Great property investments can be defined in different ways.

Here’s a definition that will resonate with many investors:-

A long-term lease to an international tenant, a high net rental yield and potential for capital growth from a property that occupies a large block in a high-profile location.

It’s credentials like those that make service station properties so highly sought by investors who understand the fundamental benefits of commercial property.

Real Estate Investing for reliable Income + Capital Growth Residential v Commercial property – Pro’s and Con’s Accessible Commercial Property Investing – Syndicated Ownership Amplify Fuel & Convenience Trust The future of Fuel & Convenience Centres (Service Stations)

Rossi says service station properties are among the most compelling for multiple reasons, which include …

Long leases to international brands (including Caltex, BP and Coles Express).

Locked-in rental increases Goodwill and geographic necessity High barriers to entry

Steve Palise, a member of Hotspotting’s Panel of Partners, says notwithstanding the gradual rise of electric cars, petrol stations will still be in huge demand until 2040-2050 especially highway sites and in country areas.

“Trucking and logistics technology is not there yet so major arterial roads will still require petrol stations even longer than this,” he says.

“Over time there will be a phase of converting petrol stations to a blend of food, entertainment, customer experience, co-working, and fitness.”

To connect with Peter, you can reach out by emailing him at peter.rossi@amplifyfm.com

To connect with Steve, please visit https://www.paliseproperty.com/

There really is no realistic prospect of rental vacancies rising significantly any time soon, which is grim news for tenants in most parts of Australia.

Vacancy rates continue to be close to those historic lows that have become the norm in the past couple of years and I can’t see any way they will improve in the foreseeable future.

The politicians who have created this unprecedented shortage of rental properties are clueless about how to fix their mess – and most of their actions which impact on the situation make it worse, not better.

The latest data on vacancies nationwide – from one of the key sources, SQM Research - has the national vacancy rate at 1.3% in June, the same as it was a year ago. We still have capital cities with vacancy rates well below 1%, including Adelaide, Perth and Darwin.

That June vacancy rate was slightly up on the rate for May, but that’s attributed to seasonal factors.

Here’s what Louis Christopher, managing director of SQM Research and one of Australia’s most experienced and respected research analysts, says about the current situation and about the future of vacancy rates:

“Based on history, we have now reached the peak in rental vacancy rates for Winter. It is likely that, vacancy rates will now begin to tighten again and keep tightening until November.

“So far this year, we have recorded very similar vacancy rates compared to the same period in 2023.

“Overall, the national rental market remains in severe shortage and barring some exceptions, is not expected to materially soften out of the rental crisis for some years.”

So what does this mean for residential rents?

Well, it doesn’t necessarily mean they are going to continue rising at 10% or more per year.

While vacancies are set to remain dangerously low for some time, there is a ceiling beyond which rents can’t rise because to the capacity of tenants to pay.

Louis Christopher says: “Much of the structural rental shortage has now been priced into the rental market and so I do believe the days of 10-20% plus annual rental increases have come to an end.”

I agree. Tenants, who tend to have lower incomes, have had years of rising rents and they can’t keep paying more and more in rent, in times when they’re also paying more for food, electricity, petrol and other essentials.

But the situation of ongoing ultra-low vacancies does mean that rents won’t fall. They will remain at the current high levels for the foreseeable future.

There will continue to be upward pressure on prices and rents for the foreseeable future, with no end in sight for the imbalance between supply and demand in residential property markets across Australia.

National valuation firm Herron Todd White reports that, nationally, home prices have increased for 17 consecutive months and the median home price is now $784,000.

According to Oxford Economics, the nation’s housing supply and affordability crisis is likely to deepen and will remain a “chronic” issue for years to come.

Oxford Economics is predicting we will fall well short of the Federal Government’s ambitious plan to build 1.2 million new homes over the next five years.

A new report from the firm, Building in Australia, forecasts just 960,000 new homes will be built between now and 2029, well short of the 1.2 million target in the government’s National Housing Accord.

The figures underline industry fears that it will struggle to keep up with an ongoing population rise fuelled by a wave of new migrants – and also not helped by labour shortages, dysfunctional planning systems and high construction costs.

The report author Timothy Herbert, Oxford Economics head of property and building, says while new housing construction could well reach record levels by the end of the decade, it wouldn’t be enough to keep up with demand.

Herbert says: “While industry capacity is showing signs of improvement in some areas, labour shortages remain that will place a speed limit on the early to mid stages of the recovery.”

But he also says: “We will continue to experience a dwelling stock deficiency, but activity will inevitably recover in the residential sector. All build forms will contribute, driving total dwelling commencements to a new record level by the end of the decade.

“Attached dwellings are forecast to join the upswing from FY2026 with support from falling interest rates, the upward rebasing of rents, co-ordinated social housing investment, and planning tweaks in key markets. Build-to-rent development has risen to around one-fifth of apartment starts and is expected to grow this share a little further through the late decade.”

This report adds to the views of many others that the Federal Government’s stated goals for housing construction were never realistic and had no chance of being achieved – and therefore the shortage would not be adequately addressed, keeping pressure on prices and rents.

The Housing Industry Association earlier this month warned the government would fall short of its housing targets by 64,000 properties in the first year alone.

To reach the 1.2 million target by the end of June 2029, an average of 240,000 homes need to be built each year, a level that has never been achieved in the nation’s history.

Only 963,000 new homes were completed over the past five years despite the pandemic HomeBuilder stimulus, which sent building levels to record highs.

The HIA is calling for tax relief, planning reforms and incentives to attract more workers to the industry in order to avoid what it predicts will be a 180,000-home shortfall over the next five years.

And the Government-appointed independent advisory body - the National Housing Supply and Affordability Council - has also shot down the government’s targets, estimating a homes shortfall of almost 300,000.

It suggests the private market will only be able to supply 903,000 new homes to 2029.

Real estate consumers tend to place their attention on the markets receiving the most media headlines, which primarily are the ones that have shown the biggest growth in the past month or the latest quarter or year.

But that is not the best measure of which locations have been showing the best growth.

To get a better picture of locations that out-perform, you need to look at longer time frames, such as the past THREE years, not the past week or the past month as media tends to do.

News media continues to obsess over the Perth market where prices currently are rising the fastest and they tend to imply that this boom will keep on rolling for years to come.

It won’t. Perth has already had a couple of years of major price growth and there are already signs that the market has peaked.

One of the things that would be more useful is for the media to take a broader focus of price performance, to give consumers a more enlightened picture of where the best growth has been.

For example, where in Australia have we seen the biggest growth over the past three years?

It would no doubt surprise many to learn that there are a dozen regional centres across Australia which have had considerably higher growth since 2021 than Perth – and most of the other capital cities as well.

Research published by one of Australia’s best real estate analysts, Simon Pressley of Propertyology, shows that the best performers on capital growth over the past three years have been regional cities - and that the best of the capital cities has not been Perth, but Adelaide.

So which location has recorded the highest growth in median house prices in the past three years?

According to Propertyology, the answer is Bundaberg in Regional Queensland, where the median price has risen 63% in three years.

Close behind comes Wagga Wagga in NSW, which has grown 56%.

Then we have little-known Gympie near the Sunshine Coast, up 51%, alongside Hervey Bay a little further north in Queensland, which also increased 51%.

In fifth place we have the first of the capital cities, Adelaide, which is up 50% on the pricing levels of 2021.

Next, in order, we have the Sunshine Coast in Queensland, Mandurah in WA, Rockhampton in Queensland, Tamworth in NSW, the Gold Coast in Queensland and Albury-Wodonga at the NSW-Victoria border.

In 12th place, up 40% over three years, is Perth.

Now, I’m happy to report that every one of those out-performing locations across the nation have featured strongly in our hotspots reports over the past 3-4 years.

And we featured them BEFORE that big period of three-year growth started.

In the 2020 editions of our National Top 10 Best Buys report, the Sunshine Coast was our top pick – and went on to be a national leader on price growth over three years.

In the 2021 editions of Best Buys, Bundaberg, Tamworth, Albury-Wodonga, Wagga Wagga and the Gold Coast, as well as key locations in Adelaide and Perth, all featured in our national top 10 lists – BEFORE the three years of growth happened.

And remember that, back in 2020 and early 2021, economists and the media generally were telling us that prices were going to crash everywhere. We simply did NOT agree – and we got it right.

This speaks to the essence of intelligent investing – accessing good research reports that tell you where the highest growth will happen BEFORE it happens.

NOT diving into markets where the media says prices have grown the most in the past year. That is the essence of BAD investing.

It’s the dream for many Australians: an annual income above $100,000 without working. It sounds too good to be true, but with sensible – and safe – investment strategies it’s possible.

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Investment expert Danny Buxton says investors can steadily build a portfolio of six properties and give themselves multiple options to create a six-figure passive income.

He has done it himself and clients of his business Triple Zero have achieved it. “There are different ways you can do it,” Buxton says. “We do it with new-build properties. The key to success is having the right team of experts around you.”

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For a long time I have argued that housing is expensive in Australia because politicians have made it so – AND keep making decisions that add to the cost.

The value of all residential real estate in this country is under-pinned by the cost of creating new dwellings – and those costs keep rising, way beyond the rate of inflation.

One of the biggest elements in the cost of new homes is the taxation component.

The research shows that a massive share of the cost of creating a new dwelling in Australia is taxes, fees and charges at all three levels of government.

The Federal Government, the various state governments and local government authorities all use residential real estate as a cash cow – in other words, they milk it for revenue.

Over the past 5-10 years, there have been a number of research reports which quantified how much of the cost of new dwellings comprises government imposts.

Some of that research has come from the building industry and some have been independent research reports by credible organisations.

And they have all arrived at similar conclusions: that somewhere between 30% and 50% of the cost of a new home in Australia is taxes, fees and charges at the three levels of government.

Why is it 30% to 50%? Because the percentage differs depending on location.

And now that reality has been confirmed by a new research report by the Property Council of Australia in Queensland – which has found that one third of the cost of new homes and apartments in that state is made up of government charges.

The report says: “The Queensland Government’s promise of delivering ‘a home for every Queenslander’ cannot be fulfilled under the current tax model.”

The ‘Stacked Against Us’ research report shows that government taxes, fees and charges make up 32 per cent of the total cost of a new house and land package in Queensland and 33.3 per cent of a new apartment.

For a $730,000 mortgage, that equates to $233,440 in taxes, fees and charges.

The report says: “The impact of these tax settings is seeing Queenslanders spend the first nine years of a 30-year mortgage package paying off prohibitive taxes, fees and charges – plus interest.”

And the report also says: “Queensland is in the grips of a housing affordability crisis. A key reason why houses aren’t affordable is the increasing burden of taxes and regulatory costs in the development of new houses and apartments.

“Taxes on new homes are a double whammy – they increase costs (and therefore sale price) of new builds, in turn increasing the costs of buying or renting established homes.”

The report points out that, over the past three years, the Queensland Government has experienced a $3.5 billion in windfall transfer duty receipts alone - representing a 29 per cent increase in receipts above the forecast level.

The situation in Queensland is being replicated across Australia.

It’s worse in New South Wales. In Sydney, the taxation component of a new dwelling on a block of land can be as high as 50%.

It’s becoming diabolically bad in Victoria, which has by far the highest taxes on residential real estate of anywhere in the nation.

The message to politicians is clear: if you really want to create affordable housing, as you say you do, stop treating the process of creating new homes for Australian families as a cash cow.

Economists don’t understand residential real estate very well and they’re scratching their collective heads over why prices keep rising when interest rates are high.

Here’s a couple of simple things to help them out: one is that, historically, there’s no evidence that rising interest rates lead to falling property prices. There’s nothing unusual about what’s currently happening in Australian property markets.

But the key factor is that we have very high demand for real estate, fuelled by record population growth, at a time of incredibly low supply.

The rental shortage is well documented.

But another statistic that depicts under-supply is the incredibly low level of listings in many parts of the nation.

The number of homes for sale is at dramatically low levels.

In June, the number of national residential property listings decreased by 8.3% compared to May.

Part of that was a 13% decline in the number of new listings of homes for sale, according to SQM Research.

Notably, all major cities experienced a decrease in their listings in June.

Adelaide recorded the largest monthly decrease in total listings, falling by over 15%. Melbourne and Perth followed, both recording decreases of 12%.

Perth recorded the largest annual decrease of 32%, while Adelaide, Brisbane and Darwin also had big falls in the number of homes for sale.

The data on listings correlates generally with the results we are seeing with prices.

The cities with the biggest declines in the number of properties for sale – Perth, Adelaide and Brisbane – are the ones with the major escalation in prices.

Cities where listings remain higher than a year ago – like Melbourne, Canberra and Hobart – are the weakest performers on price growth recently.

In Melbourne, for example, listings are 12% higher than a year ago.

It illustrates, yet again, that we don’t have a single property market in Australia, but lots of local markets doing different things.

And it also shows that supply and demand factors will override other issues, such as high interest rates.

A new factor now coming into the equation is the Federal Government’s tax cuts, which are likely to add to demand and put further upward pressure on prices by increasing borrowing capacity.

According to an analysis done by Shore Financial, borrowing capacity would increase by 4% for those with an income of $90,000 and 5% or more for those with an income of $100,000 or more.

According to Mortgage Choice, the borrowing capacity of a buyer with a $100,000 income could increase by about $25,000 while someone earning $150,000 could borrow about $37,000 more.

In the meantime, the capacity of Australians to cut through all the barriers and buy real estate is shown in the lending figures – including the rise in the size of the average loan, which now sits at $625,000.

Sally Tindall, research director at comparison website, RateCity.com.au., says this:

“Over the last two years, buyers have seen their maximum borrowing capacity plummet, in some cases by hundreds of thousands of dollars, as a result of the RBA hikes, and yet the average new loan size has hit a new record high.

Tindall says: “It’s astounding to think owner-occupiers are, on average, taking out larger loans than ever before, despite the fact the cash rate is sitting at a 12-year-high.”

Maybe it’s not so astounding, given that demand from owner-occupiers and from investors remains high and supply continues to be low, putting further upward pressure on prices.

Brisbane and Queensland increasingly are emerging as the property market destination with leading metrics pointing to out-performance in real estate.

A couple of months ago Hotspotting published its annual report with Australia’s largest comparison website Canstar - the one we call Rising Stars – which analyses the capital city and state regional markets across Australia and ranks them for future growth prospects based on five key metrics.

And the leading market jurisdiction to emerge from that process was Queensland, including both Brisbane and Regional Queensland.

The Sunshine State has also, more recently, achieved nation-leading status in the latest population data published by the ABS.

Finance data also confirms an increase in loans to both owner-occupiers and investors, with the average loan size in Queensland at an all-time high.

In the Rising Stars report each year, we use five key metrics to rank the 14 major market jurisdictions in the nation - the eight capital cities and six state regional markets.

The report with Canstar ranks the 14 market jurisdictions from 1 to 14 on their prospects for growth in the coming year.

The 2024 edition of Rising Stars ranked Brisbane No.1 - the market with the best prospects to provide growth in the next year or so.

And the No.1 regional market in the nation, using this methodology, was Queensland.

Brisbane was a standout on all the five metrics we used to arrive at our ratings - sales activity trends, recent price movements, vacancy rates, rental growth trends and infrastructure spending.

Regional Queensland ranked in the top 4 nationally on three of the five metrics and it also produced solid ratings on the others.

The trend we call The Exodus to Affordable Lifestyle is still pumping, with large numbers of people relocating from the biggest cities to regional areas in pursuit of a different lifestyle at cheaper prices.

The latest data and analysis from a range of sources, including the ABS, Regional Australia Institute and real estate data company CoreLogic, confirms that this remains a major demographic force, with significant consequences for real estate.

And Queensland is the national leader in this category, gaining the most of any state or territory from internal migration in 2023 – that’s people moving from one part of Australia to another.

The only other state or territory to achieve a net gain in its population from internal migration was WA. All others were net losers – which means many Australians are relocating and most of them are going to Queensland for its climate, lifestyle and relevant affordability for homes.

This is being reflected in the price data. According to PropTrack, Brisbane unit prices have increased 17% in the year ending 30 June, while Regional Queensland rose 12% - while for houses, Brisbane rose 14% and Regional Queensland 11%.

This ranks both Brisbane and Regional Queensland among the best in the nation on capital growth – and the key factor is that all the indicators suggest that the out-performance of Queensland markets, generally speaking, is set to continue.