This week we look at two suburbs in Perth that are offering solid rental yields as rental prices improve. And in the first part of our interview with BankWest Chief Executive of Retail, Ian Corfield, Ian talks to us about what the BankWest Key Worker Housing Affordability report revealed. And in this week’s tax tip we look at claiming the main resident exemption for capital gains tax when you sell a property.
The Australian Bureau of Statistics released data showing a 9.3 per cent increase in building approvals for the month of June after a steep fall the month before. The latest figures from Australian Property Monitors ‘Quarterly Housing Data’ report revealed a 3.3 per cent jump in house prices in the June quarter. Sydney experienced one the biggest rises, with the median house price up 3.7 per cent in the quarter. And in a report prepared by RP Data on behalf of the Commonwealth Bank, housing affordability improved nationally in the six months to July. The report showed that it was cheaper to buy than rent in 94 suburbs across Australia. This increased to almost 203 when the boost to the First Home Owners Grant was taken into consideration.
This week we are looking at two suburbs in Perth that are both paying a solid gross rental yield and have experienced a big jump in rents in the past 12 months. The first is the house market in Mount Claremont which is about 10 kms west of the Perth CBD. Then we look at the unit data for Perth City.
47% of Mount Claremont’s dwellings are occupied by families and 40 to 59 years olds are the largest age bracket. Stand alone houses account for 63% of dwellings in the area with semi-detached houses and terraces making up 19% and flats and units accounting for 16% of property. Rental properties make up 26% of the housing market. The median house price in Mount Claremont is $725,000 dollars, which is 1.7% LESS compared to a year ago. The average growth rate over the last 5 years is 3% each year while over a ten year period it is over 11% per annum. The weekly asking rent price for a house is $675, an increase of more than 42% compared to a year earlier, bringing the gross rental yield to 4.8%.
Now let’s have a look at the unit market in Perth city. It’s a younger population with 20 to 39 years olds making up 41% of residents. 45% of properties are lived in by singles with families making up another 37%. Units are the most common property type at 35% of properties while stand alone houses make up 28% and semis and terraces account for 24% of properties. It is mainly a renter’s suburb with rental properties making up a high 55% of the housing market in Perth city. The median unit price in Perth is $397,500 dollars, which is more than 9% LESS than a year ago. The average growth rate over the last 5 years however has been over 16% p.a. while over a ten year period it is almost 12% per annum. Units are taking about 91 days to sell and when do, they are selling for a 9.7% discount to asking price. The weekly asking rent price is $500, which is a jump of over 16% on a year ago, bringing the gross rental yield to 6.5%. When you sell an investment property you have to calculate and pay capital gains tax except if it is your principle place of residence, in which case you are exempt from capital gains. However, there are a couple of things to look out for when claiming the main residence exemption to make sure you are eligible for the exemption. You may not be entitled to the full main residence exemption if you: acquired the home on or after 20 September 1985 AND used part of the home to produce income at some time during the period you owned it - this could include renting out a room to a flat mate or tenant or using it as a business office – AND you would have been entitled to deduct interest if you had a mortgage on the property. This is known as the interest deductibility test. So, if you have sold a property in the last financial year that was used as your main residence and you also derived income from it at any time during your ownership, speak to an accountant and get the right advice.
