This week we look at two property markets in Brisbane posting high rental returns. And in our second instalment from our interview with Scott Beynon from the Master Builders Association, Scott talks to us about the role of the Australian Building and Construction Commission in keeping the building and construction industry clean, and why its powers should not be diminished. And in this week’s tax tip we look at capital gains tax.
The Australian Bureau of Statistics has released data showing a sharp fall in building activity in the March quarter. Figures show a 7 per cent decline in work done on new residential dwellings in the March quarter to an annualised $33.1 billion, a fall of 4.8 per cent from a year ago. According to the Housing Industry Association the largest fall in new home building occurred in New South Wales, down 13 per cent, with Tasmania experiencing an 11.8 per cent fall. Victoria recorded a 7.1 per cent decline, Western Australia had a 6.5 per cent drop, the ACT a 3.6 per cent decline, Queensland a 3 per cent fall and South Australia reported a 2.4 per cent drop. HIA Chief Economist, Dr Harley Dale said government initiatives like the First Home Owner Boost and very low mortgage rates have been helping to fuel a turnaround in new home building activity in the middle of this year but that it won't be enough on its own to generate a sustainable recovery.
This week we are looking at the property markets that are posting the highest rental yields in the Brisbane metropolitan area. We are firstly looking at the unit market in inner Brisbane city and then we'll take a look at the house data for Kenmore Hills, which is located about 12 km south west of the CBD. Let’s have a look at the numbers. 44% of Brisbane’s dwellings are occupied by unmarried residents while families make up another 41%. Stand alone houses account for 41% of dwellings in this area with another 41% being units. Rental properties make up 56% of the housing market. The median unit price in Brisbane is $435,000 dollars, which is 2.6% less compared to a year ago. The average growth rate over the last 5 years is almost 4% each year while over a ten year period it is 6% per annum. Units are taking about 111 days to sell and when they do they are selling for a 6.9% discount to listing price. The weekly asking rent price is $550, which is an increase of 7.8% compared to a year earlier, bringing the gross rental yield to 6.6%. Now let’s have a look at the house market in Kenmore Hills. It’s an older population with 32% of Kenmore Hills’ residents aged between 40 and 59. 60% of properties are lived in by married couples and families. 95% of properties are stand along houses and rental properties make up just 14% of the housing market. So clearly this is an owner occupier heavy suburb. The median house price in Kenmore Hills is $650,000 dollars, which is almost 5% less than a year ago. The average growth rate over the last 5 years has been 5.6% each year while over a ten year period it is 8.3% per annum. The weekly asking rent price is $768, which is a jump of almost 30% on a year ago, bringing the gross rental yield to 6.1%. And now to the Tax Tip for this week. Today we are having a look at capital gains tax. Firstly, did you know that you do not need to pay capital gains tax if you owned the assets, including an investment property, before 20 September 1985? Another thing to remember about capital gains tax is that you are eligible for the 50% capital gains tax discount if you have owned the property for at least 12 months. So if your property investment strategy is to buy, renovate and then sell the property, this could be something to think about. Some investors get a tenant for a year and then renovate the property and then sell, making them eligible for the 50% reduction in capital gains tax. 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.
