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The ATO clamps down on property-related tax errors

Last month, ATO Commissioner Chris Jordan told The Tax Institute conference in Hobart that the ATO had randomly reviewed 300 rental property claims and found errors in almost nine out of 10. Soon after, the ATO announced it would undertake 4,500 audits of taxpayers its data analytics systems had identified as “high risk” – roughly 2,000 more than it undertook last year.

Using data from accommodation sharing platforms, rental property bonds and property sales records, these systems flagged instances in which taxpayers were likely to have either over-claimed deductions or under-declared rental income. The ATO then contacted these taxpayers to offer them the opportunity to make appropriate adjustments to their returns – either through letters or via real-time “nudges” on the web-based platform myTax.

“We really want to help people get it right in the first instance, so that we don’t have to go down the audit pathway,” ATO Assistant Commissioner Gavin Siebert tells realestate.com.au.

“If the claims raised by the data analytics systems aren’t amended or advised, then that’s when we do the reviews. And if we get to the end, that’s when we need to do the audits.”

Siebert says the ATO’s enforcement gave taxpayers the benefit of the doubt and that there were a lot of “genuine mistakes”, which could generally be split into one of three categories – over-claiming interest repayments; confusing repairs and maintenance; and incorrectly apportioning rental income.Nerida’s 2019 property predictions

Over-claiming interest repayments

According to Siebert, the most common errors were related to incorrectly claiming interest repayments.

Current legislation allows investors to offset interest paid on the loan they used to buy an investment property against their assessable income, but Siebert said many investors were continuing to claim interest repayments on the entire loan even when they had refinanced a portion of it for private purposes, which contravenes the law.

The ATO only allows you to claim interest on the portion of your loan that is used to fund an investment property, regardless of whether equity in an investment property is used as security in that loan.

Confusing repairs and maintenance

The second most common mistake was the conflation of capital works and repairs. While the latter can be claimed immediately, in the income year in which the expense occurred, the former must be depreciated over a long period of time.

“For example, let’s say you renovate the bathroom in your rental home. Many investors are claiming the entire cost of that renovation in that one income year, but you need to depreciate that at a rate of 2.5% over 40 years,” says Siebert.

Ben Kingsley, co-host of the Property Couch and chairman of the Property Investors Council of Australia, says investors also often incorrectly claimed immediate deductions when they replaced fixtures and fittings.

“Great examples are things like fences, washing machines, carpets, curtains. When people replace rather than repair them, they need to write them off over a period of time, not as a complete one-off claim,” he says, in reference to the ATO’s rule that only repairs directly related to wear and tear can be claimed as an immediate deduction.

Recent change to the laws around depreciation, however, mean that investors who bought a property after 9 May 2017 can only claim depreciation on an asset if the asset was brand-new, the property was newly built, or the property had been substantially renovated and no-one had previously claimed any depreciation deductions on the asset.

2/56 St David Street

Investors often claim interest on an entire loan amount even when they have refinanced a portion of it for private purposes. Picture: realestate.com.au/buy

Incorrectly apportioning rental income

Just as some investors are claiming interest payments for loans used for private purposes, Siebert says many are also claiming interest repayments during untenanted periods.

“You should only be claiming interest for the periods the property was rented out, or genuinely available for rent,” he says.

Travel expenses no longer claimable

Finally, Kingsley says taxpayers were still attempting to claim deductions for the cost of travel incurred while visiting their investment property on official business.

Investors were able to do this up until 1 July 2017, but changes to the law have since stripped them of this right. Now, only excluded entities or those who are carrying on a business of property investing can claim these expenses.

“The vast majority of investors are doing the right thing most of the time,” says Kingsley. “But there are some real complexities to some of the details in the tax legislation, so I would always advocate seeking out a professional tax agent who specialises in residential property investment.”

This article was first published in www.realestate.com.au. Here is the link to the original article:https://www.realestate.com.au/news/the-ato-clamps-down-on-property-related-tax-errors/

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Five affordable housing markets where prices are tipped to skyrocket by 2022: Sell or Hold forecast

Property prices are expected to shoot up by 2022 in several major affordable housing markets across Australia, according to new findings from property research platform Sell or Hold.

Sell or Hold, managed by the independently run Select Residential Property group, looked at 17 markets for the study, each with a median house price of about $500,000.

The research identified the suburb of Karabar in Queanbeyan as likely to see the most price growth over the next three years. The top five is rounded out by Middle Ridge in Toowoomba, Seaton in Adelaide, Ashtonfield in Maitland and Brompton in Adelaide.

Sell or Hold chose the price range of close to $500,000 because investors were most likely to target properties around that price point. This meant that suburbs in Sydney, which has a median house price of $1,062,619, were too expensive to be included in the forecast.

Houses in the eastern suburbs of Sydney
The affordable price bracket ruled out all Sydney suburbs. Photo: iStock

Only significant urban areas with a diversified economy and a population of over 100,000 were part of the study.

Select Residential Property group head of research Jeremy Sheppard said a three-year analysis period was the most accurate way to predict price trends.

“In a 12-month period, there isn’t much time for supply and demand to influence price growth, and a lot of times after three years, supply and demand may have [balanced] again,” he said.

Mr Sheppard said Sell or Hold’s forecast was based on gathering supply and demand metrics, rather than collecting data on individual properties. Demand was calculated by using a variety of metrics, including clearance rates, how quickly homes are selling, discounting rates, and the percentage of renters to owner-occupiers.

Where to look for growth
Affordable three-bedroom houses tend to perform well on the Karabar rental market. Photo: LJ Hooker Queanbeyan

Mr Sheppard suggested that some suburbs on city outskirts have seen the benefits of a ripple effect in property prices.

“Often, if you have a boom like we saw in Sydney, it tends to start in more affluent areas. Once prices go up, people look for the next best thing. Prices tend to ripple out to fringe suburbs that are possibly less desirable, but far more affordable,” he said.

The predicted price growth for Karabar, which is tipped to increase by about $150,620 by 2022, is a massive 5 percentage points more than the next suburb on Sell or Hold’s list.

With a median house price of $522,986, Karabar is about 20 minutes’ drive to Canberra’s CBD. Mr Sheppard said this may help to explain why prices were expected to climb so significantly. 

Aaron Papahatzis of Belle Property Kingston is well aware of that drawcard. “For Karabar and for Queanbeyan more broadly, the attraction would be the easy access to Canberra, as well as affordability and the local shopping and sporting facilities,” he said.

Aerial view of Canberra
Karabar residents can reach Canberra by car in about 20 minutes. Photo: iStock

While the bulk of Mr Papahatzis’ buyers are owner-occupiers, he said there was good scope for investors to find strong opportunities in the area. 

“The majority of properties we sell are family homes and the rent does stack up quite well. If you’re buying a three-bedder with one bathroom, which you can get for about $500,000, you’d be looking at $520 to $550 in rent payments per week.”

He recommended investors seek out low-maintenance properties in Karabar which were already partly renovated, and said more affordable rentals would perform well, especially among young families.

14 Jake Court Middle Ridge QLD LOW RES
A typical four-bedroom house for sale in Middle Ridge, QLD. Photo: Ecology Property

In Middle Ridge, which ranked in second place in the forecast, it’s a similar story.

Robbie Witt of NGU Real Estate Toowoomba said most Middle Ridge buyers were owner-occupiers.

“You will have no dramas renting a property out,” Mr Witt said, pointing to four-bedroom, two-bathroom houses as an ideal bet for investors. “These properties just get snapped up really quickly on the rental market.”

With Middle Park’s large blocks, abundance of parks, and quality schools, Mr Witt said the area was performing comparatively well.

Lake Annand in Toowoomba LOW RES
Infrastructure and a strong economy in Toowoomba (pictured) may affect Middle Ridge prices. Photo: T&GWSBT

Mr Witt said aside from a new land development called The Leas, Middle Ridge itself was not slated for significant development in the near future.

According to Mr Sheppard, however, infrastructure in the wider Toowoomba area may have an effect on Middle Ridge prices. He said projects like the Toowoomba Wellcamp Airport, as well as Toowoomba’s strong economy, were worth considering.

Middle Ridge is about a 15-minute drive to the centre of Toowoomba.

Investor advice
Adelaide city skyline
Mr Sheppard pointed to Adelaide as a key city for investors to consider. Photo: iStock

Mr Sheppard advised buyers to keep an eye on Adelaide, which had two suburbs in Sell or Hold’s top five for price growth.

“It seems to have quite a broad range of high demand, relative to supply. There are still plenty of pockets that aren’t going to see much in the way of growth but Adelaide … seems to have clusters of growth,” he said.

“This could be down to affordability, or due to the efforts of the state government … starting to show fruit. It’s not clear what the precise cause is, but there’s definitely a lot of heat picking up in Adelaide.”

He pointed to Adelaide, Brisbane and Canberra as key cities for investors to consider.

Mr Sheppard said there was no common thread that tied Sell or Hold’s top-five performers together. He said the results came down to timing and where each suburb sat relative to the broader market.

Where prices should stagnate
An aerial view of Darwin NT
Two of the bottom five rankings were in the Darwin area. Photo: iStock

Sell or Hold’s forecast also identified the areas that should see the least price growth. Prices are expected to fall the most in Rosebery in the Darwin area, with a drop of about $3148 expected over the next three years.

Wandi in Perth had the second lowest predicted growth rate, where the median house price is forecast to decline by about $2103 for that same period. 

Four of the bottom five suburbs were in Perth and Darwin, with Brisbane’s Bahrs Scrub in fifth place.

“In real catastrophe areas, [poorer price performance] will be because a major industry has gone belly up, as we saw with the end of the resource boom. Those changes in the economy have had that affect on Rosebery, where prices are still falling,” Mr Sheppard said.

This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/five-affordable-housing-markets-where-prices-are-expected-to-skyrocket-by-2022-sell-or-hold-forecast-814921/

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The NSW federal electorates hardest hit by the property market downturn

Home owners in Sydney’s middle-ring suburbs have taken the brunt of the city’s property downturn, with voters in key marginal seats among those hardest hit by falling property prices, new data shows.

One in every five federal electorates across NSW recorded double-digit house price falls last year, data from Domain has revealed, with the Liberal seat of Bennelong experiencing the biggest drop — its median fell 16.3 per cent year on year.

Electorates with a median house price between $1 million and $1.5 million saw the biggest declines, said Domain economist Trent Wiltshire, with nine of the 15 most affected electorates   — including the marginal Sydney seats of Reid and Banks — held by the Liberal Party.

“These are the more expensive areas, but not the most expensive,” Mr Wiltshire said, adding Liberal seats tended to have higher rates of home ownership due to generally higher income levels and an older demographic.

Meanwhile Labor electorates were home to more renters and harder hit by apartment prices falls.

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The median house price fell by more than 10 per cent in more than a fifth of electorates last year. Photo: James Alcock. Photo: James Alcock

The biggest unit price drops were in the city’s west, north west and south west, with the seat of Fowler — which covers the Liverpool region — faring worst with an 11.5 per cent annual fall.

The marginal Labor seats of Lindsay, in the city’s west, and Macquarie, covering the Blue Mountains, as well as the Liberal seat of Banks, were also among the top 10 electorates for unit price falls.

The election and potential changes to negative gearing and the capital gains tax discount, if Labor wins, are front of mind for buyers there, according to Dean Jr Boskovic of BOS Realty.

“A lot of people [in the Liverpool region] are asking what it means, how will it affect me and how will it affect the market,” said Mr Boskovic.  “It’s definitely a big question on buyers’ minds and rightfully so.”

While first-home buyers in the area were keen to see negative gearing scrapped, Mr Boskovic said, investors and home owners wanted to see it remain.

He said concern about falling property prices was so strong among residents that he expected to see a swing away from Labor, particularly as the NSW election had already seen a swing to the Liberal Party.

Meanwhile, in the Liberal-held electorate of Bennelong, which had the biggest hit to house prices, the election was front of mind for sellers, said Catherine Murphy of The Agency North.

“Our market is not great at the moment, the selling market is not energised and you’re throwing another thing on it … just another concern [vendors] have,” Ms Murphy said.

She added home owners were concerned about whether they should be aiming to sell before the election, while investors — who now make up a very small portion of her buying pool — were watching keenly to see what happens with negative gearing.

Mr Wiltshire said electorates with a greater proportion of renters were likely to be more welcoming of potential housing-related tax changes.

“Renters might see that policy as a way of lowering house prices a little bit,” Mr Wiltshire said. “Lots of those renters would be looking to buy and they will be looking for government to put in measures to improve housing affordability.”

He added the falling property market was less likely to be a concern in marginal electorates in regional NSW, such as Page, Eden-Monaro, Richmond and Gilmore, which saw price growth for both apartments and units.

Property markets across regional NSW held up better or even saw price growth last year, Mr Wiltshire said, but were now cooling — but not to the same extent as Sydney, which had a far greater boom.

Stewart Jackson, a politics lecturer at the University of Sydney, said falling prices may sway votes away from the ALP in some electorates like the safe and fairly safe Labor seats of Watson and Barton, which had the second and third-highest price falls.

“People are a bit worried about what’s happened, [the vote could sway] a couple of per cent … but I don’t think it will make a great deal of difference,” Dr Jackson said.

He added while renters might lean towards Labor, that might not translate to a victory in areas with a high proportion of renters, where many tenants such as international students would not be voting.

Australian politics professor Rodney Smith, also from the University of Sydney, added while the cooling market was a concern for voters, it would be far from the deciding factor come polling day.

He said economic management, health and education were generally the top three issues that affected how people voted, but he expected both parties to put a strong emphasis on housing policies.

“Both sides probably see the issue as something they can gain from and that they believe in. Labor’s put out its policies and will push for them as a means of improving housing affordability and getting people out of the rental market and buying their own homes. The Coalition will attempt to portray these policies as potentially [economically] risky and dangerous,” Dr Smith said.

ELECTORATEHELD BYMEDIAN HOUSE PRICE DEC 2018MEDIAN UNIT
PRICE DEC 2018
MEDIAN HOUSE PRICE YOY CHANGE (%)MEDIAN UNIT PRICE YOY CHANGE (%)OWNED OUTRIGHT (%)OWNED WITH MORTGAGE (%)RENTED (%)
BennelongLP$1,390,000$680,000-16.3-9.330.630.236.1
WatsonALP$957,500$550,000-14.5-7.228.128.239.4
BartonALP$1,170,000$668,000-14-3.530.228.937.2
ReidLP$1,655,000$749,995-13.6027.228.141.5
MitchellLP$1,080,000$705,000-12.3-63345.718.5
GrayndlerALP$1,416,300$738,000-11.5-3.824.528.843.7
HughesLP$970,000$630,000-10.4-5.335.444.617.6
McMahonALP$730,000$470,000-10.4-629.934.332.2
BanksLP$1,010,000$633,000-10.2-7.233.631.931.3
SydneyALP$1,450,000$857,000-10-3.313.720.162.2
North SydneyLP$2,177,500$916,000-9.6-2.629.127.240.9
CookLP$1,345,000$750,000-9.43.43833.125.7
BerowraLP$1,252,000$666,500-9.3-2.939.841.714.5
MackellarLP$1,550,000$828,750-8.3-4.736.736.921.5
BlaxlandALP$820,000$520,000-7.9-5.627.928.539.2
GreenwayALP$800,503$532,000-6.9-523.245.728.1
Kingsford SmithALP$1,760,000$850,000-6.9-3.525.424.246.6
BradfieldLP$1,977,500$799,500-6.7-2.537.635.324.2
ParramattaALP$932,500$580,000-6.3-4.120.927.248.2
WarringahIND$2,177,500$925,000-5.7-11.331.830.734.6
FowlerALP$765,000$420,500-5.6-11.529.727.938.2
CunninghamALP$778,750$570,000-5-3.434.329.732.2
WentworthLP$2,950,000$1,128,000-4.8-428.623.644.2
MacarthurALP$640,000$486,400-4.2-1.723.94230.6
LindsayALP$650,000$468,000-3.8-6.425.439.332.2
ChifleyALP$650,000$529,990-3.7-721.637.537
DobellALP$580,868$427,500-3.2-532.33528
RobertsonLP$725,000$511,000-2.60.735.73326.7
MacquarieALP$680,000$505,000-1.3-6.135.640.420.9
WhitlamALP$653,500$570,000-12.737.534.424.5
LyneNP$465,000$355,00008.245.427.622.7
New EnglandNP$325,000$240,0001.6-3.637.128.630.2
HunterALP$455,500$312,0001.84.933.535.926.6
NewcastleALP$625,000$540,0001.9-0.229.731.735.4
ShortlandALP$590,000$448,5002.6-0.339.334.622.9
GilmoreLP$565,000$435,0002.714.944.526.924.3
FarrerLP$325,000$225,0003.2036.63029
CowperNP$490,000$368,5003.68.639.826.129.7
RiverinaNP$320,000$245,2504.9-2.736.830.328.5
CalareNP$392,000$284,0005.15.235.832.128.2
PageNP$415,000$321,0005.11.140.729.326.1
RichmondALP$685,000$490,0005.44.339.527.728.3
PatersonALP$475,000$394,0005.66.833.333.929.1
Eden-MonaroALP$520,000$285,0008.323734.324.9
HumeLP$660,00032.943.719.8
ParkesNP$295,00035.727.731.5
WerriwaALP$705,00024.842.928.4
Source: Domain Group data, ABS data. Note: Median is based on six months of sales to December, with minimum of 50 sales required.

This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/the-nsw-electorates-hardest-hit-by-the-property-market-downturn-815480/

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Australia’s cheapest home will cost you less than your weekly Corona six pack

It comes with access to a pool, barbecue facilities and no water and council fees. But best of all, weekly mortgage repayments on Australia’s cheapest capital city home will cost you less than a night out at the movies or a slab of Coronas.

Listed with a bargain price tag of just $42,950, 11/565 King Rd, Virginia is Australia’s cheapest residential listing on realestate.com.au, setting buyers back a mere $38 a week in mortgage repayments. That’s based on a 20 per cent deposit of $8590.

However, there’s a catch.

11/565 King Rd, Virginia

11/565 King Rd, Virginia

The one-bedroom home is set in the Virginia Gardens Residential Village – a 25 minute drive from Adelaide’s CBD, and as such is subject to park rates – $120 per week for singles and $138 per week for couples.

On the upside, the new owner will have access to all facility features, including an inground swimming pool, barbecue areas, and there are no water and council fees.

As for the home, the weatherboard house features a master bedroom with built-in robes, a bathroom, a large living space, and a separate kitchen with storage, and an electric oven and cooktop.

11/565 King Rd, Virginia

11/565 King Rd, Virginia

There are also two small lockup sheds and garden beds to the front of the property.

Selling agent Katrina Nelsen on LJ Hooker Gawler said interest in the property was coming in thick and fast.

“I’m actually really surprised by the amount of interest we’ve had in the property as it’s not your standard home. Then again, it’s really cheap,” she said.

“Personally I think it would be perfect for truck drivers, FIFO workers, or someone separating or going through a divorce, needing a place to stay.

“I’ve also had some interest from singles. There are a lot of market gardens in the area, so it would be the perfect spot for a person looking to for work.”

11/565 King Rd, Virginia

11/565 King Rd, Virginia

As the home is located within a residential village, Ms Nelson said the prospective new owner would have to be approved by management.

“Apparently it’s a close-knit community out there and everyone gets on really well,” she said.

“You also won’t be able to lease it out as a holiday unit. They (management) want someone to actually live there.”

Virginia is a northern suburb in the Playford Council Region. According to CoreLogic, the suburb has a median house price of $275,000.

This article was first published in www.realestate.com.au. Here is the link to the original article: https://www.realestate.com.au/news/australias-cheapest-home-will-cost-you-less-than-your-weekly-corona-six-pack/

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First-home buyers in major capitals to decide the winner of the federal election

First-home buyers are set to determine who will win this year’s federal election, new data shows, with electorates in the outer-ring suburbs of capital cities, including Melbourne, holding key marginal seats. 

How these electorates vote across Australia will determine whether Prime Minister Scott Morrison and his Coalition government return to power, or Bill Shorten and the ALP take the reins after the election — predicted to be held in mid-May.

In Melbourne, the federal electorates which could see swings between the major parties include Dunkley, which takes in the suburbs of Frankston and Mount Eliza, Casey with Lilydale and Belgrave, and Latrobe with the booming growth belts of Cranbourne and Pakenham. 

They are all found on Melbourne’s fringes where first-home buyers have flocked for more affordable homes.

These electorates were more likely to have lower rates of renters, higher rates of home owners with mortgages and lower median house prices compared to safer inner Melbourne seats, Domain data shows.

Domain economist Trent Wiltshire said median house price data over the past year revealed a gap between the inner and outer suburbs — and not just in who they voted for or their property prices.

“Over the one-year change there is a clear pattern, and that is the electorates in inner-city Melbourne with the more expensive properties have seen the biggest house price falls,” Mr Wiltshire said.

“Owners without mortgages are skewed to the [safe] Liberal held seats – they tend to be wealthier and older and bought decades ago pre-property boom. These things combined means they had time to pay off their mortgage.”

The safer inner-city seats were also likely to have a higher percentage of people renting. In the federal electorate of Melbourne, which Greens MP Adam Bandt represents, more than 62 per cent of residents were renters. The electorate has a median house price of $1.17 million which dropped by 15.7 per cent over the past year.  

The most expensive house price median in Victoria, $1.528 million, is found in the electorate of Goldstein which includes the suburbs of Brighton, Hampton and Sandringham. Goldstein, represented by Liberal MP Tim Wilson, has seen the median house price drop by 10.4 per cent in the past year.

AEC map inner Melbourne federal electorates.
The Australian Electoral Commission map of inner Melbourne federal electorates.

These figures sat in comparison to the outer suburbs of Melbourne whose medians remained a little more steady.

In the electorate of Dunkley, currently represented by Liberal MP Chris Crewther, the house price median is $621,000. That median rose 53.5 per cent over the past five years, which includes the time since the last election. Over the past year, however, house price medians have dropped by 2.1 per cent.

In Casey, where Liberal MP Tony Smith is the representative, the median now sits at $676,000. The house price median in Casey has risen 54.9 per cent over the past five years, but has dropped by 7.7 per cent between December 2017 and 2018.

One of the best performers in terms of house price medians was the electorate of Latrobe, where fellow Liberal MP Jason Wood holds the seat. The median house price is $600,000 which has risen by 45.1 per cent over the past five years. It has also seen a median rise of 2.6 per cent over the past year.

AEC map outer Melbourne electorates
Australian Electoral Commission map of outer Melbourne’s federal electorates.

Monash University’s senior lecturer in political sciences Nick Economou said it was these electorates that would decided the outcome of the election.

“My view is that governments are made or broken in seats on the fringes of the cities,” Dr Economou said. “It’s the same in Melbourne, Sydney, Brisbane and Adelaide.”

He said first-home buyers in marginal seats would be unlikely to worry about policies or promises regarding cuts to negative gearing tax breaks for investment properties as they mostly could not afford them.

They would be focused on party promises to keep interest rates low, employment rates high and see penalty rates for weekend work being reinstated. These could see a swing against incumbent PM Scott Morrison and his government in some outer seats at the upcoming election, he said.

“[Ex-prime minister] Malcolm Turnbull supported the Fair Work Commission and did away with weekend penalty rates,” Dr Economou said.

“Quite often couples in the outer suburbs have both people working. It’s the old-fashioned patriarchy but those working part-time are usually women and they rely on penalty rates to help pay the mortgage. There definitely could be a residual resentment there.”

Victorian federal electorate data by household
ElectorateHeld byMedian house price Dec 2018Median house price – 1 yearMedian house price – 5 yearsProperties owned outrightOwned with a mortgageRented
AstonLP$740,000-10.3%43.7%34.1%42.5%19.7%
BallaratALP$400,0009.3%29.0%33.6%35.6%27.3%
BendigoALP$387,0004.3%13.8%35.2%35.9%25.4%
BruceALP$615,000-1.6%53.8%30.8%32.9%32.0%
CalwellALP$563,0002.4%51.3%25.8%44.9%25.5%
CaseyLP$676,000-2.0%54.9%34.0%48.2%14.5%
ChisholmLP$1,100,000-16.5%40.9%37.9%29.3%29.2%
Coopernew electorate$840,000-8.7%34.4%30.2%28.0%38.1%
CorangamiteALP$619,00012.5%36.0%38.1%38.4%20.0%
CorioALP$515,0007.3%45.%33.1%32.2%31.3%
DeakinLP$812,500-9.8%44.6%34.4%39.0%23.7%
DunkleyALP$621,500-2.1%53.5%28.3%41.1%26.7%
FlindersLP$715,550-1.3%47.5%38.8%34.3%22.1%
FraserALP$622,000-3.1%59.7%35.7%32.2%27.5%
GellibrandALP$750,000-2.9%36.4%27.2%37.1%32.6%
GippslandNP$287,0001.7%15.3%39.6%32.5%23.9%
GoldsteinLP$1,528,000-10.4%48.3%38.4%32.4%26.0%
GortonALP$540,0005.9%47.5%23.4%50.7%22.3%
HigginsLP$1,460,000-18.3%32.7%29.4%25.6%42.0%
HoltALP$570,5000.6%48.2%19.3%56.8%20.6%
HothamALP$950,000-12.8%42.7%36.5%30.1%29.6%
IndiIndependent$350,0006.1%29.6%38.4%32.8%24.6%
IsaacsALP$860,000-7.0%45.8%32.9%39.1%24.6%
JagajagaALP$820,000-6.3%42.6%37.4%37.2%22.4%
KooyongLP$1,750,000-17.1%26.4%37.6%28.4%31.1%
LatrobeLP$600,0002.6%45.1%24.6%49.5%22.4%
LalorALP$542,0004.2%52.7%21.1%47.6%28.2%
MacnamaraALP$1,225,000-27.9%31.7%21.4%22.9%52.5%
MalleeNP$258,0005.3%27.1%41.1%29.6%24.8%
MaribyrnongALP$925,000-2.6%43.4%31.7%29.5%35.3%
McEwenALP$575,0002.7%43.8%28.2%50.5%18.6%
MelbourneGreens$1,117,000-15.7%39.6%15.6%18.0%62.6%
MenziesLP$1,110,000-13.3%42.1%44.1%35.5%16.9%
MonashLP$430,00013.2%37.639.934.122.2
Nichollsnew electorate$310,0006.9%15.736.832.825.9
ScullinALP$611,000-3.8%52.831.140.724.6
WannonLP$300,0005.3%16.740.632.123.1
WillsALP$780,000-3.7%41.330.028.238.4
Source: Australian Electoral Commission (AEC); ABS; Domain

This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/first-home-buyers-in-major-capitals-to-decide-the-winner-of-the-federal-election-815394/

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Federal budget 2019: $1.7 billion recommitted for affordable housing but few new measures

The federal government has recommitted to previous pledges on affordable housing, setting aside more than $1.7 billion towards state projects in this year’s budget.

But despite Treasurer Josh Frydenberg declaring that “affordable housing is a priority for this government”, the budget papers contain limited new policies addressing the issue.

Mr Frydenberg highlighted the $300 million raised last week for the National Housing Finance and Investment Corporation, saying it was the largest social bond in Australia’s history.

The NHFIC, announced in the 2017-18 Federal Budget and also known as a bond aggregator, is a mechanism to provide cheaper finance for the community housing sector.

No significant announcements in relation to the NHFIC appeared in this year’s budget but an estimated $225 million will be spent on the program over 2019-20.

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Affordability was talked about but few new measures were delivered. Photo: Stephen McKenzie

Meanwhile, more than $1.7 billion of federal government funding will go towards supporting state affordable housing services.

This includes a government pledge to deliver almost $1.6 billion towards the National Housing and Homelessness Agreement, as foreshadowed in last year’s budget.

The NHHA, announced in the 2017-18 budget, aims to increase the supply of new homes through working with state and territory governments.

NSW will receive the largest slice with $484.2 million, followed by Victoria and Queensland at $406 million and $319.8 million, respectively.

WA will receive $165.9 million, $108.7 million will go to SA and Tasmania will receive $33.7 million. The ACT will get $26.7 million and NT $20 million.

Other funding for state and territory governments around affordable housing over 2019-20 include $300,000 for a review of community housing regulation in NSW and $113.5 million for remote housing in the Northern Territory.

The government has also reaffirmed to provide $529.9 million over 11 years from 2018-19 to support projects under the Hobart City Deal. Of that, $30 million in funding will go towards providing more than 100 new social housing dwellings in Greater Hobart.

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House prices in Hobart continue to rise, making the city increasingly unaffordable. Photo: Sarah Rhodes

While house prices across most capital cities declined last year, according to the latest Domain figures they increased by 8.8 per cent over last year in Hobart and rents jumped 6.3 per cent over the same period. The Tasmanian capital also has the tightest rental vacancy rate in the nation at 0.3 per cent.

Despite house prices falling across the nation, housing affordability continues to remain an issue.

According to the most recent Domain House Price Report, prices have fallen nationally by 6.5 per cent with Sydney and Melbourne leading the fall at 9.9 per cent and 8.4 per cent, respectively. Even so, the income to median price ratio remains elevated in these capital cities.

In the budget economic outlook, the government touched upon the fact falling house prices could detract from the forecast that predicts a real GDP growth rate of 2.75 per cent.

Labor has promised to put housing affordability high on the agenda if it comes to power at next month’s federal election, with a policy to curtail tax breaks for negatively geared investment properties a major campaign platform for the party.

This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/federal-budget-2019-1-7-billion-recommitted-for-affordable-housing-but-few-new-measures-815201/

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Melbourne’s champagne suburbs for buyers on a beer budget

Budget-minded buyers can raise a glass to falling house prices in Melbourne’s exclusive suburbs, which have become easier to break into.

Properties in the city’s “champagne suburbs” can now be bought on a “beer budget” thanks to recent price drops, a new report says.

The Herron Todd White analysis shows some blue-chip ‘burbs had experienced significant price declines and many quality family homes were selling below the sales median.

16 Power St in Hawthorn sold for $2.065 million.

The suburb’s median sale price has dropped to $2.2175 million.

Herron Todd White Melbourne director Perron King said the softer market had opened the door to suburbs like Hawthorn and Carlton for an increasing number of buyers.

“Cosmopolitan suburbs have actually been some of the worst performers during the downturn, but in the long-run they will provide great value,” Mr King said.

“With limited buyers and prices dropping, this is an opportunity that’s never been better.”

Hawthorn, Kew and Camberwell had seen prices drop by 12 to 15 per cent since the market peaked in late 2017, the report found.

19 Horne St, Brunswick sold for $1.55 million in May 2016.

It sold again late last year for $1.365 million.

Brunswick, Carlton and Northcote were identified as some of the best investment options for buyers in the inner-north, with prices dropping about 10 per cent since their peak.

Jellis Craig Brunswick director Rob Elsom said families should take the opportunity to buy north, with more schools opening in the area.

“There’s a lot of demand at the moment because more people have started catching on to the area being competitively priced,” Mr Elsom said.

“The lifestyle on offer in each of these suburbs is obvious, with great street shopping strips that speak for themselves.”

22 McLauchlin Ave, Sandringham is for sale for $1.65-$1.725 million.

Inside the immaculate property.

Sandringham and Black Rock were highlighted as other top choices for savvy buyers.

Mr King said it was a great time to buy family houses, knockdown properties and units.

“First-home buyers should be circling Brunswick, young families and professional couples can be looking out east,” he said.

“And families looking to upgrade and get that bit closer to town should do their best to make it happen now.”

Sandringham was highlighted by the report as a suburb that could be broken into.March 23: Jack Boronovskis’ Victorian property wrap

But the report suggests the blue-chip bargains will not last long.

“Victoria’s last quarter was the worst performing since the global financial crisis, but there’s now a slightly more positive outlook on the horizon,” Mr King said.

“We expect it will stay a soft market until the election this year, but we could be seeing green shoots in the market again in 2020.”

This article was first published in www.realestate.com.au. Here is the link to the original article: https://www.realestate.com.au/news/melbournes-champagne-suburbs-for-buyers-on-a-beer-budget/

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Reserve Bank keeps rates on hold as 2019 election looms

The Reserve Bank of Australia has today opted to keep interest rates on hold at 1.5% as the Morrison Government prepares to announce a date for the upcoming federal election.

Rates in Australia have been on hold for a record 32 months, since August 2016, when the RBA cut the official cash rate by 25 basis points.

While most experts had anticipated the RBA’s decision to maintain the status quo, it is also a reflection of the precarious state of the economy, according to realestate.com.au Chief Economist, Nerida Conisbee.

“The RBA held rates today with economic data still too mixed to make a move. In particular, employment data remains strong with unemployment data low and job vacancies now at their highest level ever recorded,” she says.

“While employment is strong and not many people fear losing their jobs, this is not flowing through to consumer confidence, retail spending or wages growth. All these factors remain subdued.”Tips to keep ahead of the property market

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Reserve Bank Governor Philip Lowe says the RBA was also swayed by the continued decline in house prices.

“Conditions remain soft and rent inflation remains low. Credit conditions for some borrowers have tightened a little further over the past year or so. At the same time, the demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed,” he says.

Global markets & flat wages won’t help

While the official cash rate will remain on hold for yet another month, that doesn’t mean home owners won’t see a change in their mortgage repayments.

In fact, with wage growth sitting at 2.3% and major lenders raising their rates outside of the RBA’s monthly meeting, most home owners are more likely to see their housing costs rise and will rein in their spending accordingly.View image on Twitter

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The RBA has released a snapshot of Key Economic Indicators – https://bit.ly/2QpxiY8 406:15 AM – Mar 8, 201942 people are talking about thisTwitter Ads info and privacy

Australian lenders get a significant proportion of their funding from overseas markets, and with the US economy continuing to recover and rates in the UK and the EU likely to move as Brexit negotiations are finalised, the wholesale cost of debt for banks here will soon rise.

With 41% of realestate.com.au visitors surveyed in March predicting major lenders will raise rates, Australians are probably expecting further rate rises from their banks, despite the monthly decision of the RBA.

This article was first published in www.realestate.com.au. Here is the link to the original article: https://www.realestate.com.au/news/reserve-bank-keeps-rates-on-hold-as-2019-election-looms/

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Major headwinds for housing pre-election but affordability is rising

Affordability is rising across the country as dwelling values fall, but experts warn of major headwinds for housing in the lead up to the Federal Election.

The latest CoreLogic Hedonic Home Value Index, released Monday, found that national dwelling values had been trending lower for 17 months and fallen by a cumulative 7.4 per cent since peaking in October 2017.

But “despite the broad based weakness, the national index remains 15.9 per cent higher relative to five years ago, highlighting that most property owners remain in a strong equity position.”

“The silver lining here is that housing is now very affordable and first home buyers are proportionally much more active relative to other areas of the country,” especially in markets where values peaked much earlier (2014) such as Darwin (-27.5 per cent) and Perth (-18.1 per cent).

“As dwelling prices trend lower or level out, household incomes are edging higher and mortgage rates remain around the lowest level since the 1960s,” said CoreLogic head of research Tim Lawless. “First home buyers are clearly taking advantage of the improved levels of affordability and less competition in the market.”

The good news for Brisbane was that while values were softening, the apartment sector seems to have recovered from over-supply.


SPREAD

The good news for homeowners was that the pace of the decline in property values was now easing off relative to the past four months, especially across Sydney and Melbourne.

The fear though was that the market downturn was “becoming geographically more widespread”, according to CoreLogic head of research Tim Lawless.

He said housing values were lower across six of the eight capitals and five of the seven ‘rest of state’ markets in the past month.

Brisbane was down -0.6 per cent in the past month, with dwelling values dropping by -1.3 per cent in the past 12 months, putting the median value at $489,832. Over the past five years though, dwelling values had actually grown by almost double digits, 9.9 per cent.

Mr Lawless said Brisbane was “previously seen as a level market”.

Canterbury Bankstown Mayor delighted over housing win

Weakness in Sydney and Melbourne was now spreading, mostly because of credit availability in the owner occupier market. Picture: AAP/Matthew Vasilescu.

“Values have really been edging lower in the last four months. We do see acceleration in the rate of decline in Brisbane despite Brisbane showing strong population growth, affordability, and generally improving conditions, it does look like there are some headwinds based on credit availability.”

But he said the apartment sector’s headwinds appeared to have eased, with it “starting to look healthier in Brisbane”.

“There’s been a rapid slowdown in construction, and the local unit market is looking a lot healthier,” he told The Courier-Mail.


CHANGE IN DWELLING VALUES

Capital city Month Annual Median value

Sydney -0.9% -10.9% $782,473

Melbourne -0.8% -9.8% $624,425

Brisbane -0.6% -1.3% $489,832

Adelaide -0.2% 0.8% $426,990

Perth -0.4% -7.7% $442,716

Hobart 0.6% 6.0% $464,168

Darwin -0.6% -6.8% $400,316

Canberra 0.0% 3.1% $595,212

Combined capitals -0.7% -8.2% $597,860

Combined regional -0.4% -2.1% $376,728

National -0.6% -6.9% $524,149

(Source: CoreLogic Hedonic Home Value Index, March)

FEDERAL ELECTION

He expected the housing market to “continue to be affected by uncertainty related to the federal election, lending policies and more broadly, domestic economic conditions”.

“Federal elections generally cause some uncertainty, which is likely amplified more so this time around considering the potential for a change of government which will also involve significant changes to taxation policies related to investment.”

“No doubt, some prospective buyers and sellers are delaying their housing decisions until after the election, however, there is no guarantee that certainty will improve post-election, considering the impact of a wind back to negative gearing and halving of the capital gains tax concession is largely unknown.”

“It seems a reasonable assumption that removing an incentive from the market would result in some downwards pressure on activity and prices for a period of time.”

“If elected, the Opposition have flagged that changes to the capital gains tax discount and negative gearing would take effect from January 2020.”

CM New estates magazine - generic young couple looking at new house

The reduction in owner occupier lending was creating widespread impact across major cities.

BORROWING CREDIT

Credit availability was also a major headwind, with one indicator of reduced activity coming of the number of housing valuation events “which provides a timely proxy for mortgage activity”, Mr Lawless said. Those valuation events were “around 14 per cent below activity a year ago” — a trend that was also showing in ABS housing finance data in terms of both investor and owner occupier lending through to the end of January.

Mr Lawless said it was the downturn in owner occupier lending that was of concern.

“The value of owner occupier lending is around 2.6 times the value of investor lending, so the substantial drop in owner occupier mortgage commitments perhaps explains why the housing downturn is becoming more widespread.”

Owner occupier housing finance commitments (excluding refinance) were down 17.1 per cent compared with January last year while investment credit was 24.6 per cent lower, he said.How much do I need to retire?

There is even better news for those borrowers who do decide to refinance or follow through with housing loans, with Mr Lawless expecting all the headwinds plus general weakness to see the Reserve Bank cut its cash rate target “later this year”.

“While any cuts to the cash rate may not be passed on in full, a lower cost of debt will provide some positive stimulus for the housing market. Arguably, this stimulus won’t be as effective as previous interest rate cuts due to the high serviceability buffer applied to borrowers, whereby lenders are still required to assess serviceability at a mortgage rate of at least 7 per cent despite mortgage rates which are now available around the 4 per cent mark or even lower.”

This article was first published in www.realestate.com.au. Here is the link to the original article: https://www.realestate.com.au/news/major-headwinds-for-housing-preelection-but-affordability-is-rising/

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Questions raised over churches’ ability to become property developers without paying tax

An array of Sydney churches have been accused of exploiting loopholes to become pseudo-property developers and keep their tax-free status, prompting renewed calls to examine whether religious organisations should retain such exemptions.

Opponents pointed to four developments across the city as examples why further examination of churches’ ability to pay no tax is warranted.

A leading expert, University of Melbourne taxation professor Ann O’Connell, said churches were beneficiaries of significant tax exemptions on projects that were in competition with entities required to pay tax.

“It’s most obvious at the local government level of concessions. If they’re not paying rates then other residents are subsidising them and you can make the same arguments at the state and federal levels,” Ms O’Connell said.

She said if revenue was collected from churches and other charities, it would reduce the burden on existing taxpayers. 

“But because we don’t even collect data on their income, we don’t know how much tax that we’re not collecting,” Ms O’Connell said. “We don’t know the income of the Catholic Church that we could levy tax on and I think it’s less than desirable.”

A 2018 investigation by The Sydney Morning Herald andThe Age found the Catholic Church in Australia was worth an estimated $30 billion.

Ms O’Connell said despite several reviews suggesting a reassessment of charities’ exceedingly generous tax-free status, nothing has changed due to the lack of political will.

NSW Greens MP David Shoebridge has also questioned whether sweeping tax concessions are appropriate for some church developments.

“It is one thing for an entirely charitable development to get a tax concession but this is very rarely the case,” he said. “Many of these developments are large mixed-use projects with a minority of the project having a charitable aim, but the whole lot gets tax-free status.”

He pointed to four examples of tax-free church developments in Sydney:

Catholic Health Care Seniors Housing, Maroubra Bowling Club Site

  • Catholic Health Care outbid 39 others to acquire the 10,850-square-metre site in 2016 for $28.5 million;
  • It later lodged plans worth $76 million with Randwick City Council for a dual aged care precinct with a 108-bed facility and 63 seniors living units;
  • In 2018, Catholic Healthcare Limited reported a gross income of $291 million, with 85 per cent from tax-free goods and services.
  • Artist’s impression of Catholic Healthcare’s $76 million development. Photo: Supplied

Seventh-Day Adventist Church, Wahroonga

  • The Seventh-Day Adventist Church’s current proposal with NSW Planning is in the eighth modification of its original 3A approval – a now-defunct planning law;
  • The modified application can be approved regardless of local planning laws, if the Planning Minister agrees to it;
  • It currently seeks approval for 175 apartments in four buildings, six storeys high;
  • There were no up-to-date financial details available.
  • An artist’s impression of the proposed apartment development next to the Wahroonga Adventist School, which is opposed by parents, residents and members of the Wahroonga Seventh-Day Adventist Church. Photo: Capital Bluestone

Catholic Cemetery Trust proposal, Varroville

  • The trust’s proposal to develop a $30 million cemetery consists of two chapels, an office, landscaped parklands and walking tracks as part of a five-stage plan in the Campbelltown Scenic Hills;
  • In 2017, Catholic Cemeteries & Crematoria reported a gross income of $31 million, with 82 per cent from tax-free goods and services;
  • A spokeswoman for the Catholic Metropolitan Cemeteries Trust said it was an independent organisation, not a church entity, and any surplus funds were reinvested back into the Trust;
  • Its website says the trust was established by the Archdiocese of Sydney and is a not for profit Catholic organisation.
  • Varroville site and artist’s impression of Macarthur Memorial Park. Photo: Supplied

Greek Orthodox Church-affiliated Estia Foundation, Blakehurst

  • In 2014 the foundation bought a historic waterfront house and the associated pristine bushland on the shores of Kyle Bay, totalling almost 24,000 square metres;
  • It was previously operated by a trust as a small respite home for convalescent children;
  • The foundation subsequently negotiated and gained council approval to rezone the land to redevelop it a $2.5 million respite care centre comprising five new buildings on the ground and surrounding the heritage home;
  • In 2017, Estia Foundation reported gross income of $4 million, with 80 per cent from government grants.
  • View of Estia’s development site from Kyle Bay. Photo: Supplied

But Mr Shoebridge argued the religious organisations were also often given generous planning concessions to facilitate developments like senior housing at densities that would otherwise be unacceptable.

He said Catholic Cemetery Trust secured what was effectively spot rezoning, bypassing local council and directly appealing to the NSW Planning Minister.

Meanwhile, the Seventh-Day Adventist Church continued to exploit a planning loophole that was abolished eight years ago, according to Mr Shoebridge.

Urban Taskforce chief executive Chris Johnson said there should be an even playing field when it came to lucrative developments by churches.

“It depends how much development is occurring … if the churches do get a leg-up then it’s probably OK if it equates to producing social or community housing [for good],” he said.

“A line does need to be drawn somewhere particularly now when apartment dwelling is much more accepted, which means land values go up. Churches have had a lot of land that were worth a small amount but are now probably worth a lot more [because of high-density developments].”

Gosford Anglican Church’s Father Rod Bower said some property transactions were now occurring to create an income-producing venture to fund compensation schemes.

“The Anglican Diocese of Newcastle absolutely wants proper redress for victims. In order to do that we need to liquidate property and we are prepared to that.”

But he believed a review of tax concessions for not-for-profit organisations should occur when there was complete rethink of the general taxation system.

“Looking at [it] individually is not really going to achieve anything at the moment … because what we have to do is if we take money away from the non-profit sector then we have to look at what we replace that with.”

But Victorian MP Fiona Patten called for greater transparency and accountability of the complex tax structures to re-instill trust that has been lost after the Royal Commission into Institutional Responses to Child Sexual Abuse.

“Given the cover-ups in the church, given the attempts by the church to not recognise the victims of abuse warrants greater scrutiny of those organisations,” Ms Patten, who has long campaigned on these issues, said.

“No one would question the benefits of health, education and other charitable acts like feeding the poor. But I would question what benefits ‘advancing religion’ has on a largely secular society.”

The charitable head of most churches are tax-exempt for the purpose of “advancing religion”.

But subsidiaries, such as Catholic Healthcare Limited and Adventist Health Limited, which are one of the main income-producing vehicles for their respective churches, are granted tax exemptions for other purposes, including relief of poverty, advancing social and public welfare and provision of aged-care accommodation.

Ms Patten said profit-making businesses owned by churches should be transparent as current requirements were insufficient.

Domain contacted all four religious organisations for comment. A Seventh-Day Adventist Church spokesperson said it operated a wide range of services to the benefit of communities around Australia.

NSW Treasurer Dominic Perrottet said charities, benevolent organisations and churches made invaluable and irreplaceable contribution to communities and excessive taxation would put them out of business.

This article first appeared in www.domaon.com.au. Here is the link to the original article: https://www.domain.com.au/news/questions-raised-over-churches-ability-to-become-property-developers-without-paying-tax-808398/