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With affordability at its lowest level on record, first-home buyers have to think outside the square.
The home-ownership dream rarely used to feature a sibling in your bathtub and a parent on your certificate of title. But these days, first-home buyers are prepared to be flexible.
Housing affordability fell to record lows in the March quarter this year according to the latest Housing Industry Association-Commonwealth Bank report. Mortgage payments now account for 30.7 per cent of total first-home buyer income!
Generations X and Y are also settling down later meaning for many home ownership is a solo battle.
It’s not surprising then that increasing numbers of first-home buyers are teaming up with siblings, parents or friends in a bid to break into the property market.
“There has been a noticeable trend towards family members buying property together, as property prices are still very high, particularly for first-home buyers,” says Aussie Home Loans boss John Symond.
The number of family members taking out mortgages together has jumped from about 1% of all loans originated by ‘Aussie’ to 5 per cent over the past two years! Mortgage Choice has reported a similar trend. A survey carried out by the company last year revealed more than 6 per cent of people who bought property within the past two years had done so with family or friends. And of those who intended to buy property within the next two years, more than 8 per cent intended to do so with family or friends!
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INVESTORS own around two million homes in Australia and every year thousands claim deductions they’re not entitled to and fall foul of the Australian Taxation Office.
The result can be a kindly warning or a significant fine and large interest bill.
The tax office says it is investors’ responsibility to get their tax returns right and they can’t blame their accountant or plead ignorance if they get it wrong.
One of the most common mistakes investors make is claiming items that should be depreciated over several years.
According to the tax office, initial repairs to fix damage, defects or deterioration that existed when a property was bought are capital expenses that should be claimed as capital-works deductions over either 25 or 40 years.
Capital improvements such as re-modelling a bathroom or adding a pergola should also be claimed as capital-works deductions.
Other mistakes include:
Interest
Taxpayers sometimes use loans for investing and private purposes — for example, to buy or renovate a rental property or to buy a motor boat.
The interest expense on the private portion of the loan (the boat) is not deductible.
Legal expenses
Conveyancing expenses incurred when buying and selling a property are not deductible. These form part of the cost for capital-gains tax purposes.
Travel expenses
If you take a holiday and visit your investment property while you’re there, you cannot claim a deduction for the full trip.
The tax office says you may claim only those expenses that are directly related to the property inspection and a proportion of accommodation expenses.
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Property investors should plan ahead to take advantage of the next upturn in the property cycle, according to quantity surveying firm Asset Economics.
“Property booms never last and neither do property busts,” the firm says in its latest newsletter.
To take advantage of the next boom, investors really need to buy for long-term capital growth and take in account the ripple effect.
“As our next property cycle comes around, it‘ll be the most desirable, most sought-after areas that start growing first, and these are usually the most affluent areas too.”
From there, capital growth starts to “ripple outwards!!”
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The value of Aussie homes increased in the first quarter, bucking a global trend downwards, according to a recently issued report.
House and flat prices in Australia increased in value by 1.6% in the first three months of the year, helped by a scarcity of supply, lower interest rates and incentives to first-home buyers.
The slight recovery in Australia “has been driven by the 40% fall in home loan rates to 5.7%, which are now at their lowest levels since July 1968!”
March’s three-month gain follows a 0.1% rise in the three months to February in the RP Data-Rismark’s national dwelling value index, and a 3% fall in the value of capital city homes in 2008.
The strength of Aussie home prices is a world away - so far - from the 2.7% drop in British home prices over the first quarter, capping a year to March 17.5% plunge.
US housing didn’t fare that much better, with prices in the top 20 cities sinking 1.9% in February, which brought the 12-month fall to 18.6%, according to the most recent S&P/Case-Shiller index, a widely followed measure.
RP Data-Rismark said the first-home buyer’s grant, which ends June 30, has acted like a catalyst for new home buying in Australia, but lower interest rates are sustaining the market’s growth.
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So it’s well known, buying properties within 10km of capital cities is generally a good investment, but where ARE the most affordable areas?
There’s some suburbs within 5km of capital city centres where the median unit price is $200,000 and the gross rental yield 5.33%?
You really don’t have to buy far from the city centre to pick up a bargain!
And it’s not a bad strategy for identifying best value properties to find ones located in affordable suburbs within a 10 kay radius of the city.
For some cities, this inner circle can be more or less, depending on the size of the city, however, generally it’s a good rule of thumb because it is these areas that are more than likely well serviced by transport, have social and retail amenities near by and benefit from strong rental demand.
Identified below are the five most affordable suburbs for houses and units within a 5km radius of Melbourne City.
Melbourne - houses
|
Suburb
|
Council area
|
Number of sales
|
Median price
|
Annual change
over 10 years |
Median weekly rent
|
Gross rental yield
|
|
Braybrook
|
Maribyrnong
|
73
|
$345,200
|
15.45%
|
$250
|
3.77%
|
|
Maidstone
|
Maribyrnong
|
114
|
$435,000
|
14.24%
|
$300
|
3.59%
|
|
West Footscray
|
Maribyrnong
|
138
|
$447,000
|
13.62%
|
$320
|
3.72%
|
|
Kingsville
|
Maribyrnong
|
26
|
$451,000
|
11.77%
|
$330
|
3.80%
|
|
Footscray
|
Maribyrnong
|
168
|
$453,750
|
13.06%
|
$320
|
3.67%
|
Melbourne - units
|
Suburb
|
Council area
|
Number of sale
|
Median price
|
Annual change over 10 years
|
Median weekly rent
|
Gross rental yield
|
|
Williamstown Nth
|
Hobsons Bay
|
12
|
$218,500
|
0.24%
|
n.a.
|
n.a.
|
|
Footscray
|
Maribyrnong
|
155
|
$240,000
|
14.42%
|
$270
|
5.85%
|
|
Carlton
|
Melbourne
|
249
|
$246,000
|
2.60%
|
$390
|
8.24%
|
|
West Footscray
|
Maribyrnong
|
96
|
$269,500
|
15.06%
|
$210
|
4.05%
|
|
Braybrook
|
Maribyrnong
|
28
|
$275,000
|
9.85%
|
$310
|
5.86%
|
|
|
|
|
|
|
|
|
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Mark Forytarz has a great development opportunity in Burwood, this high exposure development site (1,776m2) approx. and regular in shape is within close proximity to Deakin University (Burwood).
Boasting a wide frontage, this site suits many options including a prime student apartment site (STCA) or OYO 1 & 2 bedroom apartment site (STCA).
Land: 1776m²
Mark Forytarz
Castran Gilbert
Phone
03 9827 1177
Mobile
0407 766 308
•
|
1219 Riversdale Road BOX HILL SOUTH
|
|
Property ID: 973947
|
|
Price: Contact agent for details
|
|
| This high exposure development site of 1,236m2 approx. with two street frontages has a Permit for 26 spacious student apartments or proposed plans for 38 OYO one and two bedroom apartments (STCA).
Ideally located within close proximity to Deakin University (Elgar Road Campus). |
|
Contact Agents
Mark Forytarz 0407 766 308
mforytarz@castrangilbert.com.au |
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Claire Heaney from the herald sun has written an interesting article about whether the hesitation from property investors is leading to bargains in the market. From the article:
NERVOUS property investors are waiting for prices to stop falling before returning to the market, according to property research company RP Data.
But this hesitation is creating bargains for fast-acting first-home buyers who are willing to take a bet that prices are at or close to their lowest point.
“This is good news for first-home buyers, because fewer investors mean less competition,” RP Data’s national research director Tim Lawless says. “These two segments of the market often compete for the same housing stock because of the low entry price and generally strong rental yields.”
Figures released this week show Melbourne homes are now at their most affordable in five years for first-home buyers. Falling interest rates, higher first-home buyer grants and falling property prices have cut the amount of income needed to service a mortgage.
Read the full article here: http://www.news.com.au/heraldsun/story/0,21985,25074653-5013926,00.html
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Good article about whether its a good time to buy into the hard hit top end of the market, from the article:
There are plenty of losers in the falling market, but the big winners will be those able to pounce on a cut-price premium property.
Though the downturn is being played out differently from suburb to suburb, it’s clear the properties at the top end of the market are being hardest hit. Exclusive suburbs such as Balwyn have seen as much as 21 per cent sliced from their median prices in the year to December last year.
The houses in the $500,000 to $600,000 bracket haven’t been as hard hit and some may have dropped only 10 per cent.
They are also expected to rebound quicker.
Read the full article here: http://www.news.com.au/heraldsun/story/0,21985,25074641-5013926,00.html
Mark Forytarz
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Interesting article by Ben Butler and Ben Packham over at http://www.news.com.au/heraldsun/story/0,21985,25091470-5013926,00.html about
From the article:
The Reserve Bank has cut rates five times since August, slashing the official rate from 7 per cent to 3.25 per cent.
While those who fixed their home loan at last year’s higher rates have seen no relief, falling home loan rates have helped contribute to a clearance rate of 77 per cent this weekend.