This week we take a look at two Adelaide suburbs where houses have a median price of $400,000 or less and have posted excellent gains in the past 12 months. And we hear from Robin Mellon from the Green Building Council of Australia who talks to us about the Federal Government’s Renewable Energy Target and what the passing of this target will mean for homeowners and the construction industry. And in this week’s tip we begin looking at things you may want to think about as you prepare to do your tax return by October 31.
News. In property news this week, sales of new homes surged 11.4 per cent in August as first home buyers sought to take advantage of the federal government’s $21,000 first home buyer grant boost before it is reduced at the end of this month. The figures released y the Housing Industry Association show an 11.8 per cent rise in detached house sales for August while the number of apartments sold increased by 7.5 per cent. And in other news the Westpac-Melbourne Institute Consumer Sentiment index rose 5.2 per cent in September 2009 to a read of 113.4. This is the highest level since July 2007. Chief economist Bill Evans says the survey showed that consumers are relieved the economy is starting to show signs of recovery which is ‘drowning out’ any concerns over impending rates rises. In another report, according to the Australian, the International Monetary Fund has reportedly urged central banks to get ready to raise interest rates to avoid the sort of asset price bubbles that caused the global financial crisis.
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 two house markets in Adelaide where the median prices are under $400,000 and where the suburbs have also offered investors strong growth in the last 12 months. First, the house market in Ridleyton and then the house market in the suburb of Royal Park.
This suburb has a working class and industrial history but in recent times has been redeveloped into a prime residential suburb that is located just 5 kms from cosmopolitan and upmarket North Adelaide. Ridleyton is located about 7 kms from Adelaide’s CBD and in 2006 had a population of almost 1,000 residents. Today there are new developments and housing estates in the suburb and it is a popular suburb for city workers with 41% of the working population being professionals. 46% of households contain families - 38% of families are couples without children and 37% of families are couples with children. Houses make up 59% of properties and semis represent another 28%. Rental properties make up 42% of the property market. Let’s look at the data. The median house price in Ridleyton is $400,000 dollars, which is 35.6% higher compared to a year ago. There have been 22 units sold in Ridleyton in the 12 months to June 30 and 21 have been rented out so this is a relatively small market. The median rent price for a house in the suburb is $370 which brings the gross rental yield to 4.8%.
Now to the house market in Royal Park which has also seen very strong growth in the last year….. and Royal Park was a suburb in days gone by with many different European cultures represented in its population. Today there is a mixture of public and private housing estates as the area has been developed with many new homes currently for sale. It is a working class suburb with the most common employment being in trades, labourers and clerical roles. Royal Park is located 12kms north west from Adelaide’s CBD, fairly close to the coast and in 2006 had a population of 2,650 residents. 62% of households contain families - 38% of these families are couples with children while 36% are couples without children. Stand alone houses make up 92% of properties and rental properties make up 27% of the property market. Let’s look at the data. The median house price in Royal Park is $375,000 dollars, which is an increase of 29.3% compared to a year ago. There were 67 houses sold in Royal Park in the 12 months to June 30 and just 9 were rented out.
Tax Tip. With about a month to go before the October 31 deadline which may apply to you to get your tax return done, we’re looking at common things that property investors should be aware of when they do their tax this year. Firstly, body corporate fees for unit owners and the ATO want to make sure that there is no capital expenditure within body corporate fees. Body corporate fees usually pay for expenses like repairs and maintenance. If a special levy was raised for a capital improvement or major capital repair made to the building, the ATO want you to claim depreciation on that cost, not claim a deduction for it. Another common error on tax returns are borrowing expenses and the ATO wants to make sure that you do not claim stamp duty as an expense. Stamp duty paid to your state or territory government is only factored into the cost base when you sell the property and cannot be claimed as a deduction. However, stamp duty on the mortgage can be claimed as a borrowing cost, and borrowing costs are deductible over a 5 year period. Of course, this is very general information only and for more specific information speak to your accountant and get specific advice.
