Housing is more affordable now then it was a year ago, according to a
joint study by the Real Estate Institute of Australia (REIA) and Bendigo
Bank.

Despite housing prices rising in the three months to June, this study
shows that the current economic climate has made housing more
affordable than it once was. The average house price is down by 3.1 per
cent from this time last year and units or apartments are 0.4 per cent
down on what they were in 2011.

REI president Pamela Bennett said there are promising signs if you know where to put your money.

“The news is good for investors with improving yields, thanks to
tight vacancy factors and the impact on rental returns coupled with
lower borrowing costs.

“Every capital city with the exception of Adelaide, Hobart and
Canberra experienced strong demand for rental accommodation during the
June quarter. National vacancy rates remain low,” she said.

Statistics on rents in places like Darwin show a moderate increase
from this time last year, highlighting the benefits of investing in
property.

Meanwhile, data from the Australian Bureau of Statistics (ABS) shows
that building construction grew modestly in the June quarter, up by 4.6
per cent.

The number of projects that builders broke ground on was 34,116.

Lyndsey Douglas, Ray White

Property depreciation is a non-cash tax deduction available to the
owners of income producing properties. As a building gets older, items
wear out – they depreciate. The ATO allows property owners to claim this
depreciation as a tax deduction. Depreciation on items such as carpets,
stoves, blinds, hot water systems, light shades and heaters are all
valid deductions. There is also a deduction available for the wear and
tear on the structural element of a building, commonly called building
write-off.

Investors often wonder about the depreciation potential of older properties
compared to new properties. The simple answer is that new properties
will get higher depreciation deductions, however all investment
properties both new and old can attract depreciation deductions.

New
properties have new fixtures and fittings, so the starting value of
those items is higher, resulting in higher depreciation deductions. The
same applies to the building write-off allowance. 2.5% of the structural
costs of a building can be claimed per year for forty years.
Construction costs generally increase over time, making building
write-off deductions on new buildings higher.

Owners of older
properties can claim the residual value of the building up to forty
years from construction. For example, if an investment property is five
years old, the owner will have thirty five years left of building
write-off to claim. Building write-off is governed by the date that
construction began. If a residential building commenced construction
before the 18th of July 1985 there is no building write-off available.
Investors who own properties that are built before this date will still
be able to make a claim on the fixtures and fittings within the property
and include any recent renovations, even if the renovation was carried
out by a previous owner.

It is always worth getting advice about
the depreciation potential of a property regardless of age. The
deductions are not as high on older properties but there are usually
enough deductions to make the process worthwhile.

The table below
shows the difference in deductions for depreciation of fixtures and
fittings and building write-off between similar new and old properties.

For
obligation free advice about an investment property scenario, please do
not hesitate to contact BMT Tax Depreciation on 1300 728 726 and speak
to one of our professionals.

Bradley Beer, BMT Tax Depreciation

There are many trends and factors that can influence a property’s value and the types of tenants it will attract. It is important to not only consider the individual benefits and features of a property, when buying or selling, but also the trends occurring in the suburb and surrounding areas. 

Save yourself time and money and identify the key selling points of a suburb by downloading our free local property report.

Your Investors Mortgage property report will cover:

    - Property details
    - Residex Price Estimate
    - Comparative Residex Price Estimate Analysis
    - Price Test Summary
    - Sale history for the property
    - Street rating
    - Current Median Price for the suburb
    - Historical capital growth
    - Demographics for the suburb
    - Location of suburb
    - Recent comparable sales
    - Predicted Future of Key Economic Factors

    - Including - Capital growth for the suburb and city,Rental returns, Home loan rate, Inflation rate
    - Median values across the region
    - Walk-through valuation process

Get your free local market property report here.

Size doesn’t matter. So it’s small, don’t let that mean your home has to be cramped, claustrophobic, dark or a design dead end. There are plenty of savvy things you can do by swapping small for smart. Start by tipping the challenge of limited floor area on its head. If your rooms are taller than they are wide think about accentuating the ceiling or upper parts of the walls with brighter or stronger colours rather than standard white.

If you’re not confident enough to buck orthodox white ceilings go for adding an extra wide cornice painted in a contrasting neutral like grey or black.

Add a statement central light fitting or architectural detail like a ceiling rose. The effect can be surprising, elegant and edgy.

Mirrors are a well-known fall back for small spaces. If your place is seriously space impaired then don’t attempt half measures with mirrors, it’s time to commit and cover an entire wall of a space with a sheet of mirror.

The only art to introducing a mirrored wall into a space is knowing which wall to go for. Often the greatest effect doesn’t come from selecting the most obvious wall. Think about passage ways or using a wall from an adjoining space to create the illusion of multiple spaces leading off each other.

Again, if a full mirrored wall is too scary a prospect for you, opt for clever use of mirrored furniture.

Judicious use of mirrored furniture can do a lot to alter first impressions of a small house. Put it to work for your house or apartment by creating the impression of an entry space, even when there isn’t one.

Try fixing or leaning an extra-large plain, frameless, mirror on a wall that can be seen when entering or exiting the front door. Add a fine mirrored console or mirrored storage cube in front of it. The result will look clean, fresh and uncomplicated.

To maximize the effect and beauty of the mirrored entry piece add an assortment of plain, clear glass vases with a lit candle in each to create a warm welcome for guests or potential buyers.

Alex Honey, Sterling Interiors

The Reserve Bank of Australia (RBA) staying on the interest rate
sidelines shouldn’t deter consumers from trying to secure a better deal
from their lender, according to leading mortgage broker Loan Market.

Loan Market Corporate
Spokesman Paul Smith said it was no surprise to see the RBA maintain its
relaxed approach and keep the cash rate at 3.5 per cent for the second
consecutive month.

Mr Smith said the RBA was likely to lower official rates at least once in
the next few months, with some forecasters expecting the central bank to emerge
from its winter hibernation in the spring and resume rate cuts.

He said the 75 basis points reduction in the cash rate over May and June had
yet to have a substantial impact on consumer sentiment, particularly in the
housing and retail sectors.

“The market is still adjusting to rate cuts in May/June and it appears the
RBA would rather keep some ammunition up its sleeve to combat any further
deterioration of the economy than try and stimulate the present lagging data
sets,” he said.

Mr Smith said mortgage holders anxious for more rate relief should see if
they can secure a reduction independently of any RBA decision.

“There are favourable conditions for certain borrowers who are looking for a
better home loan, and it costs nothing to ask for a lower interest rate or to
talk to another lender,” he said.

“There is still considerable downward pressure on rates as inflation is
below its targeted range and the European debt crisis won’t be settled in the
short term.”

As a result, Mr Smith said lenders would continue to apply competitive
pricing to attract consumers and prevent any stalling in the credit sector.

“For consumers looking at home loans in the coming months, a mortgage
broker is well placed to present the most competitive products that
suit a borrower’s personal circumstances best,” he said.

Mr Smith said a mortgage
broker who is independent from the banks can advise of products from a
wide range of lenders or negotiate a better rate with their current
institution.

Loan Market