Hey guys I used to live in Sydney but I moved to HK 2 years and have been watching the low end housing market in Sydney rip up with interest due to the FOHG. In particular Potts Point as I have a 1 bedroom and studio apartment there. I spent a bit of time researching this weekend and sent something out to my friends (see below), I reckon its time to sell. My units have run up 20% pa pretty good return for the crappy current investment climate. What do you guys think? Comments / feedback welcome thanks for your time!
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On 14 October 2008, the Australian Government announced that it was introducing the First Home Owners Boost, which together with the current $7,000 First Home Owner Grant (“FHOG”) and the Bonus Grant ("FHBG") of up to $4000 will provide first home buyers with up to $25,000 on new homes purchased or built before 30 June 2009. First home buyers purchasing an established home may receive up to $18,000.
From the rough data set I looked at it looks like lower end properties in Potts Point have moved up aggressively since this policy announcement. Rudd still has to announce what he’s doing with at the end of June. Interest rates still trending down and don’t look like popping back up in the near future which should keep Aussie property relatively well supported in the near future.
Thus, I’m thinking wait till end of June and revaluate I think once Rudd releases his policy on first home owners grant and whether he’s going to extend it. Aiming to sell in approx 6 months as I think the first home owner property prices have a little bit more room to move. Going to keep an eye on interest rates and unemployment numbers if the former starts to turn up or the latter starts to get worse I’ll probably sell earlier as these two are the key drivers for property in Australia in my opinion.
Tax wise its more advantageous for me to sell while I’m overseas as I effectively only have to pay 30% on half the capital gain vs it being the top tax rate if I were to work in Sydney and sell it when I get back. My understanding if I remember right is that I have to pay CGT still on physical property in Australia as it is not excluded can anyone confirm this? However its paid on non resident income threshold rates i.e. 30% on half the gain.
I’ve attached an estimate of what my estimated gains are: gross for each property are approx 20% and net is approx 17% after tax if I sell (see attached spreadsheet). Not bad for a shitty investment climate in the last 3 years and I still maintain that I think this temporary slowing down of bad economic data / people talking about green shoots recovery / bounce in stock markets is a temporary bounce in a terrible investment climate and things are going to turn south again hitting new lows within the next 1.5 years. So I'm happy to sell down at a good price and reduce my leverage a bit.
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On 14 October 2008, the Australian Government announced that it was introducing the First Home Owners Boost, which together with the current $7,000 First Home Owner Grant (“FHOG”) and the Bonus Grant ("FHBG") of up to $4000 will provide first home buyers with up to $25,000 on new homes purchased or built before 30 June 2009. First home buyers purchasing an established home may receive up to $18,000.
From the rough data set I looked at it looks like lower end properties in Potts Point have moved up aggressively since this policy announcement. Rudd still has to announce what he’s doing with at the end of June. Interest rates still trending down and don’t look like popping back up in the near future which should keep Aussie property relatively well supported in the near future.
Thus, I’m thinking wait till end of June and revaluate I think once Rudd releases his policy on first home owners grant and whether he’s going to extend it. Aiming to sell in approx 6 months as I think the first home owner property prices have a little bit more room to move. Going to keep an eye on interest rates and unemployment numbers if the former starts to turn up or the latter starts to get worse I’ll probably sell earlier as these two are the key drivers for property in Australia in my opinion.
Tax wise its more advantageous for me to sell while I’m overseas as I effectively only have to pay 30% on half the capital gain vs it being the top tax rate if I were to work in Sydney and sell it when I get back. My understanding if I remember right is that I have to pay CGT still on physical property in Australia as it is not excluded can anyone confirm this? However its paid on non resident income threshold rates i.e. 30% on half the gain.
I’ve attached an estimate of what my estimated gains are: gross for each property are approx 20% and net is approx 17% after tax if I sell (see attached spreadsheet). Not bad for a shitty investment climate in the last 3 years and I still maintain that I think this temporary slowing down of bad economic data / people talking about green shoots recovery / bounce in stock markets is a temporary bounce in a terrible investment climate and things are going to turn south again hitting new lows within the next 1.5 years. So I'm happy to sell down at a good price and reduce my leverage a bit.