This week we take a look at two Sydney property markets with very high auction clearance rates that have also posted growth in the last 12 months. We hear from BT Financial Chief Economist Chris Caton, who talks to us about interest rates and how the Reserve Bank is likely to continue to raise rates as the economy continues to strengthen. In this week’s tip we continue looking at some rules regarding jointly owned investment properties.
News. In the news this week, the Reserve Bank of Australia became the first central bank in the world to raise interest rates, increasing the Official Cash Rate to 3.25 per cent. The move sparked a global rally on stock exchanges around the globe in response.The Australian Bureau of Statistics released data showing a 0.6 per cent fall in Australian housing finance for August. Analysts had forecast a drop of 0.5 per cent. However investors appear to be returning to the market in droves, with investment lending up 7.6 per cent in August. The big four banks, the Commonwealth Bank, NAB, ANZ and Westpac, are expected to make announcements soon regarding how much of the rate rise they pan on passing onto their customers.
The boost to First Home Owners Grant ended on September 30. New home owners are now eligible for a $14,000 grant down from $21,000. Buyers of existing homes can now only get $10,500 down from $14,000. The reduction to the boost of the First Home Owners Grant will stay in effect until the end of the year. And the Australian Industry Group/Housing Industry Association’s Performance of Construction Index added 8.4 points to a read of 50.8 in September, pushing the result above the 50 mark separating expansion and contraction in the sector.
And now taking a look at upcoming events in the property arena. 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 Sydney property markets that have recorded growth and where auction clearance rates are over 80%, showing strong buying demand and a liquid market. We’re looking at the unit market in Summer Hill but first up is the house market in Camperdown, which is in Sydney’s inner west and just 4kms from Sydney’s CBD.
Camperdown is located just 4kms from the Sydney CBD and is a popular inner west suburb that is next to Sydney university and Royal Price Alffed hospital. Let’s look at the data. The median house price in Camperdown is $700,000 dollars, which is 5% higher compared to a year ago. There have been 57 houses sold in Camperdown in the 12 months to September 30 and auction clearance rates are currently 88% for the suburb, which is one of the strongest rates in Sydney. The median rent price for a house in the suburb is $540 which brings the gross rental yield to 4.01%.
Now to the unit market in Summer Hill where auction clearance rates are again one of the strongest in Sydney at 83%. Summer Hill is located 8kms west of Sydney's CBD and the median unit price in Summer Hill is $385,500 dollars, which is an increase of 9.2% compared to a year ago. There were 114 houses sold in Summer Hill in the 12 months to September 30. The median rental price is $340 bringing the gross rental yield to 4.59%
Tax Tip. This week we continue looking at things that joint property owners should know and this week we look at the scenario of one of the owners of an investment property moving into the property. In this case, it ceases to be an investment for that owner’s portion of the property and starts being their principle place of residence. The other owner, who does not live in the property, can still claim their portion of the income and expenses proportionate to their ownership. And the joint owner that becomes the tenant will need to pay half of a comparable market rent to the other owner as rent and it’s a good idea to draw up a formal lease so that there is no confusion down the track. Remember that if you move into your investment property at any time, you only need to pay capital gains tax for the proportion of time that you rented the property out so keep good records and for assistance in calculating complex capital gains calculations for jointly owned property, get a good accountant and get professional advice. This is very general information only.
