This week we look at two suburbs in Western Australia that are posting solid rental yields - one in Perth and a mining town in regional WA. And we speak with Angus Nardi from the Property Council of Australia about the governments halving of stamp duty on purchases of new dwellings under $600,000 in NSW. And in this weeks tax tip we look at the important dates and rates for residential depreciation deductions.
But first, let’s hear from Emma Pearson who has a wrap up of this week’s property news. Building approvals fell for the first time in four months in May. The latest figures released by the ABS show a 12.5 per cent fall in building approvals in May. A report in the Australian newspaper says that the housing supply in Australia is likely to fall short of demand over the next five years. The paper says a report released by the Residential Development Council of Australia shows that residential property developers in Australia will need to build 155,000 homes a year over the next five years to accommodate an 8 per cent rise in the population. However this is unlikely to occur with new housing supply built for the 2009 financial year falling 16 per cent below demand. And Australia has been named as one of the top three best destinations for property investment in an annual survey conducted by the Asian Real Estate Association with the European Association for Investors in Non-Listed Real Estate Vehicles and the Pension Real Estate Association.
This week we are looking at the property markets of two Western Australian suburbs that are both posting solid rental yields. We are firstly looking at the unit market in Rivervale which is located about 6 kilometres east of Perth’s CBD and has posted excellent growth in the past 5 years and higher rental prices and gross rental yields, although the numbers are less impressive compared to a year ago. Then we take a look at the house data on a more remote suburb - Kambalda West which is located about 60kms south of Karlgoorlie in regional WA and is a mining town, particularly for nickel and previously gold. Let’s have a look at the numbers.
37% of Rivervale’s dwellings contain married couples and families and a further 38% are unmarried residents. Stand alone houses account for 59% of dwellings in this area and rental properties make up 47% of the housing market. The median unit price in Rivervale is $285,000 dollars, which is a gain of a modest 1.8% compared to a year ago. The average growth rate over the last 5 years is 16.8% each year while over a ten year period it is almost 16% per annum so clearly the big growth has been in recent years and has cooled in the past year. Units are taking about 132 days to sell. The weekly asking rent price is $500, which is an increase of almost 80% compared to a year earlier, bringing the gross rental yield to an impressive 9.1%. Now let’s have a look at the house market in Kambalda West.
It’s a young population with 38% of Kambalda West’s residents aged between 20 and 39. 52% of properties are lived in by married couples and families. 68% of properties are stand along houses, semis make up another 8% and there is no real unit market. Rental properties make up 50% of the housing market. The median house price in Kambalda West is $221,000 dollars, which is less than 1% higher compared to a year ago. The average growth rate over the last 5 years is 22.2% each year while over a ten year period it is 12.7% per annum so clearly growth has stalled in the last year as Perth’s materials sector and economy slows. The weekly asking rent price is $280. Houses are taking 120 days on average to sell and when they do sell, the price is about 14% lower than the listing price. The gross rental yield is 6.6%. Now to our expert comment and this week Angus Nardi from the Property Council of Australia talks to us about whether there is a risk that government schemes and grants simply cause higher prices during the period they are available which could fall again once the grants end. And now to the Tax Tip for this week from Depreciator - Tax Depreciation Schedules. This week we are starting a series of lesser known facts about residential depreciation claims for investment properties. This week we are looking at the crucial depreciation dates to assist you to claim depreciation this year. If construction started on the property before 18th July 1985, you are not entitled to claim depreciation on the actual building but are still able to claim depreciation on any assets in the property. If construction started between 18th July 1985 and 15th September 1987, you are entitled to claim 4% of the construction cost for 25 years, which will run out in 2012 at the latest. If construction started anytime after 15th September 1987, you are entitled to claim 2.5% of the cost of construction for 40 years. These dates also apply to renovations. So if you buy an older property that has been renovated, you can claim depreciation on all the renovation work that has been carried out after July 18th 1985. For this reason, it is a good idea to ask the previous owner for cost details of any renovations done but if they don’t or can’t supply this, a quantity surveyor will be able to estimate them for you. The dates get more complex for assets so ask a professional if you want assistance with what rates to apply to assets bought at different times. The dates and rates we have talked about today don’t apply if the property is used for short term traveler accommodation, which we will be looking at next week. And of course, this is general information only and you should always check with your accountant or tax professional before making tax related decisions - it could save you thousands.
