This week we take a look at two Perth suburbs where houses have a median price of less than $550,000 and have posted excellent gains in the past 12 months. And we hear from Assistant Commissioner for Home Building Service at the NSW Office of Fair Trading, Steve Griffin, who talks to us about owner-building and the requirements. And in this week’s tip we continue looking at things you may want to think about as you prepare to do your tax return by October 31 and this week it is jointly owned property.
News. In property news this week, The Australian Bureau of Statistics released figures showing a 0.1 per cent fall in building approvals for August. The Housing Industry Association says the multi-units sector continues to stifle housing recovery in Australia. Multi-unit approvals dropped 10.9 per cent in August, while detached house approvals rose 3.1 per cent for the month. Senior economist Ben Phillips says multi-unit approvals have plunged by a third over the last 12 months, with NSW, Western Australia and Queensland al being particularly hard hit.
The HIA also launched its 2008/2009 list of Australia’s largest 100 builders with West Australian based BGC Australia’s largest builder for the sixth consecutive year. The HIA also says that Australia’s largest builders have taken a larger share of the new home market thanks to the tripling of the First Home Owners Grant. The Housing 100 boosted dwelling starts by 38 per cent in 2008/2009 up from 34 per cent the year before.
And now taking a look at upcoming events. The Home Buyer Show is on at 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 Perth where the median prices are under $550,000 and where the suburbs have also offered investors strong growth in the last 12 months. First, the house market in Mount Pleasant and then the house market in the suburb of Wembley.
Mount Pleasant is just as the name suggests, a lovely suburb on the Canning River in Perth. It is located 8 kms from Perth’s CBD and in 2006 had a population of almost 6,500 residents. The suburb is inhabited with city workers with 50% of the working population being professionals and managers. 68% of households contain families - 47% of families are couples with children and 42% of families are couples without children. Houses make up 81% of properties and semis represent another 15% so the unit market is very small. Rental properties make up just 21% of the property market. Let’s look at the data. The median house price in Mount Pleasant is $520,000 dollars, which is 17.6% higher compared to a year ago. There have been just 11 houses sold in Mount Pleasant in the 12 months to June 30 and 36 have been rented out so there is strong demand to live here and not a lot of stock coming onto the market. The median rent price for a house in the suburb is $435 which brings the gross rental yield to 4.4%.
Now to the house market in Wembley which has also seen very strong growth in the last year. Wembley is located 5kms west from Perth’s CBD and in 2006 had a population of over 9,600 residents. Wembley’s working population is primarily employed as professionals, and in administrative and managerial roles. 50% of households contain families - 43% of these families are couples with children while 40% are couples without children. Stand alone houses make up 50% of properties while units make up 38% and rental properties make up 34% of the property market. Let’s look at the data. The median house price in Wembley is $435,000 dollars, which is an increase of 14.5% compared to a year ago. There were 18 houses sold in Royal Park in the 12 months to June 30 and 73 were rented out which again shows the high demand for rental properties in the area.
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 and this week’s tip is for joint owners of an investment property who can gain greater access to cash flow benefits by using the Low Value Pool and immediate write-off rules. Most people know that the Low Value Pool depreciates assets that cost between $300 and $1,000 while assets costing less than $300 can be immediately written off. And did you know that these rules are applied to each owner’s interest in the asset, not the asset as a whole? This means that if an investment property is owned equally by two individuals, assets costing up to $2,000 can be depreciated as part of a Low Value Pool, and assets costing less than $600 will be able to be written-off for example, $300 by each owner. However, joint property owners also need to be aware of their responsibilities. Joint owners must divide the investment income and expenses proportional to their legal ownership. No written agreements can overwrite the legal ownership interests!
