Australia’s housing market continues to weaken in the first half of 2011, following the Reserve Bank of Australia (RBA)’s action in hiking the key interest rate to 4.75% in November 2010, up from 3% in September 2009. RBA has kept the key rate unchanged since then.
The house price index for 8 capital cities dropped 1.87% during the year to end-Q2 2011, according to the Australian Bureau of Statistics (Austats). When adjusted for inflation, house prices actually fell by 5.28%. In contrast, the weighted average median house price rose slightly by 0.9% y-o-y to Q2 2011, according to the Real Estate Institute of Australia (REIA), suggesting that most of the price-falls were at the top end.
Last year, there was an amazing 20% surge of house prices y-o-y to March 2010, triggering the RBA’s interest rate rises. Since then, house price rises have moderated. The house price index for 8 capital cities rose 5.8% y-o-y to Q4 2010 (3.1% in real terms), after annual increases of 10.8% and 16% respectively (7.8% and 12.6% in inflation-adjusted terms) the previous two quarters.
In Q2 2011, housing starts fell by 4.7% from the previous quarter. The Northern Territory saw the largest drop (69.4%), followed by NSW (-20.1%), Queensland (-16.3%), and Tasmania (14.3%).
The RBA believes it can repeat its success of 2004, when it cooled the housing market by raising interest rates and issuing warnings against housing speculation, thus preventing a crash similar to the US and Europe.
Inflation fears have receded, with underlying inflation at 2.8% in 2010, which is consistent with the RBA‘s 2%-to-3% target. The inflation rate is expected at 3% in 2011, according to the IMF.
In the second quarter of 2011, the country proved its resilience by posting a stronger-than-expected seasonally-adjusted GDP growth rate of 1.2%, the fastest pace in four years. The economy is expected to grow by 1.8% in 2011 and by 3.3% in 2012, according to the IMF.
Acquisition of residential real estate by foreign nationals and corporations is subject to Foreign Investment Review Board (FIRB) approval.
The house price index for 8 capital cities dropped 1.87% during the year to end-Q2 2011, according to the Australian Bureau of Statistics (Austats). When adjusted for inflation, house prices actually fell by 5.28%. In contrast, the weighted average median house price rose slightly by 0.9% y-o-y to Q2 2011, according to the Real Estate Institute of Australia (REIA), suggesting that most of the price-falls were at the top end.
Last year, there was an amazing 20% surge of house prices y-o-y to March 2010, triggering the RBA’s interest rate rises. Since then, house price rises have moderated. The house price index for 8 capital cities rose 5.8% y-o-y to Q4 2010 (3.1% in real terms), after annual increases of 10.8% and 16% respectively (7.8% and 12.6% in inflation-adjusted terms) the previous two quarters.
In Q2 2011, housing starts fell by 4.7% from the previous quarter. The Northern Territory saw the largest drop (69.4%), followed by NSW (-20.1%), Queensland (-16.3%), and Tasmania (14.3%).
The RBA believes it can repeat its success of 2004, when it cooled the housing market by raising interest rates and issuing warnings against housing speculation, thus preventing a crash similar to the US and Europe.
Inflation fears have receded, with underlying inflation at 2.8% in 2010, which is consistent with the RBA‘s 2%-to-3% target. The inflation rate is expected at 3% in 2011, according to the IMF.In the second quarter of 2011, the country proved its resilience by posting a stronger-than-expected seasonally-adjusted GDP growth rate of 1.2%, the fastest pace in four years. The economy is expected to grow by 1.8% in 2011 and by 3.3% in 2012, according to the IMF.
Acquisition of residential real estate by foreign nationals and corporations is subject to Foreign Investment Review Board (FIRB) approval.
Analysis of Australia Residential Property Market »
RENTAL YIELDS
Last Updated: Aug 01, 2011
Sydney apartments have now reached stellar buying prices of around US$7,000 – US$8,000 per square metres, and Sydney is rapidly climbing the league tables of the “most expensive cities in the world”.
Spiralling prices mean that the days of high yields are past in Sydney. Two years ago we found 8% yields on the very smallest apartments in Sydney. Now these small apartments yield around 5%.
The bigger the size, the lower the yield. Apartments of 100 square metres (sq. m.) yield around 4%. 200 sq m. apartments yield around 2.75%.
We remind readers that these are gross rental yields, i.e., they are calculated on the basis of the offered rent, and are before vacancies, costs, repairs, refurbishments or any other expenses. Actually achieved yields are likely to be even lower.
Spiralling prices mean that the days of high yields are past in Sydney. Two years ago we found 8% yields on the very smallest apartments in Sydney. Now these small apartments yield around 5%.
The bigger the size, the lower the yield. Apartments of 100 square metres (sq. m.) yield around 4%. 200 sq m. apartments yield around 2.75%.
We remind readers that these are gross rental yields, i.e., they are calculated on the basis of the offered rent, and are before vacancies, costs, repairs, refurbishments or any other expenses. Actually achieved yields are likely to be even lower.
TAXES AND COSTS
Last Updated: Apr 25, 2012
Rental income: Rental taxable income earned by nonresidents are taxed at progressive rates, range from 29% to 45%.
An owner may also be required to pay a land tax annually, depending on his property classification for tax purposes and property location.
Capital Gains: Individuals are subject to a 50% reduction of the taxable gain if the asset is held for at least 12 months. Capital gains follow the individual income tax rates, at rates from 29% to 45% for nonresidents.
Inheritance: There are no direct taxes on inheritance.
Residents: Residents are taxed at a progressive rate on their annual income, from 0% to 45%, and are required to pay a 1.5% Medicare levy.
An owner may also be required to pay a land tax annually, depending on his property classification for tax purposes and property location.
Capital Gains: Individuals are subject to a 50% reduction of the taxable gain if the asset is held for at least 12 months. Capital gains follow the individual income tax rates, at rates from 29% to 45% for nonresidents.
Inheritance: There are no direct taxes on inheritance.
Residents: Residents are taxed at a progressive rate on their annual income, from 0% to 45%, and are required to pay a 1.5% Medicare levy.
BUYING GUIDE
Last Updated: Jul 24, 2007
Roundtrip transactions costs are 7% to 12% of the property value. Stamp duty on property transfers ranges from 1.5% – 6.75%, and is paid by the buyer. It takes about 10 – 11 days to complete the five procedures needed to register a property.
LANDLORD AND TENANT
Last Updated: Jun 19, 2006
Australia ’s landlord and tenant laws are generally neutral. Both parties’ rights are well-protected by each states’ Residential Tenancy Act.Rents: Rents can be freely negotiated, but increases are subject to review by a Tribunal provided the tenant makes an application. The rent cannot be increased before the end of the first year of tenancy in any state.
Tenant Eviction: A landlord can terminate a tenancy by giving notice in the approved form, or by using the tribunal. The legal system is highly efficient: it takes an average of 44 days to evict a tenant.
ECONOMIC GROWTH
Last Updated: Sep 27, 2011
Australian economy resilient
Australia is one of the world’s most progressive countries (GDP/cap was US$55,600 in 2010). It achieved uninterrupted economic growth from 1992 to 2007, with an average GDP growth rate of 3.6% per year.
After contracting by about 0.6% during the last quarter of 2008, Australia saw positive real GDP growth in the following quarters, thus avoiding technical recession – an extraordinary achievement.
Australia has since performed even better, with annual GDP growth of 2.7% in 2010, up from 1.3% in 2009. Australia’s continued economic growth was mainly driven by the mining industry and the robust demand for iron ore, coal and natural gas from Asia, especially China.
The economy is expected to grow by 1.8% in 2011 and by 3.3% in 2012, according to the IMF.
Australia’s unemployment reached a 10-month high of 5.3% in August 2011,much lower than the 9.1% in the US and 10% in the euro area. Unemployment was 5.2% in 2010, 5.6% in 2009 and 4.3% in 2008.
The country’s overall inflation rate was 2.8% in 2010, which is consistent with the RBA‘s 2%-to-3% target. Inflation is expected to be 3% in 2011.As the country fights climate change, the government recent announcement that polluters will be required to pay AU$23 (US$22.7) per metric tonne of carbon emissions starting in July 2012 is projected to raise the inflation rate by 0.7% in 2012-13.
Australia is one of the world’s least densely inhabited countries, with scarcely two people per square kilometer. This vast country, big enough to be considered a continent, houses a mere 21 million people of various nationalities. However, more than 75% of the population lives in urban areas, and more than 13 million (65%) live in the eight capital cities.
With a gold coast accommodation, you’re in for a wonderful vacation!
After contracting by about 0.6% during the last quarter of 2008, Australia saw positive real GDP growth in the following quarters, thus avoiding technical recession – an extraordinary achievement.
Australia has since performed even better, with annual GDP growth of 2.7% in 2010, up from 1.3% in 2009. Australia’s continued economic growth was mainly driven by the mining industry and the robust demand for iron ore, coal and natural gas from Asia, especially China.
The economy is expected to grow by 1.8% in 2011 and by 3.3% in 2012, according to the IMF.
Australia’s unemployment reached a 10-month high of 5.3% in August 2011,much lower than the 9.1% in the US and 10% in the euro area. Unemployment was 5.2% in 2010, 5.6% in 2009 and 4.3% in 2008.
The country’s overall inflation rate was 2.8% in 2010, which is consistent with the RBA‘s 2%-to-3% target. Inflation is expected to be 3% in 2011.As the country fights climate change, the government recent announcement that polluters will be required to pay AU$23 (US$22.7) per metric tonne of carbon emissions starting in July 2012 is projected to raise the inflation rate by 0.7% in 2012-13.
Australia is one of the world’s least densely inhabited countries, with scarcely two people per square kilometer. This vast country, big enough to be considered a continent, houses a mere 21 million people of various nationalities. However, more than 75% of the population lives in urban areas, and more than 13 million (65%) live in the eight capital cities.
With a gold coast accommodation, you’re in for a wonderful vacation!
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