Continuing our series looking at capital city unit markets with a median price between $350,000 and $450,000 where there are more than 50 units up for sale, we focus this week on two suburbs in Adelaide.
And in our tax tip this week we’ll look at how the ATO treats buying vacant land with the intention of building a house as a principal place of residence.
NewsMelbourne might soon topple Sydney as the country’s most expensive housing market.
Australian Property Monitors says up until 2004, the median dwelling price, including houses and units, in Melbourne represented 60 to 70 per cent of the value of the median property price in Sydney.
But that rose to 94% in the March quarter - with the median house price in Melbourne at $522,000 compared $558,000 in Sydney.
And the latest housing finance data shows that home loan commitments for owner-occupiers fell by 1.8% in April, seasonally adjusted, to 47,669.
The Bureau of Statistics says total housing finance by value rose by 0.8% in April, to around $21.7 billion.And just briefly, a long term investing report by Russell Investments and the ASX shows that on a before-tax and after-costs basis, residential investment property outperformed all other asset classes with a 9.8 per cent per annum over a 20 year period.
Comparatively, Australian shares achieved 9.7 per cent per year and Australian bonds with 8.9 per cent.
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 Adelaide.
First up we take a look at the unit market right in the heart of the city. The suburb of Adelaide’s population in the last census was 10,229. A coastal city, Adelaide is situated on the eastern shores of Gulf St Vincent in between the Gulf and Mount Lofty Ranges. Adelaide is known for its festivals including the Adelaide Festival of the Arts, Fringe Festival and Cabaret Festival and has a nurtured food and wine culture. For shopaholics, Rundle Mall is the spot to indulge in some retail therapy with more than 800 stores to choose from. The Adelaide Park Lands comprising of nearly 900 hectares including gardens, playing fields, lakes, and walking trails, covers almost 45% of the city and has placed Adelaide on the National Heritage list.
Turning to the figures, the median unit price in Adelaide for the 12 months to March 2010 was $399,250 with an average rental yield for a unit of 5.1%. Adelaide currently has 87 units on the market.
And now to our second suburb, the unit market in Glenelg located 11 kilometres south west of the CBD. The suburb’s population in the 2006 census was 3,125. A popular beach-side suburb, Glenelg is situated on the shore of Holdfast Bay in Gulf St Vincent. The suburb is a top tourist destination serviced by Adelaide’s only Tram, with tourists flocking to enjoy the shops and dining at sidewalk cafes along Jetty Road, or the suburb’s many attractions including The Beachouse, an amusement arcade including a ferris wheel, carousel, mini golf and water slides. There are a number of high rise residential developments in Glenelg, including the Atlantic Tower featuring a revolving restaurant on its top floor, and the Marina Pier apartment building.
Looking at the figures now, the median unit price in Glenelg for the 12 months to March 2010, came to $380,000 with units in the suburb posting an average rental yield of 5.3%. There are 76 units currently for sale in Glenelg.
Tax Tip
This week we are looking at buying vacant land with the intention of building a house as a principal place of residence.
Generally, if you build a dwelling on land you already own, the land does not qualify for exemption until the dwelling becomes your main residence for capital gains tax (CGT) purposes. The area of land that may be exempted under this provision is limited to two hectares and subject to certain provisions. Vacant land may also be treated as your main residence if it is vacant because your home has been destroyed.
However, you can choose to treat land as your main residence for up to four years before the dwelling becomes your main residence in certain circumstances. You can choose to have this exemption apply if you acquire an ownership interest in land and you: build a dwelling on the land repair or renovate an existing dwelling on the land, or finish a partly constructed dwelling.
There are a number of conditions that you must satisfy before you can claim the exemption. You must first finish building, repairing or renovating the dwelling and then:move into the dwelling as soon as practicable after it is finished, and continue to use the dwelling as your main residence for at least three months.
As always seek professional advice and keep good records when dealing with tax related matters.
