NewsThere were a number of key pieces of economic news released over the past week. As widely expected the RBA decided to leave rates on hold this month at 4.5% saying that European sovereign debt concerns have dented investor confidence and put pressure on equity markets and the Aussie dollar.Many economists expect that the central bank is likely to leave rates unchanged again next month.Adding fuel to this expectation is data released by the ABS showing a 14.8% fall in building approvals in April from the month before. Approvals reached their lowest level since May of last year.In more positive news, a report released by the Housing Industry Association showed that national home sales rose 6% in April boosted by a 27.6% rise in Victoria.NSW however, did not fare as well experiencing a 9.6% drop in home sales for the month.And in separate figures released by the ABS, Australia’s gross domestic product rose 0.5% in line with expectations in the March quarter. GDP rose 1.1% in the fourth quarter of last year.
Suburb in FocusIn our suburb in focus section, we are looking at capital city unit markets with a minimum 50 units for sale and a median price between $350,000 and $450,000. This week our focus is Melbourne.
First up is the unit market in the suburb of St Kilda - 7 kilometres south of Melbourne’s CBD.An inner-city suburb with a population of around 16,122 at the last census, St Kilda is a popular suburb for young urban professionals due to its proximity to the CBD. St Kilda has an eclectic mix of residential styles from rows of Victorian terrace houses and Edwardian apartments to post war and modern infill development. Some of Melbourne’s most popular tourist attractions are found in St Kilda including Luna Park, the Esplanade, Acland St, which is a shopping and restaurant precinct famous for its cake shops, St Kilda Pier and St Kilda Beach. Several of Melbourne’s big events and festivals are held in the suburb including the arts and crafts market run on the Esplanade every Sunday.
Turning to the figures, the median unit price in St Kilda for the 12 months to March 2010 was $430,000 with an average rental yield for a unit of 4.2%. St Kilda currently has 118 units on the market.And now to our second suburb, the unit market in Hawthorn another inner city suburb of Melbourne located 7.5 kilometres east of the CBD. The suburb’s population in the 2006 census was 19,784. Glenferrie Rd is a major shopping hub with supermarkets, all the major banks, a number of specialty stores and restaurants. There are also a large number of parks, sporting facilities and recreational areas to enjoy barbecues and picnics. Hawthorn is home to the Swinburne University of Technology offering university and TAFE courses.
Looking at the figures now, the median unit price in Hawthorn for the 12 months to March 2010, came to $420,000 with units in the suburb posting and average rental yield of 4.1%. There are 68 units currently for sale in Hawthorn.
Tax TipAnd now to the Tax Tip of the week from Depreciator. Tax Depreciation Schedule specialists.
Last week we briefly mentioned the implications of leasing out rooms in your principle place of residence. Well this week we had an email from a viewer asking us to expand on this topic, which is more popular as interest rates go up and home owners look for ways to make money.
If you lease out space in your principal place of residence to a boarder or a room mate, the ATO may deem you to have made part of your home an investment property. This means that you will need to include any rent or board amount as income in your tax return.
Also, when you sell the property, it will not be fully CGT exempt because part of it has been an investment property, which makes calculating the cost base tricky and potentially costly to you. You will probably need to ascertain the market value of the property at the time the boarder starts paying rent to be able to calculate this. But there is some latitude with this. Talk to your accountant before you take on a boarder to see how best to structure the arrangement.
