This week we continue our series bringing you suburbs where it is cheaper to buy a house than it is to rent one, based on current median prices and interest rates and this week we find a suburb just outside of Newcastle in New South Wales and we also look at the house market in Rosewood in south east Queensland. This week we hear from Professor Phil O’Neill, the Director of the Urban Research Centre at the University of Western Sydney, who talks to us about the outlook for Sydney’s housing market. And in this week’s tax tip we look at a question from a viewer about leasing her principle place of residence out.
NewsThe Australian Industry Group/Housing Industry Association Performance of Construction Index fell 3.1 points to a read of 39.5 in July. Construction activity has remained below the 50 mark which separates expansion from contraction for 17 months. House building rose in July with the sub index climbing 7.9 points to a read of 51.9. Apartment building activity fell however, down 5.9 points to a read of 29.4. In other news, figures released by the ABS show that house prices rose 4.2 per cent in the June quarter.Sydney house prices increased 4.9 per cent with Melbourne house prices catching up, rising 5.2 per cent over quarter. House prices in both Brisbane and Hobart experienced a 2.5 per cent jump, Adelaide up 3.4 per cent, Perth rising 2.7 per cent, up 2.4 per cent in Darwin and Canberra house prices increased 3.6 per cent in the June quarter.
Suburb in FocusThis week we are looking at the regional house markets in Windale, New South Wales and Rosewood, Queensland as part of our series to find suburbs where it is cheaper to own a property than it is to rent one. Let’s have a look at the data…..
Windale is located about 15kms outside of Newcastle at the top of Lake Macquarie. It is a working class suburb and sole parent families are the most common household. 33% of Windale’s residents are married while 40% are unmarried. Stand alone houses account for about 82% of dwellings in the area with semis and townhouses accounting for another 10% of properties. Rental properties make up a huge 75% of the housing market. The median house price in Windale is $185,000 dollars, which is about 1% lower compared to a year ago. There were 49 houses sold in Windale in the 12 months to June 30. The average growth rate for a house over the last 5 years is again at 1% each year and over 10 years it has been a healthy 13.1% per annum so clearly gains happened in the longer term. And if you were to buy at this median house price, the weekly mortgage repayments are $206.35 at an interest rate of 5.8%. The median rent price for a house is $247.50 which brings the gross rental yield to almost 7% and means that it is cheaper by about $41 a week to own a house than to rent one.
Rosewood is located about 20kms west of Ipswich or 60kms west of Brisbane. Couples with children are the most common household type with 69% of households being families. Stand alone houses account for 95% of dwellings in the area. Rental properties make up 30% of the housing market. Let’s look at the data…The median house price in Rosewood is $255,000 dollars, which is an almost 3% decline compared to a year ago. There were 39 houses sold in Rosewood in the 12 months to June 30. The average growth rate for a house over the last 5 years is 8.7% each year and over 10 years it has been a healthy 13.4% per annum. If you were to buy at this median house price, the weekly mortgage repayments are $284.42, again at an interest rate of 5.8%. The median rent price for a house is $325 which brings the gross rental yield to 6.6% and means that it is cheaper by $40.58 a week to own a house than to rent one in Rosewood.
And now to the Tax Tip for this week. This week we had an email from Marilyn, who has owned her home for the last 25 years and now wants to lease out her home to a tenant and go traveling for a year or two because she has just retired. She wants to know what tax benefits she will be able to claim and be aware of. She has a very small mortgage on the property. Well one of the most interesting points is that Marilyn bought the property before 20th September 1985, which means the property is not eligible to be capital gains taxed. This means that she could lease out her home for the next 10 years and she would not have to pay a cent in capital gains tax. However, Marilyn will need to start accounting for the rental income as her income and then keep a record of the deductions she will be allowed to claim for the period it is leased or available for lease which include the council rates, interest on the mortgage, a managing agent fees, repairs and depreciation on any assets in the property.The deductions won’t be significant if the interest expense is very small on the mortgage and so the property is likely to be positively geared and will contribute to Marilyn’s spending money as she travels. If you have a property or tax question that you would like answered, you too can email us at info@finnewsnetwork.com.au and we’ll answer your question in a future episode.
