This week we continue a series looking at capital city suburbs with the highest rental growth for units in Australia, starting with a look at two suburbs in Melbourne. We speak with RP Data about why Canberra has been performing so well while Perth is going in the other direction. And in our tax tip we look at what’s required to maintain the tax status of your home should you move out due to work or other commitments.
News: The biggest property news over the past week has been all about rising interest rates and the impact on the Australian property market.
The RBA’s 0.25 of a percent increase in the official cash rate to 4.75% on Melbourne Cup Day will add around $50 per month to the repayments on a $300,000 mortgage. Of course, repayments will be even higher where mortgages are attached to banks that went a step further in lifting their variable lending rates. The Commonwealth Bank comes first to mind.
The Australian Bankers' Association has defended the rights of the big four banks to offset higher funding costs.The prospect of higher rates appears to be taking the heat out of the property market and improving affordability.
The Australian Bureau of Statistics says building approvals fell 6.6 per cent to 12,143 units in September, seasonally adjusted, from a downwardly revised 12,998 units in August. In the year to September, building approvals were down 11.6 per cent.
And the Housing Industry says that the number of new homes sold increased by 0.6 per cent in September 2010. However, sales were down by 14 per cent for the September 2010 quarter.
Suburb in Focus This week we continue a series looking at capital city suburbs with the highest rental growth for units in Australia, starting with a look at two suburbs in Melbourne.
First let’s look at the unit market in North Balwyn, 11 kilometers East of Melbourne. With a population of 19,968 in the last census, North Balwyn was one of the first Melbourne suburbs to be developed according to the pattern of postwar suburbia, with expansive, quiet residential areas designed as family homes and relatively few business districts. The character of the suburb however has changed over the years as newer and bigger houses have replaced older stock. However, with many tree lined streets providing a complete canopy, good schooling and close proximity to the city it’s no surprise that the suburb is demand.
North Balywn is well supplied with public transport, including a tram and bus service. A number of bus routes connect North Balwyn with suburbs such as Box Hill, Doncaster and Templestowe. Also, a number of freeway bus services have stops at the entrance of the Eastern Freeway on the northern edge of the suburb. Bicycle tracks also connect with the Main Yarra Trail, along the Yarra River and the Eastern Freeway.
Turning to the figures for the year to 30 June 2010. Rents in North Balywn rose 25.7 per cent to $453 per week, up from $360 per week in 2009. Over the same period 48 rentals were advertised. The median price of a unit in North Balwyn is $550,000.
Our next suburb is the unit market in Hampton East, 14 km South-East from Melbourne's central business district. With a population of 4,423 in the last census, Hampton East is on the bay side of the Nepean Highway less than 5 minutes from Port Phillip Bay down South Road and next door to the up-market suburbs Brighton and Sandringham. Westfield Southland shopping centre is close by, in Cheltenham with strip shopping available at Brighton, Sandringham and Hampton.
Public transport includes the train from Moorabbin station to Flinders St, which at peak hour is a 30 minute trip, and buses to surrounding suburbs and Southland Shopping Centre. Parks, golf courses and Port Phillip Bay are all close at hand, making the area much sought after.
Taking a look at the figures, rents for units in Hampton East rose 19.9 per cent, from $340 per week in 2009, to $408 per week in the year to 30 June 2010. 26 properties were advertised over the year and, the median price of a unit in Hampton East is $457,500
Tax Tip And now to the Tax Tip of the week from Depreciator - the Tax Depreciation Schedule specialists.
This week we look at what is required to maintain the tax status of your home should you move out due to work, or other commitments.
If you leave your main residence temporarily, you may want the ATO to treat it as your main residence while you are away, for example, if you:
· move because of a temporary job transfer· study overseas, or, · take an extended overseas holiday
Under the capital gains tax rules, if you:
· use your vacated home to produce income, you can choose to treat that home as your main residence for a period of up to six years· If you do not use your vacated home to produce income, you can choose to treat it as your main residence for an unlimited period after you cease living in it.
If you choose to treat that home as your main residence, you cannot nominate any other dwelling as your main residence during your period of absence, even if you actually live in that other dwelling.
There is one exception – the maximum six month period you can qualify for the exemption on two homes is when you are moving from one main residence to another.
You must make the choice by the day you lodge your tax return for the income year in which a capital gains tax event happens, such as selling the house. Use this information on your tax return as evidence of your choice. If you make a choice, it is not affected by you becoming a foreign resident during the period of absence.
