The Tax Office has issued a draft ruling allowing Do-It-Yourself super funds that borrow to buy property to renovate the asset using their own money. Trustees have to date not been able to use money from any source to do this. This could lead to fierce competition, especially for older stock worth around $400,000, appealing to investors who want to add value by renovating. Meanwhile, on the subject of DIY super funds, Wakelin Property Advisory has warned against investing in the National Rental Affordability Scheme. These properties, part of the government’s plan to address the shortage of affordable rental housing, do not provide a good level of capital growth and rental income, according to the managing director of Wakelin.
The seasonally adjusted estimate for the number of dwelling units commenced fell 4.7 per cent in the June quarter, according to data released by the Australian Bureau of Statistics. The seasonally adjusted estimate for new private sector house commencements fell 2.1 per cent in the same period. And new private sector other residential building fell 7.1 per cent. The Housing Industry Association says commencements look set to fall even further and is calling on the government to kick-start new home building.
As real estate approaches its prime selling period, the housing bubble debate is gathering some momentum. American forecaster Harry Dent forecasts that house prices will return to levels of a decade ago as baby boomers reduce their spending. Dent has correctly made predictions about market events including the bursting of Japan’s property and stock bubble, the late 1990s boom, the tech stock bubble and the most recent housing and financial crisis.
And the latest figures from the Real Estate Institute of Victoria show a slump at the top end of the Melbourne housing market. Toorak house prices have fallen by 5.2 per cent in the year to July. The median price for a house in East Melbourne declined by more than a quarter in the year. Other upscale suburbs including Brighton and Armadale have fallen by more than 5 per cent. Hawthorn bucked the trend and proved to be a strong performer in the top-end slump.
