MORE than 250 suburbs around Australia are predicted to double in value in the next 10 years.
This is great news for Moreton investors with rising prices and rising rental returns. And tenants in almost 800 suburbs are potentially set to see their weekly rent double in the same time, according to new research by RP Data.
The real estate data firm’s Autumn Investor Guide has revealed the nation’s top property investment prospects include 263 suburbs or towns with the potential to see 100 per cent growth in the next decade, 792 where rental growth will do likewise, and 582 suburbs where rental margins are currently topping 5.5 per cent.
It is thought these factors will make the suburbs a hit with investors, but they may also prove a nightmare for those renting and trying to get their feet on the property ladder.
Despite house prices tumbling from this time in 2010 until about May last year, Victoria is the nation’s most likely state to see property values double, according to the report.
The real estate data analysis firm tipped houses to double in Williams Landing (current median $407,970), while units are set to do likewise in Derrimut ($391,589) and Travancore ($443,507).
Among the nation’s capital cities, the top earners over the past five years, and top picks to see values double in the next 10 are extremely varied.
Berrimah in Darwin tops the list with a 25.7 per cent average annual growth over the past five years, followed by Deakin, Canberra, and Potts Point, Sydney, at 19.8 per cent, and Williams Landing in Melbourne at 19.4 per cent.
RP Data analyst Cameron Kusher said a large number of the tipped property winners are in regional Queensland, NSW and WA – with mining growth a significant factor in their performance recently and a major element of their future prosperity.
“We don’t necessarily say that that is going to continue, but there are some good opportunities from over the last five years,” he said.
Mr Kusher said that while not all the suburbs mentioned in the report would continue on trend, those hoping to buy or who are still renting could take heart that many others would not see such dramatic growth.
“From the investors perspective these are the ones that have done very well in the last five years,” Mr Kusher said.
“(And) there are some (suburbs) in Victoria where rents are falling or haven’t moved.
“Over the past five years some of these areas have done quite well, perhaps they have cooled off over the last year or two.
“Renters in Sydney are most likely to feel the pinch if the predictions, based on growth over the past five years, come to pass.”
A whopping 249 suburbs have been identified in Sydney, including ritzy Vaucluse where rent for houses has grown by about $1015 (15.3 per cent per year) in the past five years and Potts Point, where houses now rent at $377 (13.9 per cent per year) more than they did in 2008.
Perth was a close second, with 181 suburbs tipped for a potential rental price double.
Houses in Menora are expected to see median rents double after they rose from $400 in 2008 to $1,100 currently, according to the RP Data figures.
Report co-author and RP Data analyst Tim Lawless said the growth had been predicted on suburbs with annual growth topping 7.2 per cent.
“By using a scenario based on compounding growth calculation, the value of an asset will double in ten years if it records an annual increase of 7.2 per cent,” Mr Lawless said.
“Based on this measure we have identified 263 suburbs where values are on track to double over a ten year period and 792 where weekly rents are on track to double over ten years.”
Mr Lawless said that investors were encouraged to view the free report as a guide or starting point for investigating investment opportunities.
Article originally published in Couriermail.com.au by Nathan Mawby
Mon Komo Redcliffe Records Strong Occupancy Rate
7 Common GST Mistakes On Property
It’s great to see the property market in South-East Queensland going in the right direction. With that comes an upswing in volume of transactions and GST consequences to consider.
GST and property has always been a touchy area and the Australian Taxation Office have remained active and vigilant in identifying problem transactions.
With the market now moving in the right direction we thought it a good time to set out the most common mistakes we see in the market by developers and professionals. So, here are 7 Common GST Mistakes on Property:
#1. CHARGING GST ON PRE-EXISTING RESIDENTIAL PREMISES.
For some reason this continues to happen almost 15 years after GST was introduced. If a developer sells pre-existing residential premises there will be no GST effect [they are input taxed supplies]. This is despite the fact that the developer is GST registered and selling to another GST registered developer. To be clear this only applies to pre-existing houses, units, apartments, etc … not land that may happen to be in a residential area.
#2. FORGETTING TO AGREE THE MARGIN SCHEME IN THE CONTRACT.
While most developers are aware that selling under the margin scheme can save GST on sale it is still often left out of the contract in error. The only way to fix this problem is to go to the purchaser after settlement to agree the margin scheme was used. You then still have an additional step in asking the ATO to waive the normal requirement to have this agreed prior to settlement. If this doesn’t occur you have lost the full 1/11th in GST on sale.
[Tip – make sure you can use the margin scheme in the first place]
#3. CLAIMING GST ON A RESIDENTIAL PROPERTY BEING BUILT WHERE YOU INTEND TO HOLD THE PROPERTY.
No GST can be claimed where you intend to rent out a property for residential rent. This is the case even if you intend to sell the property as new residential premises within 5 years of construction.
[Tip – make sure you have considered the cash-flow effect of not being able to claim back GST on construction costs]
#4. FIRST TIME OR PRIVATE DEVELOPERS REGISTERING AUTOMATICALLY FOR GST TO CLAIM CREDITS BACK.
When you undertake a development you need to consider whether or not you should register or if you are required to be registered for GST for your specific development. If you are subdividing land that you have held for a long term for a capital purpose such as rental, then you might not need to register for GST. If you choose to register for GST when you’re not required to by law you could be giving a lot of profit away by unnecessarily paying GST on the sale of the development property.
[Tip – do the maths and seek advice on your personal circumstances]
#5. IF A PROPERTY IS USED COMMERCIALLY THEN IT WILL AUTOMATICALLY ATTRACT GST ON SALE.
This is another common misconception. Traditionally with GST the type of property tends to determine the GST treatment. In other words you should look at the property and understand what its normal form and function is. Don’t just look at how the property is used. This will mean many properties used in a commercial way may not actually be subject to GST.
[Tip – you normally shouldn’t be charging GST to a commercial tenant in this circumstance or claiming back GST credits]
#6. IF YOU HAVE CHARGED OR PAID GST WHERE YOU SHOULDN’T HAVE IS IT DIFFICULT TO DO ANYTHING ABOUT IT?
We have dealt with numerous circumstances on both sides of the fence where we have been able to get a much better GST result. In some cases the ATO has been actively engaged with to ensure a good outcome.
[Tip – it’s still easier and less costly to get it right up front prior to settlement]
#7. IT’S TOO HARD TO GO TO THE ATO TO GET A PRIVATE RULING ON GST.
This is not the case. GST and property tend to be one of the more common rulings the ATO are asked for. They also tend to be quick to resolve where you know what information is required to be provided up front. This is one way to deal with contentious GST matters under contract.
We see these types of mistakes happening all the time [along with many others]. But now over to you, leave your comments below and tell us what other GST mistakes you have experienced on property.
Queensland Says No New Taxes on Foreign Property Buyers in Bjelke Petersen-like Strategy
The Queensland government has ruled out introducing new taxes on foreign buyers of residential real estate.
They are the only state that actually monitors foreign investment, so were in the box seat to implement such a tax regime.
The rejection comes after the populist Victoria Labor government’s recent budget unveiled a new tax regime that will seek to tax foreign buyers and foreign owners.
Queensland has vowed not to follow Victoria’s lead and introduce any new taxes on foreign property investors.
Treasurer Curtis Pitt said Queensland welcomed foreign property investment.
“We’re ruling out any stamp duty surcharges for foreign investors who purchase a house in Queensland,” said Pitt.
“We’re also ruling out any land tax surcharge for foreign investors in this state.”
The Victorian state budget, revealed on Tuesday, included a 3%t stamp duty surcharge for homes from July and land tax increases of 0.5% from 2016 for offshore-based investors.
News Ltd reported Queensland executive director of the Property Council, Chris Mountford saying the action will strengthen Queensland’s position on the global investment map.
“In particular it creates a compelling case to invest in Queensland over Victoria.”
Nothing new for Queensland as that was how former premier Joh Bjelke Petersen saw the state into an upswing when Queensland didn’t have death duties like other states.
It was in 1977 when the Premier of Queensland Joh Bjelke Petersen abolished death duties and a wave of Australia’s elderly headed towards the Gold Coast with the high rise following as dying in Queensland became a tax avoidance scheme and Surfers Paradise became a retirement haven.
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