Investment Feasibility in NSW Housing

This assignment examines the market viability for mortgage investment in the NSW housing market by the Alpha Property Development Group. It analyzes demographic, income, transport, population, and market performance factors to advise the group on investing in the Ultimo suburb of NSW. The report suggests targeting young adults with weekly incomes of at least $650 and emphasizes a focus on mortgages and rentals for a promising future in this sector.

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THE ALPHA PROPERTY DEVELOPMENT GROUP
By Student’s Name
Code+ course name
Professor’s name
University name
City, State
Date

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Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................3
New South Wales (NSW) market feasibility...............................................................................................3
a) Location...........................................................................................................................................3
b) Marketing theory factors..................................................................................................................3
c) Transport.......................................................................................................................................6
Housing industry performance in Ultimo................................................................................................6
Market segmentation and Targeting........................................................................................................7
Recommendation.......................................................................................................................................7
Conclusions................................................................................................................................................8
References list.............................................................................................................................................9

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Executive summary
The paper examines the market feasibility for mortgage investment in the Ultimo's NSW
housing industry by the Alpha Property Development Group. The Ultimo suburb had a
population of 8,845 with a median age of 27 years according to the 2016 census report. Most of
the houses are owned through mortgaging and renting. Likewise, 63.60% of the population earn
a weekly income of between $600 and $3500. Sydney is considered to be among the best
performing Australian markets. The New South Wales was crowned as the strongest state with
the highest scorecard with strong population growth, growing demand for affordable houses,
low-interest rates, strong exchange rate, and affordable investment funds. The NSW housing
market is performing exemplary. Therefore the Alpha Property Development Group should
invest in it.

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Introduction
This paper examines the market feasibility for mortgage investment in the housing
industry by the Alpha Property Development Group. More specifically the focus on the New
South Wales (NSW), a suburb of Sydney, Sydney Australia. The objective is to analyze the
market and advise the Group whether or not to invest in the NSW's housing market.
New South Wales (NSW) market feasibility
This section addresses the location, and other marketing theory factors such as demographic,
transport, marking performance of the Ultimo, NSW housing industry (Developer, 2017).
a) Location
The Ultimo suburb, under the postcode 2007, is within the larger New South Wales city
of Australia. It is located approximately 33 kilometres west of the Sydney CBD.
b) Marketing theory factors
i) Demographic factor
According to the Australian 2016 census, the Ultimo suburb had a population of 8,845
which was segregated as follows. Ultimo's median age was 27 years which was five years lower
than that of the country (Australia). The suburb's age distribution, in comparison to that of
Australia, is summarized as shown in the table below (Statistics, 2017).
Age Distribution Ultimo Average
Australia
0- years 708 1464779
5-14 years 1013 2899829
15-24 years 1469 2988388
25-54 years 4713 7953789
55-64 years 415 2573729

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65 years and over 527 3676763
Median Age 27 38
Table 1: Age distribution (Statistics, 2017)
According to the age distribution table, most residents of Ultimo are between the age of
15 and 64 years. At this age bracket, most people get employed for the first time and plan their
lives especially starting their families away from their parents. Young adults think about having
their own houses through either mortgage or renting.
Dwellings tenure
Ultimo Average Australia
Owned outright 545 2565695
Owned with a mortgage 1107 2855222
Rented 3385 2561302
Other tenure type 35 78994
Tenure type not stated 163 224869
Table 2: Dwellings tenure in Ultimo (Statistics, 2017)
The table shows that most households in Ultimo own their houses through mortgaging
(18.67%) and renting (67.58%). Conversely 10.88% house owners have used their savings to
acquire them. The suburb’s dwelling tenure pattern is similar to that of Australia where many
dweller acquired their homes through mortgages and renting.
Dwellings household composition
Ultimo Average Australia
Family households 2361 5907625

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Single households 1011 2023542
Group households 321 354917
Table 3: Dwellings household composition (Statistics, 2017)The table shows that most dwellers
live as families followed by single households. The pattern is similar to that of the Australia.
Therefore investing in the family and single households is viable.
Dwellings Household Income
Ultimo Average Australia
Less than $650 gross weekly income 13.80% 20.00%
More than $3000 gross weekly income 18.50% 16.40%
According to the table, 13.8% of the households in Ultimo earn a weekly income of
below $ 650 while 18.5% of the households earn a weekly income of at least $3,000. The rest of
the population, i.e., 67.70% earn a weekly income of between $650 and $3000. The Ultimo's
median rent stood at $458 compared to the State’s $300.
c) Transport
The Ultimo has several modes of transport in place. First, the suburb has a Central
railway station which serves the Western and Eastern line, and the Darling Harbour. This shows
that the suburb has a well-established railway network. Second, the suburb has a bus Broadway
which connect the rest of the Suburb to the railway terminals. According to the 2016 census,

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39% of the working population travel to their work places using cars (either as passengers or as
drivers) while 61% travel using public transport (i.e., bus and train services) (Developer, 2017).
Housing industry performance in Ultimo
Sydney is considered to be among the best performing Australian markets according to
2017 (first quarter) industry performance. However, the marketing is facing pressure from
financial lending restrictions which show the price of properties rises by 1.3%. The market is
promising and is likely to yield adequate revenue (Macleary, et al., 2008, p. 45).
According to the Housing Industry Association (HIA) 2017 report, New South Wales
was crowned as the strongest state with the highest scorecard. The state recorded strong
population growth, growing demand for affordable houses and rising prices of houses. Other
factors that have led the boom in the housing market are low-interest rates, strong exchange rate
which attracts foreign investors, and affordable investment funds from financial institutions
(emeraldinsight, 2017, p. 32).
The report also indicated that the number of first-time buyers increased by 8.4%. The
growth is associated with the urge to own apartments and lowered cost of first mortgages. The
report suggested that the trend for new apartments by young people is on an upward cyclical. It is
suggested that the growth would reach a double digit by 2019 (Developer, 2017, p. 78).
Market segmentation and Targeting
Based on the demographic, transport and market performance analysis, the group should
invest in the apartment which houses either families or single households. Young people are

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breaking from their nuclear families and are ready to rent or buy their houses. The targeting
consumers should be earning a weekly income of at least $650. Most youths and young adults
who are eager to own houses fall within this income bracket. Likewise, the group is looking for
the shortest payback time on its cash outflow (Marshall, 2017, p. 95). Therefore, this segment is
feasible.
Recommendation
According to the housing report, the NSW housing market is performing exemplary.
Therefore the Alpha Property Development Group should invest in it. The group should focus on
investing in housing units which would be offered to the consumers through mortgages and rent.
The housing industry has a promising future, and with the growing population of young people
in the Ultimo suburb on NSW state, the company should take up the opportunity.
Conclusions
The study examined the market feasibility for mortgage investment in the housing
industry by the Alpha Property Development Group with an objective to analyze the market and
advise the Group whether or not to invest in the NSW's housing market. From the analysis,
which considered factors such as demographic, income, transport, population, and market
performance, the Company should invest in the Ultimo suburb, New South Wales.

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References list
Developer, T. U., 2017. NSW Australia’s Strongest State In Housing Sector Conditions. [Online]
Available at: https://www.theurbandeveloper.com/new-south-wales-australias-dominant-state-
housing-sector-conditions/
[Accessed 28 08 2017].
emeraldinsight, 2017. Property investment and Finance. Journal of Property Investment &
Finance, 35(5).
Hunt, S. D., 2017. Marketing Theory: Foundations, Controversy, Strategy, and Resource-
advantage Theory. 1 ed. New York: Routledge.
Kotler, P. T. & Armstrong, G., 2015. Principles of Marketing. 16 ed. New Jersey: Pearson.
Macleary, A., Macleary , A. & Nanthakumaran , N., 2008. Property Investment Theory. 1 ed.
New York: Taylor & Francis.
Marshall, R., 2017. Marketing. Australasian Marketing Journal, Issue 24.

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Statistics, A. B. o., 2017. 2016 Census QuickStats: Ultimo. [Online]
Available at: http://www.censusdata.abs.gov.au/census_services/getproduct/census/2016/
quickstat/SSC14261