This week we continue our series looking at looking at council areas with the greatest increase in hold periods over the last five years, with a focus on two council areas in Tasmania. In our tax tip we look at positive gearing.
News
According to RP Data, Australian home values slumped November as higher interest rates hurt housing affordability. In November, home values in capital cities declined by 0.2 per cent and the rest of the state saw declines of 0.1 per cent. The figures represent declines across all dwelling types. The key driver in the softening of housing values has been the Reserve Bank and retail banks lifting the variable mortgage rate from 6.3 per cent in November 2009 to 7.8 per cent in November 2010.
Suburb in Focus This week we continue our series looking at looking at council areas with the greatest increase in hold periods over the last five years, with a focus on two council areas in Tasmania. A hold period represents the time between when a property is bought and sold, and can be an indication of the appreciation rates and desirability of the area.
First let’s look at West Coast, a council area located on Tasmania’s coast, around 400 kilometers north-west of Hobart. With a population of 5,006 in the last census, the West Coast council area says it is the ‘Gateway to Tasmania’s Wilderness’, priding itself on picturesque views that include harbors and lakes, rainforests and rivers, dunes and historic sites. As a popular destination for visitors, the area is supported by tourism, mining and fishing industries. The coastal town of Strahan sits on Macquarie Harbor, lined with nineteenth-century buildings facing the harbor. Former mining town Queenstown is an hour inland from Strahan and a stop on the hire-car circuit around Tasmania.
According to figures from RP Data, houses in West Coast recorded the largest increase in hold periods in Tasmania for the five years to 2010. Last year the average hold period was 8.1 years in 2010, up from 4.8 years in 2005. The median price of a house in West Coast has risen 53.8 per cent in the five year period, to $100,000 in 2010.
Our next council area is George Town, located around 250 kilometers north of Hobart. With a population of 6,527 in the last census, George Town sits on the northern tip of the main island, on the eastern bank of the mouth of the Tamar River. The council area offers a choice of urban, rural or coastal living, with a broad selection of panoramic waterfront accommodation. A range of community service initiatives are offered by the council to support families and the elderly. While for those looking to widen their educational and employment options, Tasmania’s second largest city, Launceston, is around 40 minutes drive south along the East Tamar highway.
Taking a look at the figures, houses in George Town recorded the second largest increase in hold periods in Tasmania for the five years to 2010. Last year the average hold period was 7.7 years, up from 5 years in 2005. The median price of a house in George Town has climbed 64.4 per cent in the five year period, to $236,750 in 2010.
Tax Tip And now to the Tax Tip of the week from Depreciator - the Tax Depreciation Schedule specialists. Positive gearing is when the rental returns on your property are more than the outgoings, including interest on the loan. This creates a situation where tax must be paid on the net income. Positive gearing is attractive because in addition to potentially high rental yields, the cash flow received from these properties can be used to fund your next investment.As always, do remember to consult with a tax accountant or tax professional before making any tax related decisions.
