Property market in Laidley, Gatton and Lockyer Valley: Ask Margaret

Hi Margaret, just wondering if things have changed in the Lockyer Valley and whether it is a growth area and worth looking at from a long term investment perspective?

Answer: 

When you make that decision to invest in property, there is much more to consider than whether an expert is predicting whether an area will make a good investment, or not.

You see, working out whether an area has the potential to be a good investment is a little like asking how long is a piece of string – that also depends upon the piece of string, and who cut it in the first place. 

You must start by establishing a few things about yourself – the time till you will need to realise this investment, the personal cash flows you can afford to support along the way, and how much is your borrowing capacity.  You also need to know whether your immediate reliance will be on growth, giving you equity quickly to be able to buy more property, or on cash flow – providing enough rental return to enable you to stay in the market and make your loan repayments and meet expenses.

Some investors have plenty of equity in their own home which allows them to buy more than one property, and so they can afford to wait for growth and buy in areas which may be a little more speculative or long term.  Such areas, as long as they have the correct growth drivers, will grow in the long term and probably get pretty good rent returns in the short term. 

Other investors have no equity or little in the way of deposits, and so each and every purchase must grow immediately, or they won’t be able to add to their portfolio.  Always remember that to make money from property you need to buy more than one, and so it is important to really understand what you can afford both in terms of supporting the property financially in the short term and seeing it grow in the longer term.

Once you know this you can establish what you can afford, whether you need a higher or a lower rental yield and if you can wait until the longer term for that important growth to occur.  Make no mistake, cash flow is important but if the property never grows, it’s most likely not worth the time and effort to buy it.

In terms of the Lockyer Valley, it’s a growing area, but it’s on a very slow burn and, in my opinion, will be so for some time.  Considered the ‘salad bowl’ of Southern Queensland, there’s still quite a way to go until the population mass reaches the critical point where super infrastructure begins to be built, population explodes and the micro economy burgeons.  I have no doubt that, over the longer term this is an area which can deliver some reasonable results, but that term is going to be quite lengthy.

It’s now up to you to determine whether you can speculate long enough and wait for this growth, or whether an area with more assured growth, sooner (albeit one which may have relatively lower yields) is more up your alley.

 Have a property question?  Ask Margaret!