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Newsletter | Your Monthly Finance Tips

Coins clockNow that the winter solstice has passed, we get to enjoy a little bit more daylight every day. I hope you enjoy these four property and finance stories as well:

  • Property achieves big milestone
  • Govt low-deposit housing scheme expands
  • Property listings tipped to "surge"
  • ATO issues warning to property investors


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Property values have doubled in seven years 

The combined value of all the residential properties in Australia has passed the $10 trillion mark for the first time. 

Australia’s pool of homes was worth $10.2 trillion in the March quarter, according to the latest data from the Australian Bureau of Statistics.

Graph 1 June 22

Remarkably, that represents a doubling in value in just seven years, from $5.1 trillion in June 2014. 

Australian property prices have enjoyed remarkable growth over the long-term, even though there have been regular occasions when prices have temporarily declined.  

That’s part of the reason so many Australians want to own their own home. It’s also why so many people use property investment as a way to build wealth for retirement. 

Are you thinking about entering the market? If so, I can give you advice about your borrowing capacity and the correct way to structure your loan. I can also compare lenders and interest rates on your behalf.

Govt's low-deposit housing scheme expands 

From July 1, a total of 32 lenders will offer the federal government's flagship housing assistance program. 

Five new lenders have just signed up for the Home Guarantee Scheme (HGS) – Credit Union SA, Illawarra Credit Union, IMB Bank, Newcastle Permanent Building Society and Unity Bank.

 They join the 27 existing lenders, which includes Commonwealth Bank, NAB and an array of smaller lenders.

 To be eligible for the HGS (which is also known as the First Home Loan Deposit Scheme):

  • Your household income must be less than $125,000 for individuals and $200,000 for couples
  • The property you buy must be less than the price cap, which varies from $250,000 in regional South Australia to $950,000 in Sydney, depending on where you buy and the type of property you purchase

Under the HGS, eligible first home buyers can purchase a property with just a 5% deposit and eligible single parents with just a 2% deposit. Participants don’t need to pay lender’s mortgage insurance, because their loan is guaranteed by the government.

Listings tipped to 'surge' in Winter after falling during election month

The number of property listings has fallen, after only 246,000 homes around Australia were listed for sale in May, according to the most recent monthly data from SQM Research.

The May result was 2.2% lower than the month before and 9.0% lower than the year before. Graph 2 June 22

 SQM managing director Louis Christopher said the decline was unsurprising given that real estate activity often slows down during a federal election campaign. 

"Going forward, I expect a surge in new listings for this current month, even while we have now reached the quieter winter months. SQM Research has recorded a surge in new auction listings, hence why we have this view." 

If Christopher is right, this “surge” will put downward pressure on prices, as an increase in the supply of for-sale properties generally leads to a decrease in buyer demand.

 ATO warns investors to declare 'all their income' 

Attention property investors: the Australian Taxation Office has said it will be paying close attention to your tax returns.

The ATO has made it clear investors need to include "all the income" they've received this financial year in their tax return, including:

  • Short-term rental arrangements (e.g. Airbnb)
  • Insurance payouts
  • Rental bond money that was retained

The ATO has also urged property investors to keep good records, because all rental income and deductions need to be entered manually – even if investors use a registered tax agent (such as an accountant) to prepare their tax return. 

"If we do notice a discrepancy it may delay the processing of your refund as we may contact you or your registered tax agent to correct your return,” according to the ATO. 

“We can also ask for supporting documentation for any claim that you make after your notice of assessment issues."