Our markets remain patchy with Sydney remaining the pace setter. Its comparable growth in the last 12 months in dollar terms is now the largest in recorded history. In determining this outcome we have adjusted past dollar growth period amounts by inflation. In the following table we present some interesting statistics.
Brisbane to be the Standout Performer as Market Slows in 2015
It has generally been a better year for our housing markets with Australia wide house price growth being some 2.64 per cent better than last year and unit, or medium density, prices having increased by 2.37 per cent more than achieved in the prior 12 months.
In Table 1, we provide the growth rates for our markets as at the end of November 2014. This table shows Sydney was the major growth winner in 2014. Melbourne produced a lower, but very acceptable, level of growth. Continue reading →
Investing in Sydney and the Nitty-Gritty of Negative Gearing
We have often spoken about the issue of a two speed economy. In the past few years, we were referring to the significant economic activity in the resource states compared to sluggish performance in the non-resource states. Today however, there is a deeper divide developing between the two – not in general economic activities – but in the housing markets.
In Table 1, ‘Monthly Summary’ we provide the growth rates for our markets as at the end of October 2014. This table clearly shows the very strong growth in Sydney and the significant price differences between the markets.
The growth numbers for May are not as high as what was achieved in recent months. In fact, there are a number of capital cities that have fallen in value. However, the monthly numbers are “beautiful” as far as I am concerned and they are what I had been hoping for.
Table 1 presents the Australian-wide outcome for May 2014.
The much dreaded Federal Budget has been presented and from a housing market perspective it is of little consequence. There was nothing that directly, or for that matter indirectly, impacted on property prices. However, the reduction in the corporate tax rate to 28.5 per cent from July 2015 adds a pressure to consider investing under a corporate structure where an investment property is not negatively geared. This is particularly so where the investment is going to be held for a considerable period. The difference between the discounted (50 per cent) capital gains tax (CGT) personal marginal rate and the corporate tax rate is now minimal and over time the benefit of the lower corporate tax rate on income could relatively quickly absorb the positive CGT discount benefit.
We waited with anxious anticipation for consumer sentiment to improve last year as housing markets should have been performing well in early 2013, but this was not the case. Interest rates were low, which has historically caused property growth spurts. Gradually, sentiment improved and property markets started to show strong growth moving into the last quarter of 2013.
However, recent data indicates that Sydney, the lead indicator market, is starting to look soft and as though it has peaked (see Graph 1).
Tis the season to be jolly’ with this year’s Christmas bringing good news to our property market!
Rents are down and there is capital growth in most capital cities. All players in the market will be, or should be happier and feeling more comfortable about their financial positions. This situation bodes well for a happier Christmas with things looking as though they will be better than they have been for a number of years.