NewsThe Reserve Bank of Australia, surprised the vast majority of economists and market commentators, by kicking off its 2010 monetary policy meetings with the decision to keep the official cash rate on hold at 3.75%. It was a decision that was welcomed by borrowers around the country Meanwhile, the dream of building your own home has become dearer for Australians, as a new survey found that land prices have risen to a new high.

The latest residential land report from HIA and RP Data found the median vacant land price rose by 5.7 per cent in the September quarter to just over $181,000, from the previous quarter. Sydney remains the most expensive residential land market in the country with a median land price of $290,000.

The least expensive market is the Murray Lands region in South Australia with a median price $69,500, followed by Mallee in Victoria with $70,000.

Suburb in FocusIn our suburb in focus section each week, we look at property markets around Australia that could be of interest to property investors. We have put together a list of unit markets around Australia where the median unit prices are under $600,000 and where rental yields are solid.

Both suburbs this week are in Perth. We’re looking at the unit market in West Perth but first let’s take a look at the suburb of Highgate, located about 2kms north, north east of Perth’s CBD.

The suburb’s population was over 1,700 in the last census. Highgate is a small suburb of Perth, located within the town of Vincent. 46.5% of the residents in Highgate were Australian born according to the last census and English is spoken in over 63% of homes. Close to 52% of properties in the suburb are rental properties. Approximately 28% of dwellings are houses, over 49% are units and 23% are semis. The suburb’s population includes Professionals as well as Clerical and administrative workers.Taking a look at the figures and the median unit price in Highgate is $395,000 which is an increase of 29.5% compared to a year ago. In 2008 the suburb experienced growth of 3%. There were 19 units sold in Highgate in the 12 months to November 30. The median rental price is $335 bringing the gross rental yield to close to 4.41%.

Now let’s take a look at the unit market in West Perth which is located just under a kilometre from Perth’s CBD. It is part of what is called the inner mixed zone, and has a lot of office blocks. There is a high proportion of miners and consultants, and particularly medical specialists, compared to the CBD of Perth. West Perth’s population in 2006 was around 3,800 people. Close to 40% of residents in the suburb were Australian born in the last census, with close to 7% born in England, and another 2.5% stating they were born in Malaysia. 58% of homes are English speaking, with the most common languages other than English spoken at home being Mandarin, Italian and Cantonese. 51.4% of dwellings are rental properties. Houses make up 12.3% of properties, over 75% are units and another 12.5% are semis.

Turning to the figures, the median unit price in West Perth is $400,000 dollars, which is a 8.1% increase compared to a year ago. In 2008 the median unit price jumped 31%. There have been 47 units sold in the 12 months to November 30. The median rent price for a unit in the suburb is $450 which brings the gross rental yield to 5.85%.

Tax TipAnd now to the investment property Tax Tip of the week from Depreciator, Tax Depreciation Schedule specialists. Most property investors opt for interest only loans on rental properties - the reason being that the interest is deductible on rental properties.And Australians have traditionally favoured variable interest rates, as opposed to fixed. But with interest rates creeping up again, people inevitably wonder whether they should fix their rate or leave it variable.Why not do both? Some investors fix a portion of their loan, and leave some variable. This means you can have a degree of certainty with the fixed portion, and still maintain some flexibility with the variable portion. Of course, this is very general information and you should speak to your accountant of mortgage adviser before doing anything.