It's Tax Time. How Did COVID Affect your Net Worth?
2 minute read
It's Tax Time!
If you're like me, tax time can be one of those times of the year which can go either way. A great refund can get you excited for a new financial year and a tax bill can get you down a little bit. Those two feelings kind of sum up the last year in the Real Estate market.
It has been a few years of change for the Queensland Property Market. From the initial slowdown caused by COVID in the market and the fear of property, price crashes as we came out of the first lockdowns, through to a surprising resurgence in the market with fast sales and price growth over the last six months. The lack of properties for sale, low-interest rates, and government grants have been the biggest drivers of price growth. The shake-up to people’s lifestyles caused by the lockdowns and restrictions has also been driving the demand from buyers seeking a more suitable home in this brave new world we now live in.
The RealWay team has ridden the property wave over the last financial year. We are seeing properties exceeding the prices paid in the 2014/2015 boom and even units are now moving quickly and for good prices.
What's In Store for us Next?
Will the prices keep going up? Will they plateau and stay steady? Is the bubble going to burst and property prices crash? The looming federal election for May 2022, the inevitable interest rate increases, and the banks tightening up lending will all surely have some negative impact. On the flip side when the borders reopen and immigration & tourism ramp back up, we would expect to see some positive effects on the economy and property pricing.
So, what does it all mean for your property? Good news or bad news...
What is your True Net Worth?
It’s hard to know where your properties sit unless you watch the market every day. Lucky for you that's exactly what we do – every day we are appraising property, selling homes, and just giving people good honest advice. While we don’t have a crystal ball to predict the future, we do have our finger on the pulse and can accurately price your property in the current market.
Did you Buy an Investment?
If you have bought an investment property this year, then you should make sure that you claim any depreciation that you can. Your tax adviser will be the best place to get specific advice about your personal situation, but BMT Tax Depreciation Quantity Surveyors can prepare a depreciation schedule for your accountant to use. For more on how to increase rental income and deductions you can Read More Here or you could talk to our property experts.
Get in Touch for Free Advice!
Why not start your new tax year by being informed about what your home is worth? Give us a call, send us an email or a text and if you want to see how your home has weathered the storm of 2020/21, we are more than happy to help. We work weekends and after hours, it’s never a big issue and it only takes 15 - 20 minutes to get a quick update on price.
Greg Watson CEO RealWay Australia
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May 15, 2022
The pandemic property market
The property market has not been exempt from global changes that the COVID pandemic has caused. The two years since the pandemic have been tumultuous, but also lucrative for investors and the industry as a whole. Key points from a recent CoreLogic report provides a snapshot of the effects of the pandemic within the marketplace. Whether it was the economic and employment-based effects of city and state lockdowns, the introduction of government home-buying and building incentives and the increasing popularity of regional living and low-density housing, the era of COVID has left its legacy on the composition of buyers and dynamics of the housing market. Home values eclipse previous records, rising by 25 per cent Despite an initial dip for the property market during the pandemic, housing values rose 24.6 per cent between the end of March 2020 and February 2022. Cumulative change evidenced in the CoreLogic Home Value Index since the onset of COVID-19 shows a relatively small decline at the onset of COVID-19. For example, sales and listings volumes are far more affected than prices. Home values declined -2.1 per cent between April 2020 and September 2020, before soaring amid low-interest rates, high household savings, government grants and a sharp reduction in the supply of housing. By February 2022, CoreLogic estimated the total value of the residential real estate to be $9.8 trillion, up from $7.2 trillion at the onset of the pandemic. This is a significant change for the property market. Rents rose 11.8 per cent to record highs while gross yields fell to record lows Annual rent value growth throughout 2021 was at its highest level since 2008. Median advertised rents in Australia have increased from $30 per week to $470 per week. In New Zealand, that figure is closer to $530 for a four-bedroom home. For investors who have recently purchased long-term rental accommodation, rents may have increased due to higher purchasing prices. Through the pandemic, there has been a clear shift in rental preferences toward lower-density housing options, where the upwards pressure on rents has been more substantial. This trend has evolved over the past year, with rental affordability gradually deflecting more demand towards higher-density rental options, where the cost of renting is more affordable. Housing debt levels scale new heights However, gross rental yields have declined. This is because gross rental yields are a portion of the purchase price of a property — and purchase prices of properties have grown 24.6 per cent since March 2020, outpacing the 11.8 per cent rise in rents. As housing growth has started to slow, record-low gross rent yields appear to have begun stabilising. Although total outstanding credit reached over $2 trillion in January, data shows monthly new finance borrowed for the purchase of property continued to hit fresh record highs through January 2022, at $33.7 billion. High levels of housing debt, particularly where it has grown faster than incomes, create vulnerability in the economy. However, it is important to frame debt levels in the context of high asset values and relatively low-interest costs. Official data shows housing interest payments to income have fallen to their lowest levels since 1999 — and household debt has trended lower as a portion of housing values. CoreLogic prides itself on the most accurate real estate data in Australia. Smoke alarm legislation changed on January 1 2022
Mar 12, 2022
The Upsides of Downsizing
The thought of exchanging the maintenance of a larger home for a hassle-free future full of travel, friends, and newfound freedom is a common aspirant for downsizers on the move. Given the ideal replacement residence, more than half of Australians aged over 55 are open to downsizing opportunities, according to Australian Housing and Urban Research and similar sources. Once the reality of the children growing up and leaving the family home starts to wear off, there are many compelling reasons favouring the move to a smaller abode. The average Australian homeowner buys three to four properties in their lifetime. Traditionally, they trade up from their first home to a more substantial residence, often upgrading and then downsizing upon retirement. Financial incentives Incentives are in place to maintain this market cycle, with downsizing provisions enabling people over the age of 65 to sell their home and put an extra $300,000 in super. But firstly factor in selling and buying costs (including moving) and talk to your financial advisor about how it could affect age-pension entitlements by boosting your assets outside the home. Positive mindset More than anything, downsizing requires a shift in mindset and the need to separate your wants from your needs. Just like saving for your first home, it’s important to maintain a budget. Decluttering is an essential component of the downsizing transition. Review your belongings on a room-by-room basis and decide what to keep, discard, donate or sell. Embrace the space Given the reduced space at your new address, measure your furniture to ensure it fits the space and try to use one statement piece in each room. It’s also vital to make the most of storage where you find it – and there’s no shortage of potential solutions under beds, in cupboards, and in wardrobes. Also, mount your TV on the wall, make the most of Wi-Fi technology, and utilise multi-purpose furnishings where you can. Once you’ve settled into your new, streamlined space, embracing the downsizing adventure will be a joy as you embark on the next phase of your life. Consult your RealWay local expert to explore downsizing investment options in your region.