Buying a Strata Title Property: Good investment or avoid?

When buying property, the title is the place to look for the essential details pertaining to what you are actually going to own if you make the purchase and any conditions you need to be aware of. If you’re in the market for an apartment, unit or townhouse, the property you consider may have a strata title. Understanding what a strata title property is and what it means for you as a property owner is a must, so let’s get the facts. 

What is a strata title?

Any property you purchase will have a title, and a strata title is a simple a type of title that is very common in Australia, especially when it comes to units, apartments and townhouses. In fact, any property that has shared space.

Interestingly, the concept of strata titled property is an Australian-designed scheme. It has been widely celebrated as a property innovation and proven so effective that is has been replicated in countries across the world.


Own your ‘lot’ plus a bit more

If you purchase a property with a strata title, you not only own the ‘lot’ that is your apartment, unit or townhouse, but also a share of the building’s common areas too.

Put it this way — you’ll own a portion of a larger dwelling rather than a freestanding dwelling. You (unless stated otherwise) own the internal walls, ceiling, fixtures, carpet, courtyard, airspace and anything within the airspace of your purchased lot. You will also share ownership of the common property areas. This can include the driveway, parking area, gardens, lifts, stairwells and the external building such as roof and walls.


Share the expense of upkeep

As part of owning a strata title property, you’ll like contribute a levy to an owners’ corporation (body corporate for example), enabling all owners within the strata scheme to share the expense of the upkeep. This means that when it comes to maintaining gardens, the building, the driveway and other common areas, you will split the costs with others.

Worried about disagreements with the other title holders on what needs to be done and when? Most owners’ corporations have a fair process for decision making and for dispute resolution that keep things from escalating so ask about the owners’ corporation rules and regulations prior to purchase if you have concerns.

An additional benefit of strata properties that should be considered is this: your insurances for strata properties are usually lower. Why? Because many of your property’s maintenance and repairs will be cared for through a sinking fund that can be used for regular repairs and other unforeseen events.


Why you could benefit from investing in strata titled property 

A strata titled property can be a valuable addition to your investment property portfolio or make an excellent place of residence. Due to a lack of understanding for the most part, some people can be a little hesitant to purchase a strata titled property, but this can work in your favour, allowing you to snap up a great piece of property to invest in. And strata titling won’t have any effect on your rental yield, so a strata titled property is a lucrative long term investment.


Frequently asked questions about Strata Title Property ownership 

Can I renovate?

You can renovate your strata titled property. Assuming your changes are within the guidelines of your owners’ corporation rules and regulations, it should be as simple as notifying the owners’ corporation and gaining approval from the majority.

Will there be ongoing expenses?

You will likely pay an annual owners’ corporation levy or strata fee, however this is often money that you would have ordinarily paid for maintenance of your property’s grounds anyway.

How much will strata fees be?

This can vary but it’s important to consider what the strata fees will cover. For example, Providence will not recommend a strata property if the strata fees cannot be justified by the included amenities.

What do I need to consider before purchasing a strata title property?

Exercise due diligence and look into the levies you would need to pay, any works currently planned or underway and by-laws that might affect you such as rules around parking or noise.


As specialists in property research, the Providence team can help you make an informed and wise property purchase choice. Purchasing real estate is a big decision, and there’s no need to do it alone. Get in touch:

Avoid these common property investing mistakes

Purchasing your first investment property comes with a mix of emotions. On the one hand, there’s the feeling of infinite possibilities – how far can you go to increase your wealth and financial security, will you be able to retire earlier or increase the quality of your lifestyle?

And then of course, there can be a little apprehension – will your investment pay off? What property investing mistakes do I need to avoid? Fortunately for first time investors there’s plenty of expert advice to be gained from those who’ve forged the property investment path for decades.

Here are five golden rules for first time investors to follow from the team at Providence:

  1. Leave emotions at the door

The best investment property will, more often than not, be a dwelling that you wouldn’t necessarily live in yourself; but will yield healthy returns and increase in value. Hence, when shopping for an investment property, you have to make a conscious effort to park your emotions – looking less at aesthesis and more at fundamentals like location, scarcity and practicality.

Many fall into the trap of trying to use their investment property as a holiday house, which doesn’t usually work. Holiday homes often have poor yields, less capital growth and require more maintenance. Love your investment property, sure, but stay focused on what its purpose is for you — ultimately, to build wealth.

  1. Lean on experts

The best investors are well-researched, do their due diligence and always turn to the experts rather than accept the well-meaning but often substandard advice they receive from friends and family.

But remember, it’s extremely difficult (and risky) to manage everything on your own.

Throughout the process of purchasing your investment property, it’s important to seek advice from high-quality professionals. Find an accountant you can bounce ideas off, a good solicitor who specialises in property, and consider using a group like Providence to assist you with finding and negotiating a property to suit your goals.

  1. Think outside your city

Writing-off interstate investments is one of the greatest missed opportunities we see people make. Australian states, cities and suburbs are not performing equally – some are peaking, whilst others are starting to seriously heat up. Locations such as Brisbane and Hobart for example still have plenty of potential for growth.

If you’ve done your due diligence, researched the market where you intend to purchase and have a good team behind you to help secure the sale and manage the rental – then there’s little reason for striking interstate properties off your shopping list.

  1. Don’t over-borrow

Most investors can’t afford to be short-sighted when it comes to borrowing. For example, investors borrowing at 90+ percent can find themselves in a pickle when interest rates go up and their rental returns don’t. Other changing circumstances need to be considered too – large expenses like weddings can bring on financial strain, whilst childless couples starting a family need to consider whether they can afford their mortgage if they drop to a single income.

Key takeaway – borrow smart and give yourself a buffer.

  1. Shop for value

The core objective of your investment is to make money, so shopping for value is crucial to kickstart the process right. Shopping for value includes understanding the market in real time, as well as how it’s performed historically. You should aim to secure a deal that’s in-line with trends or (even better) undercuts the average price. If you pay too much for your investment it will take longer to turn a profit and for you to achieve your goals, so make value-shopping a top priority!

Are you currently looking to purchase an investment property? Learn how we help property investors buy better and faster,  for the lowest possible price (anywhere in Australia)….

You can be sure you will avoid making property investing mistakes when you work with property research specialists such as the team we have at Providence.

Surprising factors that can impact rental yield

For decades now, owning investment properties has been considered by most Australians as an outstanding means of building wealth and long-term security.

And for good reason.

Property markets in Australia have enjoyed moderate (and in some cases, dramatic) long-term growth over the past 50 years, which have provided excellent returns for countless investors. What’s more, many have taken advantage of generous tax deductions – including from negative gearing, which can reduce the amount of tax you pay on earnings at tax time. Meanwhile, the equity in investor portfolios has been a valuable resource, allowing investors to secure finance to achieve other goals – whether they be investment or lifestyle focused.

Pretty good, right?

Then there’s rental income – arguably the most obvious and sought-after motivation for investors to purchase additional properties.

Renting out your investment property gives you an income to contribute to your home loan, which usually means you can pay it off sooner. Provided you pay your mortgage off, investment properties can become a long-term income stream that typically increases over time.

At this point we should pause to mention that the aforementioned benefits depend on a few factors. Market conditions and economic trends play a significant part, as does the importance of choosing a good investment in the first place (we can help you with that). And even in an ideal environment, it’s important to be aware that fluctuations happen, including with rental returns. Let’s look at some of the reasons why.

Why rental income fluctuates?

Interestingly, weather is one of the biggest influencers of rental demand. According to a study conducted by, data shows that demand for rentals drops at the start of winter and recovers before spring. This is particularly true of beach side suburbs, which typically reside in areas that are less popular in cooler months.

Rental properties up for grabs at the end of the year can also be impacted by decreases in demand. Both June (winter) and December are generally the easiest months to find a rental property, according to, with far less competition in the market – which can force prices down.

Meanwhile, rental properties in suburbs close to universities can also experience fluctuations depending on the time of the year. During university breaks, demand often peaks, whilst throughout semester (when students are immersed in their studies), it plateaus.

Other factors which can impact rental returns include the economy of the town or suburb where the property is located – for example, an emerging or exiting major business or industry in the area, such as mining can drive demand up or down. How scarce similar rentals are in your area (i.e. supply and demand) is also another major factor. Whilst supply of new properties on the market is inevitable and can have a short-term effect, you can safeguard against this by buying in a suburb with low vacancy rates and by checking with the council on the number of new development applications in the pipeline. Another potential impactor includes the holiday season – availability of lease options via websites like Airbnb can create upward pressure on rentals when there’s fewer long-term options on-hand.

The key takeaway

Investors should expect some fluctuations in the rental yield of their investment property – it’s normal. Ultimately, the most important thing investors can do to shield themselves against fluctuations is to invest wisely in the first place. Choosing an investment property that will be ‘ever-green’ in its appeal to renters – through factors such as location, style and features is a way to help ensure consistent results that cannot be underestimated.

Like basically all investment properties, your rental will do best when viewed in the long-term.

Are you currently looking to purchase an investment property? Learn how we help property investors buy better and faster,  for the lowest possible price (anywhere in Australia)….

Over the years at Providence we’ve gained a reputation for achieving superior results through research-driven insight, meticulous property selection and the highest levels of advice and customer service. Our services enable you to save time and money in the selection of property with ease, simplicity, confidence and proven results. If you’re interested in finding an ideal investment property, get in touch with our expert team.

How property rewards those who wait

Australia has one of the most impressive track records for long-term property yield in the world, but often, the biggest mistake property investors make is not being patient enough to truly reap the rewards.

Just how well has Australia’s property market performed?

Well, according to a recent report from the Switzerland-based Bank for International Settlements, the long-term rise in Australian house prices since the early 1960s has been the most sustained property market upswing in the world.

But that doesn’t mean the country is immune to stagnation and slumps. In fact, these are a normal part of the property cycle – that is, the habitual rise, fall, stabilising (and then rising once again) of property prices.

Like many other types of long-term investments, it pays to be patient and remember that in many cases short-term volatility is being underpinned by long-term growth – you just have to hold on!

Take some of our clients as an example:

In 2008, we negotiated the sale of a block of 91 two-bedroom, two-bathroom, one car apartments in Sydney’s southwest.  The sale price was $405,000 per apartment.

We sold all 91 apartments and a couple of years on, some clients mentioned that the apartments had only grown slightly in value and that rental yields were low. We reminded these clients to be patient, mentioning that they purchased in a good suburb and at a good price and that they will see the greatest results if they hold onto their properties.

Nevertheless, a few became restless and sold in 2010/2011. After costs, they made little profit, most just breaking even.

Nine years on the apartments were recently valued conservatively by a bank at $875,000 ­– and they’re expected to continue growing in value. Over this period, we have seen rents wax and wane, some years increasing by as much as 5%, others decreasing by a few percent as more property came onto the market, followed by years on flat growth before increasing again.

The takeaway here is to be patient and to consider the long-term growth in value of your investment – though that’s not to say there won’t be a time when selling is the best option. This could be because of unexpected life events requiring you to free up your money, or to take advantage of a suburb/city boom that may be short-lived (e.g. holiday towns). You may consider selling a property to finance the acquisition of an investment with greater potential.

In any of these cases, the team at Providence can support you with advice and services to help you make an informed decision about buying your next home or investment property, or deciding which agent to use and which approach to take when the time comes to sell.

But remember, be patient!

Ultimately, the message here is to be patient with property. In many cases, the longer you hold on, the greater your returns. Fluctuations in market, including stagnation and slumps are normal in all property markets, though in almost every case, and certainly in Australia’s big cities over the past half-century, the overall property price trend is pointing one way… up.


If buying your ideal investment property for less sounds appealing, download our latest free report for the complete 7-step process for securing the perfect investment property in your price range. DOWNLOAD HERE.

Providence Property Group is a specialist property advisory firm providing unparalleled research-driven insight into the Australian residential, industrial and commercial property markets. Providence is a strong advocate for responsible and informed investing and supports clients to find and secure successful investment opportunities across Australia.

Property Cycles and You

Wash. Rinse. Repeat.

Many people apply this methodology to hair, but there’s a similar pattern that exists within the property market – and understanding it can be incredibly empowering.

Have you heard of property cycles?

If you haven’t, you’ve at least experienced them. Think a steady (sometimes surging) period of property growth, an inevitable downturn and then the stabilising period where a ‘new normal’ (average house prices) is set. Property cycles are not often experienced nationally, in fact they are usually localised.

For example, rarely will every Australian capital city be in the same stage of the cycle at the same time. Each market is influenced by unique factors, which impact price and demand. Sometimes even within cities, different suburbs will experience their own cycles.

In any case, this phenomenon is commonly referred to as Boom. Slump. Recovery.

Many factors influence the property cycle, including social, economic and political trends, along with population growth and property supply. Despite fluctuations, history has shown that property cycles are quite predictable and come with a reliable set of markers during each stage.

Here’s a breakdown:

Boom (growth phase) – rental yields increase, restrictions on property lending loosen, properties sell faster, house prices start rising slowly and eventually begin to peak, increased media attention and urgency around property affordability is also common

Slump (the value phase) – the market starts to slow and eventually stagnates, property prices can fall but not always, rental vacancies increase, properties take longer to sell, investor cash flow is reduced and stricter lending conditions often come into play

Recovery (correction phase) – property prices begin to show positive growth again, rents and cash flow increase for investors, properties begin to sell quicker and cautious optimism from market observers typically ensues

We’ve documented the overall property cycle and its nuances extensively. A full cycle is, on average, made up of around 18.5 years, including:

  • First upswing / return to growth – 7 growth years
  • Mid Cycle Slowdown – around 1 year typically of sideways or slightly negative movement
  • Second upswing / The boom – 7 growth years
  • Peak, crash, recovery – 4 years negative growth

These property cycles have been tracked since the 1700s and aside from interruption from very significant global events, typically world wars, they have been remarkably consistent.

How to use the property cycle to your advantage

This is the part you’ve probably been waiting for. We know the property cycle is real and we know that harnessing it is a strategically smart way to maximise property returns and rental yield. But how do you determine where various properties are in their cycle?

Many clients come to us asking this question and fortunately, we have an entire service based around providing expertise in this area.

Our research begins by considering market cycle timing using in depth analysis of cycles.

We recommend areas that are close to the bottom of the cycle and which are poised for an upswing or which have just commenced their upswing. In this way investors get an immediate equity lift in their portfolio from the market itself.

In addition to market timing insight, we review broader national and international themes and trends that will benefit particular geographical areas of Australia. Our data comes from overseas government research, Australian federal, state and local government departments, leading economists and analysts along with research from international and Australian banks and property research firms.

The result is an informed purchase for you, and one which has the greatest chance of reaching your short and/or long-term investment ambitions.

Get serious about learning more about property cycles

If this blog has whet your appetite on the topic of property cycles, we encourage you to explore our services and learn more about how we can use our expertise to seriously support your property-purchasing efforts.

Get in touch with our team and benefit from our research-driven insight and high-level strategic advice.


property cycles

8 investment property considerations you shouldn’t ignore

Looking for a great investment property is not an easy task, especially when you don’t really know what you’re looking for. It’s vital to understand which factors should be considered that make an investment property a great decision.

If you want to purchase an investment property that will be effective in creating wealth for you, there are a number of things to consider. Some are essential, some less so — some you really can’t afford to ignore.

Let’s look at eight considerations that are a must when it comes to buying an investment property

  1. Know your goals If you are to take only one thing from this article, it should be to “Agree upon, Set and Stick to your goals”. Generally, people who invest in property are looking for four main factors. These are:

-Growing Wealth through Equity

-Saving for retirement

-Increasing their income from rental yield, and

-Minimising their taxable income through Depreciation & Tax Credits

It is imperative that you know WHY and HOW this investment is going to benefit you in the long term. Providence always           takes the time to establish your goals and circumstances before presenting properties that match your criteria.


  1. Capital Growth Rate – If you are looking to build your wealth via equity with the goal of either creating a property portfolio or paying off your home loan faster, you are going to need to know the 10 and 20-year capital growth averages of the suburb you are looking at investing in. This data will give you a conservative and accurate understanding of what to expect the property’s value to increase by in the years to come.

    Take note that for the best chance of achieving your financial goals, you should do the figures to ascertain when you will be able to afford to purchase your next property, and how many properties you need to strive to own.


  1. Rental Income – Most Australians use their property’s rental income to service their investment loan. You should always obtain multiple rental appraisals from local agents to minimise surprises and use the average of all three to create your budget.


  1. Use a professional property manager – Poor handling of your property and its tenants could seriously hinder your wealth creation journey. Engage and pay for a professional who will take care of all aspects of your property’s management. Remember, the rental management fee is tax deductible, so choose a rental manager who minimise any potential stress and maximise your property’s performance. Get a rental manager to take care of everything, from paying water rates and body corporate fees to land tax and council rates. You pay them to manage your property so get them working for you.


  1. Vacancy Rates – In order to make sure you are buying a property in an area where there is low supply and high demand, it’s important that you know a suburb’s current vacancy rate. Vacancy rates represent the amount of properties in a specific area that are vacant or unoccupied at a particular time. Vacancy rates can be affected by a number of factors, one of which is the amount of new properties that are being built. This is why you should always be up to speed with local council development applications. You can find this information on most local council government websites.


  1. Employment Drivers – It’s very important to know what employment centres are going to sustain and stimulate job growth near your property. Why is this important? Because job growth will promote steady population growth. As more people gain employment in the area, they are likely to want to live close to work too, resulting in increasing demand for property. And more demand will only continue to drive property values up.


  1. Transport – Location is and always has been a crucial factor when choosing where to live. People are frequently willing to sacrifice the size of their land or even the size of their home for a desirable location. Easy access to amenities is sure to increase the desirability of any area, so when looking at a property’s location, ask yourself: is it practical and easy to travel to local amenities, education centres and entertainment venues? What public transport infrastructure is already established or coming?


  1. NAPLAN Scores – In 2008 NAPLAN was introduced into the Australian school system. Its impact on the property market: Suburbs within catchment zones of high NAPLAN-scoring schools have seen increased demand. Parents are seeking out homes which allow their children to attend these schools that will potentially give their children a higher level of education.


Property is likely to be the biggest investment of your life. With the right support and guidance, it can also be the best investment you ever make. Speak to Providence today about growing your property portfolio. Email us at or call 1300 25 25 50.

Blacklists – the truth behind the bank’s ‘high risk’ suburbs

Chances are you’ve heard of the banks’ property ‘blacklists’ – the suburbs that the banks really don’t want to lend you money to purchase in. If you’re shopping for a loan to buy in a bank’s blacklisted suburb, you will find they will decrease the Loan to Value Ratio (LVR), therefore requiring an additional deposit of 20 or 30 per cent and reducing the perceived risk to the bank. Or they simply won’t lend to you.

A quick Google search will give you results like an article in October 2017 that claimed 600 towns and suburbs were on NAB’s property lending blacklist. But how valid are these lists and how transparent is the information provided? What agenda is driving these suburbs to appear on the list one month and gone the next? How valid are these blacklists, and how they can affect people as purchasers, whether you are an occupier or an investor?

The central question here is how does a bank decide that a suburb is too high risk for their liking and should belong on their blacklist?

There are two reasons why a suburb might appear on blacklists.

Reason 1. The banks believe a certain suburb has too much supply, with an excess of development being carried out. This could apply to suburbs with high density housing or low density new house and land estates.

Reason 2. The banks have too much exposure in one particular suburb. For example, the bank may have lent too much money to investors and/or owner occupiers.

Looking at the first reason, a suburb being on a blacklist can be a good reason to dig deeper and look at the supply and demand in the area. For more on how to utilise supply and demand figures in real estate, take a look at our recent article ‘The danger of misunderstanding figures for supply and demand in property’. Don’t just accept that the suburb you’re interested in is on a bank’s blacklist and scratch it based on that fact alone, because it just isn’t enough — as is clear from reason two.

Reason number two is a crucial reminder that different banks may treat your lending needs differently based on their own interests. While one bank may be looking to limit their exposure in a certain suburb, another may not have that same overexposure.

The truth behind blacklists is that banks may very well choose to blacklist suburbs because of their personal, circumstantial risk assessments, not to protect potential lenders from a poor performing suburb as some may be lead to believe.

When property blacklists and results don’t align

Over the last 12 months the Sydney property market has declined 0.32%, however the suburbs NAB Blacklisted in Oct 2016 have performed very well.

This list shows Sydney suburbs that were on that NAB October 2016 Blacklist, demonstrating that while a 20 per cent deposit was required to gain a loan to purchase in these areas, they performed well.

Chatswood NSW: 12 Month Growth House 4.42%, Apartments 7.07% growth

Average 10 Year Capital Growth: House 9.91%, Apartments 7.58%

Putney NSW : 12 Month Growth House: 31.58%

Average 10 Year Capital Growth: House 8.99%

Newington NSW: 12 Month Growth House 5%, Unit 2.64%

Average 10 Year Capital Growth: House 7.78%, Apartment 6.29%

Auburn: 12 Month Growth: House 9.48%, Unit 5.66%

Average 10 Year Capital Growth: House 9.32%, Unit 8.04%

Baulkham Hills: 12 Month Growth: House 10.91%, Unit 14.04%

Average 10 Year Capital Growth: House 9.22%, Unit 7.65%

The Ponds: 12 Month Growth 7.14%

Average 10 Year Capital Growth: 14.15%


The impact of blacklists on selling

Blacklists aren’t just a buyer’s consideration — if you’re selling in a blacklisted suburb, you could be affected too. We frequently help clients through the process of selling property, and a blacklist is something we take into account when timing a sale.

Even if a suburb has been performing well, reluctance from banks to lend to buyers interested in your blacklisted suburb or requiring a larger-than-normal deposit means you could experience reduced interest or find your buyers require more time to secure finance.


The broader impact of blacklists

Understanding that blacklists are not always what they seem is essential because they are often referenced as a means of assessing the state of the property market.

Lending blacklists that keep coming up from banks seem to be the basis of many articles that feature in publications, such as the Financial Review as an example. These articles use these lending blacklists as an indicator of what’s happening in real estate more generally. However, as we’ve explored throughout this article, while a suburb appearing on bank blacklists could encourage you to explore its potential risks, there are many bank-centric reasons why blacklists feature the suburbs that they do from one month to the next.

Certainly major economic occurrences such as a downturn in the mining industry will trigger a bank to place suburbs on a blacklist, but only when the major industries are slowing down. In this instance, the property market would have already started to cool when banks announce the suburbs to go on the blacklist.

In summary, while you shouldn’t base property decisions solely on blacklists, they are still something to add to your research arsenal. Never let a bank’s property blacklist deter you from a purchase without doing the research yourself.

Better yet, enlist our help in assessing the optimal property investment choices to reach your goals. We take a three-tiered approach to property research and our experienced team of property investment experts can use our proven strategies to help you discover advantageous property opportunities. Contact us here or call 1300 25 25 50.



Written by Lynton Stevenson, Managing Director at Providence Property Group.

Buying to invest and renting where you love

As many of us know, buying where you can afford does not always equate to buying in an area you love. Even the worst house on the best street can be way out of budget these days. So how can you enter the property market to become a home owner AND live where you really want to live? It’s simple really: rent where you love while buying to invest where you can afford.

Though often overlooked as an option, there is no rule that says you need to own your principal place of residence in order to invest in property. In fact, it’s a really effective double play with many potential benefits.

Of course, you’ll need to make some smart decisions for this to work for you. But when done well, buying an investment property while renting in your dream location can give you all the benefits of property ownership without sacrificing your lifestyle.

There are other perks too. Let’s consider them:


Effective wealth creation — sooner

By the time you saved enough or waited until circumstances allowed you to afford to purchase in the area you truly want to live in, chances are you will have missed out on a lot of capital growth. Not to mention strong rental returns from your property (again, it’s all about choosing wisely — this is where we really shine for you).

Purchasing to invest rather than live could even enable you to generate cash flow. Down the track, or right away in some cases, rent from your investment could be paying off the property, and contributing to or even covering your rent! Compare this to owning your own home — you won’t generate any cash flow from it and in fact won’t really know if you have any profit from it until it comes time to sell.


Tax advantages on investment properties

As an owner of rental properties, there are many tax benefits for you to lessen the cost of property ownership. Many of your property expenses such as improvements, maintenance and repairs, can be offset against your rental income. Depreciation of your property can be a tax deduction. Even the interest on your property loan can be claimed as a tax deduction, if your property is negatively geared.

When done properly, the cost of paying down the loan on a rental property should be achieved by the Tax Man, the Tenant and to lesser extent, You, the investor. The debt on a rental property is good debt, as opposed to owning your principal place of residence, which is bad debt.

We can help you get the most out of your investment property (and the tax man), just chat to our team.


More opportunities

Continue to rent in the location you love, while in the meantime your investment property increases in value or you buy more properties to create an impressive portfolio. Buying to invest means you could go on to purchase additional investment properties without the need to sell up and pay capital gains tax.

By living in a rental, you can change where you live without the need to pay expensive fees like stamp duty.

And if you do still want to purchase a principal place of residence, you’ll have equity behind you to perhaps even end up buying in that dream location after all!


Share the investment 

Depending on your financial situation it may be worth considering buying an investment property with a trusted family member or friend. You would be unlikely to do this when purchasing a home to live in, but sharing income drawn from an investment property can work.


Explore your options and make the right property choice to suit your circumstances and goals

Your property goals are our property goals at Providence Property Group. With a focus on research and a commitment to results that exceed your expectations, you can trust our team of property investment specialists to guide you in the right direction based on your goals and budget. In fact, we can do more than just guide you — our services and expertise extend to helping you right through the property research and purchase journey, and beyond.

Is buying to invest right for you? Start a conversation with us today by calling 1300 25 25 50 or email Alternatively, just pop your details into this contact form and we’ll get back to you.

The danger of misunderstanding figures for supply and demand in property

Supply and demand is always a hot topic in property. It’s something we get asked about all the time, and in investing it is very important to know whether the area you’re considering has an oversupply in property, or an undersupply.

This is something we keep a very close eye on here at Providence, and in this article we will take a closer look at some of the key numbers. It’s very easy to get distracted by photos or videos of lots of new homes being built in housing estates or new apartment blocks going up in a given suburb. We see plenty of articles in the media that jump to fast conclusions about the state of supply but provide zero quantitative research to reach their conclusions.

To draw our conclusions we use a range of data; some of it in the public domain, some of it from fee for service databases. This data may not be perfect, but we believe it is quite accurate and a good basis on which to draw our conclusions.


Supply and demand in Australia’s property market — the real figures

What we will look at today is overall capital city supply and demand data focusing on Sydney, Melbourne and Brisbane. This consideration is one of many – considering the supply within and around any given suburb where you’re considering investing is essential. As part of the work we do, we examine and analyse supply and demand data both at macro/city level and at micro suburb level.

Looking back a few years, through the GFC there was certainly an undersupply across the capital cities. Developers couldn’t get funding for new developments, so less developments were built. Meanwhile, migration rates stayed the same or even increased during that period and so there was a consistent undersupply for a number of years.

As we moved our way through the GFC and banks began to loosen credit for developers and home buyers to access construction funding, we’ve seen a supply response, particularly over the last 4 years. Whether you’re in Melbourne, Sydney or Brisbane, there have been a lot more cranes in the sky and more properties being built.

As part of our analysis, we’ve looked at population growth, establishing what population growth is occurring in each capital city. We then looked at the predicted demand based on a requirement of 2.6 persons per household (the average number of persons per household, according to the ABS).

Our research then takes into account the number of dwelling approvals and the approximate dwellings that will be completed based on those actual dwelling approvals. Then we have to make an inference about the number of dwellings that will actually be completed, because of course all the dwellings that are approved are not necessarily completed. So we’ve done this on the basis of the statistics for the last 30 years. We also make a subtraction for a number of demolitions, because not only are there properties being built, there are many properties being demolished to make way for the new.

We often see highly emotive articles about oversupply based purely (and erroneously) on the number of development applications that have been submitted – not taking into account these other factors. A significant proportion of development applications do not make their way to completion. The media frequently talks in crisis and generalities to drive circulation, to get eyeballs, and to do whatever it is that they need to drive advertising. So it’s really important that when supply and demand is discussed, it is based on facts and data, not emotion.


Supply and demand in Sydney

Take a look at the chart below and you’ll see that in Sydney in 2011/12 and 2012/13 there was a shortfall in required dwellings, moving into a surplus in all the following years. Not a massive annual surplus, but a small one. This has created an accumulated surplus of around 29,990 dwellings to date, which as a proportion of the total dwellings in the city is a very small percentage. We don’t see this as anything to be concerned about at a macro level. However it is certainly meaningful on a localised area basis, and there are absolutely areas where this concentration of excessive construction will have an impact. These would include Zetland, Epping and Holroyd.

oversupply in property sydney

Melbourne property oversupply or undersupply?

Now let’s take a look at Melbourne. We will see that once again during 2011/12 and 2012/13 there was a shortfall in required dwellings, moving into a small surplus in all the following years. This has created an accumulated surplus of around 31,521 dwellings to date which, once again as a proportion of the total dwellings in the city is a small percentage. We don’t see this as a concern at a macro level, however areas where this property oversupply is concentrated and would be of a particular concern would include Southbank, Docklands and the CBD.

What about demand? The ABS predicts that Melbourne is increasing in population by about 1800 people per week. So based on dwelling size, the number of people per dwelling being 2.6, Melbourne requires 700 new dwellings per week. So that 30,000 oversupply that we are talking about is about 40 weeks of excess supply based on current growth numbers.

oversupply in property melbourne


Now we’ve seen from those numbers that supply moves in waves. There are periods of oversupply and undersupply, and what we’re seeing in bank funding to developers is credit has been tightening dramatically.

Importantly for the supply numbers not only in Melbourne but also in each of these three cities, we are seeing the trend of expected completions falling significantly. You can see that in the figures. We expect to continue to see lower completion numbers across Sydney Melbourne and Brisbane in the near term.


Brisbane’s supply shortfall

If we take a look now at Brisbane, we see supply shortfalls in 2011/12, 2012/13 and 2013/14 and again in 2016/17 and 2017/18 resulting in an overall undersupply/supply shortfall of 13,248 dwellings. This is interesting news considering we have seen reports of oversupply in various articles on Brisbane.

There has certainly been an oversupply in specific suburbs – such as Brisbane CBD, Fortitude Valley, Hamilton, Albion and the East side of Chermside. But an overall supply shortfall is an interesting revelation and is one of the reasons we think parts of Brisbane make it an appealing property investment destination.

oversupply in property brisbane


Dwelling-type specific oversupply in property

Another interesting dynamic we’ve seen in areas with apparent oversupply in property is that there are always markets within markets. Although there may be an oversupply of a certain type of property within a specific suburb – for example, small living area, high volume, commoditised, apartments in high rise buildings – there can be in fact a very strong market in that exact same suburb for higher-quality, more scarce/lower supply property.

For example, higher quality, lower density dwellings or premium quality oversized apartments eg 3 bed, 2 bath, 2 car. We’ve seen a number of examples of this in various suburbs around the country where these scarcer types of properties have demonstrated rental yields, vacancy rates and capital growth as if there was no oversupply in the suburb. In effect, a two-speed market for properties in that suburb. This is something that we will explore further in later research posts.

If you would like further detail or to discuss supply in any particular markets you’re considering, please feel free to contact us and we can put you through to one of our research analysts.

3 things you should know before investing in Sydney

As the most sought after and populated capital city in Australia, it’s no surprise that people get excited about the prospect of investing in Sydney.

Over 70,000 people make the move to Sydney every year! With our world-class landmarks like the Opera House, Sydney Harbour Bridge and incredible beaches, it’s really not surprising that so many people want to call Sydney home.

While our beautiful city and culturally diverse suburbs have many drawcards for people choosing somewhere to live, is investing in Sydney really the best option currently?

Considering investing in Sydney? Read this first.

As leading data and research professionals for property in Sydney and beyond, at Providence we spend much of our time analysing the performance and cycles of Australia’s property market in various regions. Our role as Buyer’s Agent, Selling Agent and more means we combine our extensive knowledge with on-the-ground expertise to be able to provide you with valuable property market insights. Here’s what you need to know before investing in Sydney:

  1. High premiums

In the past seven years since 2011, the Sydney property market has gained over 76% in capital growth (averaging 10.85% per annum). As a result, Sydney buyers are now paying the highest premiums in Australia. Compared to other states, as much as 50% more than Brisbane and 30% more than Melbourne.

  1. Weak yield

You are also receiving the lowest rental yields. Which means the cash flow return on your money invested is the lowest in Australia at around 2.8%. Not so attractive when compared to Perth at 3.7%, Brisbane at 4.1% even Hobart at 5%. As a result of Sydney’s weak yield, ability to service their loan is now becoming out of reach for most investors.

  1. Market currently cooling

Did you know, between 2001 & 2011 the city of Sydney was the worst performing capital city throughout the whole of Australia with an average yearly growth rate of only 4.4%? How did this compare to other cities? During this time Hobart had a higher average yearly growth rate of 4.6%, Melbourne 7.1% and Brisbane 7.68%. Our research suggests that the Sydney Market will cool over the next twelve months and capital growth numbers will probably normalise to similar levels we saw between 2001 and 2011.

The good news is that the investment dollar is transferable. This leads investors to explore opportunities in other major capital cities where historically during this phase of the property cycle they have benefited from above average increases in capital growth.

So where should you invest next? That is something we can explore with you, to ensure you have the best chance of choosing an investment that works hard for you and gets you the results you’re looking for. Contact us here.