This week we take a look at a house and unit market in Sydney’s lower north shore. And we hear from Australand about their development Pavilions on the Park in St Leonards and how this has changed the apartment market in the area.And in this week’s tip we look at the tax deductibility of financial advisor fees.
News. In property news this week, a study conducted by researchers from Flinders University has found that home ownership rates rose just 0.8 per cent between 1996 and 2006. For the period from 1986 to 2006 home ownership fell 15 per cent. The study found that lower income earners between the ages of 25 and 44 are unlikely to ever own their own home due to high housing prices and the fact that more baby boomers are spending what would have been their inheritance. In other news according to a report in The Australian luxury properties from projects that failed amid the global financial crisis, are selling like ‘hot-cakes’ at mortgagee auctions as banks and receivers of the properties slash prices by as much as 50 per cent. And in figures released by mortgage broking firm AFG, the number of ‘trade-up’ buyers, those who trade-up their family homes, returning to the market has increased significantly. The AFG’s Mortage Index for August showed that ‘trade-up’ buyers accounted for 22.8 per cent of all mortgages sold for the month, up from 14.3 per cent in February.
And now taking a look at upcoming events that will be of interest to property investors. The Home Buyer Show is on at the Melbourne Convention and Exhibition Centre from Friday October 2nd through to the 4th, and then its coming to the Sydney Convention and Exhibition Centre from Saturday the 31st of October to Sunday the first of November.
Suburb in Focus. This week we are focusing on a house and unit market in Sydney’s lower north shore. First, the unit market in St Leonards and then the house market in the next door suburb of Crows Nest. St Leonards is about a 6.5km drive north across the Harbour Bridge and in 2006 had a population of about 4,000 residents. Today it is a popular suburb for city working professionals as it is close to public transport and shopping facilities, in fact professionals and managers make up 64.6% of the suburb’s population. 43% of households contain families and 62% of families are couples without children so clearly this is a young and working professional suburb. Units and apartments make up 92% of properties and rental properties make up 54% of the housing market so clearly this is a popular investor market. The median unit price in St Leonards is $472,000 dollars, which is 5.6% lower compared to a year ago. There have been 221 units sold in St Leonards in the 12 months to June 30 so this is liquid market that has held up well compared to many other property markets. The median rent price for a unit in the suburb is $495 which brings the gross rental yield to 5.5%. Interestingly, the median rental price for a house in St Leonards has jumped 24% in the last year. Now to the house market in the neighboring suburb of Crows Nest.
Crows Nest is one suburb closer to the city and is about 6kms from Sydney’s CBD and in 2006 had a population of 3,200 residents. 48% of households contain families and 54% of families are couples without children so again this is predominantly a working professional suburb. Units and apartments make up 39% of properties and semis account for 15% of residences. Rental properties make up 45% of the housing market so this is another popular investor market. The median house price in Crows Nest is $838,250 dollars, which is decline of 7.6% compared to a year ago. There were 62 houses sold in Crows Nest in the 12 months to June 30. The median rent price for a house in the suburb is $613 which brings the gross rental yield to a modest 3.8%.
Tax Tip. Today we are having a look at the costs associated with using a financial planner to help you with your property investment strategy. Now the ATO has released a clear ruling on the issue in tax determination 95/60 which basically says that upfront fees to draw up a plan are considered capital in nature while ongoing management fees would be tax deductible because they relate to the production of assessable income. The ATO specifies that even if the investor already has property assets, the initial plan must be treated as a capital expense because it is considered to be associated with planning for income earning, rather than the management of earning income. However, the ATO does say that if the plan is only in relation to changing the mix of assets, then this is more related to the management of the investments and would be able to be tax deductible. Of course, this is very general information only and for more specific information about the deductibility of your financial planner fees, you can contact the ATO for more specific advice.
