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Everything You Needed To Know About The Upcoming Off-The-Plan Stamp Duty Concession Changes

Everything You Needed To Know About The Upcoming Off-The-Plan Stamp Duty Concession Changes

Whether you’re purchasing an Australian property for personal use or investment, you’ll no doubt have resigned yourself to the reality of having to pay a costly Stamp Duty. Thankfully, there are concessions, but in a few months there will be a change to the off-the-plan stamp duty concessions available to Victoria property purchases.

From July, those investing in a non-residential development won’t be eligible for this concession if the contract of sale is made after the date. Only first-time home buyers purchasing a property valued at $750,000 or less will benefit, and first time home buyers purchasing a property of less than $550,000 will be entitled to a principal place of residence stamp duty concession.

So if you don’t fall into the above categories, what else do you need to know?

If your aim was to make an investment purchase in Victoria, you should be aware that from next year the Vacant Residential Property Tax will also come into effect, as part of local government’s aim to make more properties available to buyers and tenants for actual residential use by annually taxing vacant residential properties in an amount equal to 1% of its Capital Improved Value. This means that if you’re considering finalising an investment after these dates you will need to sit with your property manager and advisor and discuss your rental options, as you will incur the fee if your property lies vacant for six months or longer.

Furthermore, if you are planning to transfer the investment property to your spouse in order to escape paying tax, you will also no longer be able to take advantage of this loophole after July 1st.

While details of the law are yet to be finalised, it would be in your best interest to clarify the status of your off-the-plan investment purchase as soon as possible so that you aren’t saddled with any unexpected costs in the future. By sitting down and discussing your needs and expectations with one of our team at an organisation like the Aussie Property Group, you will be prepared for whatever happens.

 

The Negative Gearing Debate and the pre-Budget News

The Negative Gearing Debate and the pre-Budget News

The Negative Gearing Debate and the pre-Budget News

We have come to the annual pre-budget season once again where the usual rhetoric in relation to the removal of Negative Gearing and other unpopular outcomes make their way out of the closet to give the media some new doom and gloom scenarios to throw at us.

This debate may be something we would need to consider if the Australian Labor Party were in government, however, that is not the case and I think sufficient common sense prevails in the Turnbull Government so that we can safely put this back into the closet until this time next year.
BIS Shrapnel have prepared a detailed report in relation to Labor’s proposed negative gearing changes:

  • Labor says its policy – is to halve the 50% capital gains tax discount for investors to 25%
  • to limit all new negative gearing to new homes from July 1, 2017
  • will raise $32 billion over 10 years and generate an extra 25,000 construction jobs annually because of the demand of new housing.

The BIS Shrapnel Report claims Labor’s negative gearing plans

  • will increase rents by an average of 10 per cent, or $2600 a year,
  • depress new home construction by 4% ,
  • shrink gross domestic product by $19 billion a year,
  • lead to 175,000 fewer jobs over 10 years,
  • shrink government tax revenues by $1.65 billion a year, and
  • put 70,000 households into rental stress.

When I look back over the first quarter of 2016, the most positive outcome has been the sharp rally in oil and commodity prices in general, a decline in the USD and strength in the AUD.

I think this is largely a momentum driven rally including a large amount of short covering and as such lacks any real substance to continue for the rest of the year.

The positive in this is that it has allowed us to adjust the asset allocation and underlying investments in our clients non-property exposures to take on an even more defensive tactical position and overweight Cash (particularly USD) to be better positioned for the continued volatility that I expect in both Equity and Bond markets over the next year or so.

The economic backdrop continues to be broadly supportive for the Australian residential property market as the RBA has remained on the sidelines in relation to current monetary policy and has left the door open for some further easing in the official cash rate which the markets have already priced in.

The ANZ Research report below shows that there is still a fairly large undersupply of housing in the Australian market which is supportive of the current market cycle. That being said, it is still very important to be very aware of the value gap between the Nation’s Capital Cities and keep an eye on areas of oversupply which are typically found in any of the CBD areas. A number of Banks have blacklisted suburb postcodes which they are not willing to give new loans for due to supply and demand issues which do not support property prices in those areas.

We will continue to monitor all these factors over the year and share some insights along the way.
I wish you every success for 2016…

Best Regards,

Dr Andrew Unterweger MB BS, CFP®, Dip FP, Dip FNS, MFAA, AFA, SMSF, REA


Negative gearing reform could lead to lost decade: BIS Shrapnel

The consequences of limiting the tax deductibility of negatively geared residential properties would impact any expected tax savings, according to a new report from BIS Shrapnel.

BIS Shrapnel’s report, Economic Impact of Limiting the Tax Deductibility of Negatively Geared Residential Investment Properties, said changes to the current negative gearing setup would go well beyond any saving of the income tax concession, to a multitude of unintended consequences.  read more


Is there still a housing shortage in Australia? ANZ Research says about 250,000 dwellings

 

unnamed-4.png

The national shortage of housing in Australia is nearly 250,000 dwellings, lower than previously estimated, but still a long way from being in structural surplus, according to ANZ Research’s latest Economic Insight.
The study forecasts that housing construction and underlying housing demand will see a modest unwinding of the current housing shortage in coming years. This easing will, however, challenge the short-term support to dwelling sales and price growth from the underlying … Read More


Australia’s Property Tax Perks Are in the Crosshairs

 

  • Labor targets landlord tax breaks in election-year pitch
  • Concessions helped fuel 50% home-price surge since 2008

Australian investors enjoy some of the most generous tax concessions in the world when they buy real estate. That could be about to change.

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Negative Gearing

About 1.2 million Australians use so-called negative gearing, where they reduce their tax bill by deducting the costs of owning
a rental property, including mortgage interest payments, from their taxable income.
Some countries including Britain and the U.S. allow property investors to deduct costs from investment income; Australia is
unusual because it allows the deduction against wages… Read more.. 


Hedge Funds Turn Bullish on the Aussie

 

  • Australian currency has rebounded from a nearly seven-year low
  • Traders were last positioned for Aussie gain in May: CFTC data

Hedge funds and other large speculators turned bullish on the Australian dollar last week for the first time since May 2015, while Macquarie Bank Ltd. said selling South Korea’s won is now the favoured way to bet against China.

Although Asia’s largest economy is the primary destination for both Australian and South Korean exports, the Aussie’s 0.8% drop this year pales in comparison to a 4.6 percent slump in the won that’s come as China’s benchmark equity index has plunged.
Expectations of relative price swings for the Australian dollar are the lowest since the first half of 2015 when compared with a
JPMorgan Chase & Co. index for the overall currency market.

unnamed-2.png

The Aussie dollar has climbed about 6 percent from a near seven-year low reached in January amid signs Australia’s labor market is recovering enough to allow the Reserve Bank to extend a nine-month stretch in which interest rates have remained unchanged. Read more…

 

 

 


Brisbane’s Apartment Pipeline – 2016 to 2018

Brisbane is under construction. Anyone driving through the Valley, Newstead or South Brisbane can see that. The streets are
lined with hoarding plastered with impossibly beautiful vistas of the CBD from across a computer-rendered infinity pool.
Buyers want to know what Brisbane is going to look like in three years’ time. How will the landscape of this city change as a
result of the recent surge in apartment construction? We will discuss the future apartment market in Brisbane. How many and
what types of apartments will be built and where they will be built.

unnamed-1.pngThere are currently 18 projects under construction across the inner city that have recorded complete sell-outs, totalling approximately 2,600 apartments. There are a further 9,170 apartments under construction across 50 buildings that are actively being sold and advertised to the market-place. Many of these have had significant levels of enquiries and sales in recent years.

On top of this, 33 brand new developments are being marketed and are in the pre-construction sales phase.
There is a further pipeline of more than 21,000 apartments that have not yet hit the market. These projects are in planning and the likelihood of them making it into the marketplace depends on a variety of factors, the biggest of which surrounds finance and risk. Read more …


Oversupply being extended by new construction

 

unnamed.png

“The property made its way onto the market back in July 2013 with the vendor originally asking for offers above $650,000. Since then the vendor has reduced the price down to $465,000, a total reduction of $185,000,” he said. Read more…

 


Meet Dr Andrew Unterweger

Dr Unterweger is a highly qualified financial and property adviser, experienced venture capitalist and successful investor

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Markets set for a strong 2014 – RP Data

Markets set for a strong 2014 – RP Data

Hi Everyone,

It’s interesting reflecting on a lot of the market predictions that we saw at this time last year …………………………. and it makes you aware that consensus opinions are not often correct !

Something we can all be confident about is that we have seen the peak of the investment boom in mining infrastructure and that 2014 will be a difficult time for the Australian economy as the non-mining sectors of the economy need to be able to compensate for that, and that this may prove to be quite difficult until 2015 and beyond.

Goldman Sachs expects growth to dip below trend in 2014, they said it will pick up to between 3.5 and 4 percent in 2016 and 2017.

The boost will come from looser monetary policy from the country’s central bank in the form of interest rate cuts, they said, combined with the benefits of a rise in housing investment and a weaker currency. Goldman said they expected the Reserve Bank of Australia to act soon, cutting rates in March next year, and again in 2015.

I’m not so confident about the prediction of a rate cut in 2015 as I think the economy should be showing signs of improvement by then.

The Bloomberg News article post the Fed announcement in relation to tapering is worth looking at as this should keep some downward pressure on the Aussie dollar, but the question is, will that be enough ?

The yield difference between Treasury five- and 30-year securities narrowed this week by the most in 19 months as traders unwound bets the Federal Reserve would wait until 2014 to announce cuts to its bond buying.

Yields on five- and seven-year notes rose to the highest since September after the Fed said Dec. 18 it will start slowing purchases next month. The U.S. economy grew more in the third quarter than first reported, data showed, underscoring wagers the Fed may conclude its buying next y […]

Read the full story at http://www.bloomberg.com/news/2013-12-21/treasury-yield-gap-shrinks-most-in-19-months-after-fed-decision.html

Given this overall outlook for 2014, I think that property should continue to fare quite well as any economic difficulties are likely to be met with an easing in monetary policy by the RBA which will continue to drive improved housing affordability.

Markets set for strong 2014

Investors have missed the opportunity to take advantage of capital growth in Sydney, Melbourne and Perth, according to RP Data analysis. More>>

Australia to be ‘odd one out’ in 2014: Goldman Sachs

Published: Monday, 25 Nov 2013 | 10:39 PM ET

By: Katie Holliday | Writer for CNBC.com

Twitter:
43  
LinkedIn:
12
Share

 

http://www.cnbc.com/id/101227413

RBA must remain ‘accommodative’: Pimco

With 2014 shaping up as a critical year for the Australian economy, the Reserve Bank will need to keep monetary policy accommodative, according to Pimco. More>>

 

Fixed rates set to rise further

1.76.jpgThe low interest rate environment will continue into 2014, but fixed rates will edge higher as economic confidence improves in Australia and overseas, according to Aussie’s executive chairman, John Symond.

Read more…

 

Lower dollar needed to boost economic growth: RBA

Broker News
The Reserve Bank Board of Australia has left open the possibility of reducing interest rates further if required to boost economic growth, within the target inflation band.Click here to read more.


Lower dollar needed to boost economic growth: RBA

I would like to take this opportunity to wish you all a very Merry Christmas and a relaxing holiday season.

All the very best !

Doc

RATES FORECAST TO FALL TO 2PC

By Smart Property Investor Staff Reporter

Friday, 06 February 2015

Two prominent economists have praised the Reserve Bank of Australia’s decision to reduce the cash rate and have predicted at least one more cut to come.

Domain Group senior economist Andrew Wilson said the Reserve Bank had made the right decision to reduce the cash rate from 2.5 per cent to 2.25 per cent.

Dr Wilson also said that another cut is likely, given that the economy received minimal stimulus from the succession of rate cuts between October 2011 and August 2013.

 

“We haven’t had much action from cutting from 4.75 per cent to 2.5 per cent, so I’m not sure what a 0.25 per cent improvement is going to do,” he told Smart Property Investment's sister publication Real Estate Business.

“Certainly the Reserve Bank had to act – it’s really the only tool in the box that we’ve got left.”

read more...

Pricing gaps across product types and capital cities are widening

by Cameron Kusher

30 January 2015

The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction.

The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction.

According to median selling prices over the three months to December 2014 published in the CoreLogic RP Data Home Value Index report, the gap between capital city house and unit prices has never been greater. As at December 2014, the capital city median house price was almost 20% higher than the capital city median house price. In dollar value terms, median house prices are $100,000 greater than unit prices. read more...

 

John McGrath ignites Sydney's "hot forever" inner ring debate

by Jonathan Chancellor

1 FEBRUARY 2015

John McGrath has always been passionate about the property prospects of Sydney’s inner ring suburbs. But last week he went a little further, saying suburbs close to the city are becoming so desirable that they will be “hot forever”

But last week he went a little further saying suburbs close to the city are becoming so desirable that they will be "hot forever".

The high profile agent stopped short of declaring inner city property prices were immune from price falls.

But the chief executive of McGrath Estate Agents told Fairfax Media these areas would always be attractive to buyers.

"There is just no end of demand from overseas and local buyers who want to live in those precincts," McGrath said.

read more..

 

 

 

 

Sydney property bubble to pop when rates rise, says HSBC

Wednesday, 11 Feb 2015   |

James Mitchell

0

·

·        A fresh round of cheap credit is further inflating Sydney’s investor-driven property prices.

In a research note released yesterday, HSBC economists Paul Bloxham and Daniel Smith predict strong national housing price growth to continue at seven to eight per cent, driven by record-low mortgage rates.

“We see Sydney prices rising by 9 to 10 per cent in 2015 and expect that, when rates do eventually rise, there is now a high risk that Sydney will see price falls,” the economists said.

“Although we do not see a national housing bubble, we believe that growth in Sydney housing prices is currently running at an unsustainable pace and that any further growth is likely to be met by housing price declines in future years, when interest rates do begin to rise,” they said.

A signal of the growing risk of overinflation in the Sydney market is the high level of investor demand, according to HSBC.

Read more…

https://www.mortgagebusiness.com.au/breaking-news/8152-sydney-property-bubble-to-pop-when-rates-rise-says-hsbc

 

 

 

 

 

JESSIE RICHARDSON | 10 FEBRUARY 2015

Melbourne growth to stand out in 2016: HSBC's Paul Bloxham

Melbourne will see the highest price growth of any capital city next year, HSBC has forecast.

In the latest HSBC Australia Downunder Digest report, HSBC Australia chief economist Paul Bloxham forecasts 4% to 8% price growth in Melbourne for 2016, after 7% to 8% growth in 2015.

Bloxham expects that in 2015, Melbourne and Sydney will "continue to outpace the rest of the nation", noting that from its mid-2012 trough, Melbourne's housing prices have increased by 20%. Read more

http://www.propertyobserver.com.au/finding/residential-investment/40049-melbourne-growth-to-stand-out-in-2016-paul-bloxham.html

 

Commonwealth Bank posts 8pc half-year profit rise to $4.5b

By business reporter Michael Janda

Updated 11 Feb 2015, 5:49am

 

PHOTO: The Commonwealth Bank has posted its half-year results. (ABC News: Nic MacBean, file photo)

The Commonwealth Bank has reported an 8 per cent rise in half-year profit to $4.54 billion.

The bank's preferred cash measure of net profit, which adjusts for some accounting items, also rose 8 per cent to $4.62 billion.

CBA said its improved profit came on the back of a 5 per cent increase in revenue, despite subdued conditions in the lending market.

It also said it had lowered its cost to income ratio by 70 basis points to 42.2 per cent, as productivity initiatives continued to contain business expenses.

Read more…

 

http://www.abc.net.au/news/2015-02-11/cba-half-year-profit-result/6084926

 

 

 

 

 

Markets set for a strong 2014 – RP Data

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