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 Sydney. In our tax tip we look at depreciation rates for solar hot water and solar power systems and why installing one on a rental can improve your rental returns.
News:
Australian home loans have risen for a third month, by a stronger-than-expected 1.3 per cent in September according to the Australian Bureau of Statistics. The figures indicate that borrowers may have taken the threat of higher interest rates in their stride. The total value of home loans was $48.33 billion compared to $47.71 billion in August.
Low interest rates and government stimulus efforts helped Australian’s remain confident about the local economy. But Australia’s housing market now faces pressure from rising interest rates and a shortage of affordable housing stock.
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 Sydney.
First let’s look at the unit market in Leumeah, located in the Campbelltown area, 52 kilometers south-west of Sydney’s central business district. According to figures from RP Data, Leumeah recorded the largest increase in unit rents in New South Wales for the year to 30 June, rising 16.3 per cent from $200 per week last year, to $233 per week in 2010.
With a population of 8,662 in the last census, Leumeah is part of a significant regional centre that is bounded on one side by the Georges River and the other by rolling hills. The suburb offers a combination of city and country and is less than one hour by road or rail from Sydney’s CBD and the airport. Leumeah hosts a major regional hospital, university and two TAFE campuses as well as plenty of tourist spots in and around the area.
Turning to the figures for the year to 30 June 2010. Rents in Leumeah rose 16.3 per cent to $230 per week from $200 per week in 2009. Over the same period 55 rentals were advertised up from 35 on the previous year. The median price of a unit in Leumeah is $270,000.
Our next suburb is the unit market in Queenscliff, located in the Northern Beaches, 16 kilometers north-east of Sydney’s central business district. RP Data figures reveal that the median rental for units in Queenscliff increased by 15.4 per cent last year, from $455 per week to $525 per week for the year ended on 30 June 2010.
With a population of 3,049 in the last census, Queenscliff is a beachside haven located on the northern end of Manly beach. The area is famous for its surf beaches, National Parks, Aboriginal sites and historic landmarks. Queenscliff also boasts a number of community centers, an Aquatic centre and a host of restaurants along the coast line.
Taking a look at the figures, rents for units in Queenscliff rose 15.4 per cent, from $455 per week in 2009, to $525 per week in the year to 30 June. 141 properties were advertised over the year, up from 136 in 2009. The median price of a unit in Queenscliff is $487,500.
Tax Tip And now to the Tax Tip of the week from Depreciator - the Tax Depreciation Schedule specialists.
This week we look at depreciation rates for solar hot water and solar power systems and why installing one on a rental can improve your rental returns. Solar hot water systems, acquired from the 1st of July 2004, are deemed to have an effective life for depreciation purposes of 15 years. In the case of solar power systems, acquired from the 1st of July 2004, they have an effective life for depreciation purposes of 20 years. Most deductions for depreciating assets will be based on deducting a larger amount in the early years, known as the diminishing value method as opposed to the prime cost method where the amount depreciated is the same each year. Speak to your accountant about which method serves you best.
And now to the second benefit of installing either a solar hot water or solar power system, both which save you power in itself. Power generated from solar power systems varies and depending on the size of the installation and location, your tenants will pay less in electricity. This adds value to the property in the same way other features do. Once you know the average monthly saving your system generates, you can include this as one of the selling points allowing you to potentially charge more with the installation than without.
