and that land component again, you’ve got that scarcity component of the land.
23:02: Which will drive your capital growth.
23:03: And typically I think what we’ll see that the established locations will have a higher portion of owner occupiers simply because the government incentives are pushing investors into brand new products.
23:14: That owner-occupier demand can therefore be deeper and more consistent in some of those established locations.
23:20: And the other thing to consider is that older homes still offer renovation and extension or value add potential, which are A lot of newer homes simply don’t hold, because they, they hold the value as a new product at the time of purchase.
23:35: So, there’s a lot to, to unpack there.
23:37: And, and just circling back to the study, I do want to make the point that I’m not saying every single suburb, or rather, every single property in Geebung outperformed every single North Lake’s property across the sample period.
23:49: The highlight the, the sample that I chose, though, really highlights the fact that established property.
23:56: In locations where land is scarce, over a long holding period, will outperform brand new property.
24:05: The other thing, and, and if we jump on both of the types of properties here, so you as you as you touched on manufacturing equity, OK, so doing some renovations, adding a little bit of value, great way to do it, we’ve done that ourselves many times, and you can add a little bit of value to it.
24:19: You’ve got access to, you’ve generally got.
24:21: Access to public transport, employment access, lifestyles, schools, those types of things.
24:26: And your land size as well.
24:28: And you, it could also be slightly different.
24:30: When you get into the new estates, you’ve generally got similar size blocks of land, similar size, similar layouts of buildings because as they build these new estates, and I remember being at a carpenter many, many years ago, and we were literally, we’d be throwing up frames in a day.
24:46: And you’d go into a new estate and it was literally almost the same thing and you’d throw it up.
24:51: Off you go.
24:54: They definitely don’t, they don’t.
24:55: So, so then you then you’re competing with then homes that are very, very similar in size and footprint as and it’s not different to somewhere else.
25:05: So if properties come to the market, for example, and they, they come on at the same time, there’s a lot of choice for people.
25:11: Yeah because and it’s very similar then they can choose between different ones as opposed to landlocked areas, established homes.
25:19: One’s been renovated slightly different to the other, so there’s a lot of diversity in those landlocked areas.
25:25: That’s right, and I think that the key point and the key takeaway from this episode is that pivoting to brand new property off the back of tax incentives is, is not necessarily the best approach for every single property investor, and now more than ever it’s more important to With professionals to seek advice that’s personalized based on your circumstances.
25:49: And I think that’s evident based on the fact that you should be seeking advice from your accountant in terms of the most tax effective structure to be purchasing any property within.
25:58: Perhaps you’re working with a financial planner in the event that there’s advice you’re receiving to, to look at alternative investment structures that are.
26:07: More tax effective for you personally, and of course, a buyer’s agent who’s a qualified property investment advisor will be able to guide you, without bias in terms of what type of asset is likely to deliver the long-term results that you’re looking for, because there’s so much noise out there at the moment.
26:25: We’ve even seen a lot of people immediately pivot to purchasing brand new properties.
26:31: and at the time of recording, it’s not even legislated, so we’re very mindful of not actually making decisions for property investors until we have certainty.
26:42: Where there is already certainty, that is, if investors are still happy to purchase established property, because of the long-term benefits that we can, provide evidence of, as long as they can comfortably withstand the negative cash flow position.
27:00: Which by the way, for higher income earners is actually easier than, than many mum and dad investors or lower income, Earners, because those losses are still quarantined, what it simply means is for the 1st 7 to 10 years, perhaps, you will be in a negative cash flow position.
27:17: There won’t be any immediate cash flow or refund benefits from the, the Australian government on an annual basis.
27:25: But, when you start producing income from that asset through either positive cash flow or through the resale, you will get to offset all of those losses.
27:35: Of being locked in against that asset because they are quarantined losses.
27:39: So you don’t lose the tax benefit.
27:41: That is the most important thing to take away.
27:44: You simply delay that tax benefit to a point in time that exists in the future.
27:49: I’m going to jump back to what you just talked about then when you, when you, you talked about the accountant, talking to your accountant getting advice, as, as you mentioned as well, we’ve got 3 qualified property investment advisors here in the streamlined team, but Something that was we talked about at our seminar recently was and and somebody asked a really good question was who, who do you go and talk to first?
28:10: And it’s is it it’s sort of like the chicken before the egg in a way because, and we had a really good discussion about this afterwards and, and it’s your whole team, because if you, if you go to a broker to understand how much you want, you can borrow, is it the right strategy or do you go to your accountant to understand, so.
28:29: And also using a good buyer’s agent that’s qualified that knows what they’re talking about.
28:33: So it’s actually working together with a team all together at the same time because then you can actually bounce off each other and they, they work together.
28:43: I mean we do it with our clients as well.
28:44: We will talk to an accountant, we’ll talk to a broker, we’ll talk to a financial planner and we all work together as a team to help the client.
28:51: to get the best outcome that actually suits them individually.
28:54: Yes, it’s all about tailored advice, especially now more than ever if property is something that you are considering.
29:01: The professional team that you have around you has become a lot more important more recently, and ensuring that you’re working with reputable providers is going to be critical moving forward.
29:13: So I guess there’s just some questions that you should be asking yourself before you consider brand new property, and we just wanna run through this list so that you can understand, can you answer these questions confidently?
29:24: Yeah, I think grab a pen and paper or just watch this back again, and if you’ve got a good memory, we’ll give you some tips here on some questions you need to understand or ask yourself before you go and buy an ink or start to think about it.
29:36: Number 1, as I touched on this earlier, would I still buy this property if there was no tax benefit?
29:42: Good question to think about.
29:43: Number 2, how much of the purchase price is land value versus building value?
29:48: And remember, you can actually find out the land value for any freehold block of land here in Brisbane by looking at the Queensland Titles Office.
29:56: If you just Google Land Values Queensland, you You should be able to search by address to get an understanding of the unimproved land value of any property that you look to buy.
30:05: Number 3, is the location genuinely supply constrained?
30:09: So that simply means is there are a lot of other competing supply that is still being built around you, because obviously when we see supply increasing, it can impact on the long-term capital growth potential.
30:22: The next question is, who will buy this property from me in 10 or 20 years?
30:26: Investors only, or will it be owner occupiers as well?
30:30: Really important question to ask, especially if you are looking at those brand new properties that come with tax benefits only once when they’re brand new.
30:40: Gotta think of that exit strategy, I think that that’s a really important one.
30:43: Is there a large volume of similar stock nearby?
30:46: Talks to the scarcity factor that we always discuss on the podcast as well.
30:50: Next, what is the suburb’s long-term resale evidence?
30:52: And of course new estates just don’t have that, so that’s the risk you take on as, as a buyer.
30:58: What are the vacancy and rental demands and tenant profile in the area as well?
31:02: Really important questions to ask.
31:04: And what happens when the property is no longer brand new?
31:07: And I think we’ve addressed that with some of the conversations that we’ve had in today’s episode.
31:12: as you touched on earlier, another one, am I paying for incentives, marketing costs, or developer margin in the purchase price?
31:20: And the last one, the most important one, but also probably the most difficult to determine is how does the projected after-tax benefit compare with the potential difference in capital growth.
31:32: And hopefully, in this episode, we’ve provided just one example of just how much difference in compounding annual growth you can achieve, or what would have been achieved historically if you’d purchased.
31:45: in two different locations here in Brisbane over the last 25 years and hopefully at the end of all of that, as we, and we touch on this all the time, a good property decision should still stand up even if the tax conversation’s been removed.
31:59: Absolutely, absolutely, and you know, when, when property makes sense, you’ve got to look at the fundamentals, and that is understanding what is the future supply.
32:09: Pipeline of similar properties in this location.
32:12: What is the demand likely to be?
32:14: Who are the future buyers of the property that I’m looking to purchase, and how does this impact me as a property investor?
32:21: If you can’t ask those questions, perhaps you need some professional advice, and, we’re very happy to have those conversations with you as a professional team with qualified property investment advisors helping you.
32:32: Understanding that sometimes new property will Suit some people.
32:35: So there’s some buyers, and again we talk, we, we’ll go back to this all the time, get some advice from your accountant, what suits you individually for your tax incomes and those types of things.
32:44: Cash flow constraint, I mean that could be another thing that could be really benefit for people when they’re looking at brand new as well.
32:50: Yeah, and obviously, you know, we’ve got to understand the fact that not everybody has the capacity to hold an established property without negative gearing benefits.
32:59: Yes, we know that borrowing capacity is impacted because of the, the budget changes to tax policy as well.
33:06: These are very real factors, and not all brand new properties are equal either.
33:10: And, again, it’s important to understand, to go back to those questions, understand what are you buying, where are you buying it, and what is the potential, who is the potential next buyer that, that’s going to, to, that I’m going to be selling to.
33:25: A few takeaways for some people before we finish up, as I, I’ve probably said this, I sound like a broken record again now.
33:31: I, I just think don’t let the tax policies choose the property.
33:35: You, you’ve gotta buy a, a good quality asset versus a, a tax-led sort of decision, I guess.
33:40: Yep, and understand the, what you’re actually paying for.
33:44: Understand what’s made up or what taxes are part of the purchase price as well, because I think that becomes critical to really unpack, you know, the value that you’re getting for the money that you’re paying.
33:55: Long-term.
33:56: I, I think keep that long-term play in there, don’t, don’t keep going on to the, the tax side of it.
34:02: Scarcity and the land and, and the demand in those areas, so the scarcity of the land, what’s going to drive your capital growth, I think keep that front of mind as well as Melinda showed and, and talked through the the North Lakes Geebung comparison that we talked about as well, it just shows that long-term and that scarcity of the land.
34:19: And our message is not that you should be avoiding brand new property.
34:22: That is not the message.
34:23: The message is that you should be very careful about what assets you select in this new environment, and if you are unsure as to what asset might be best for you, seek professional assistance and understand the numbers before you make a decision to purchase, because long term it could be, you know, it could have a significant impact on your wealth building opportunity.
34:45: So if you’re, if you’re still confused, go through those questions.
34:48: We’ve had there.
34:49: If you’re not sure, reach out to the team at Streamline Property Buyers.
34:52: More than happy to have a chat and talk through your, your situation.
34:56: And if we can help out in any way, we’d love to be able to help.
34:58: We do work with teams.
34:59: We work with anyone that you work with as well to help people make the right choice, to get the right outcome, to, to get that client outcome for long-term wealth as well.
35:09: Absolutely, that’s it for today.
35:10: That is, as usual, I will let Melinda wrap things up.
35:13: Thanks very much for listening.
35:15: Until next time, take care and bye for now.
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35:24: We would love for you to also subscribe on your favorite podcast player and share this episode with friends and family, so they too can understand the difference between pivoting to brand new property and buying established property in the new market that we find ourselves in.
35:38: We hope you have enjoyed this episode, and we look forward to speaking with you again soon.
35:42: Until then, bye for now.