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Most Liveable City 2017 Goes to Melbourne

The Australian city of Melbourne has been declared the world’s most liveable city again – for the 7th consecutive time. Image credit: http://bit.ly/2wSBIgX

Melbourne is the only country to win World’s Most Liveable City for 7 consecutive years.

The Australian city of Melbourne, Victoria has been declared the world’s most liveable city again – for the 7th consecutive time.

This is the first time in the survey’s 15-year history that a city has held top spot in The Economist Intelligence Unit’s Global Liveability Index for seven consecutive years. Vancouver, which shared the top-ranked spot with Melbourne from 2002 to 2004, held the title for 6 years.

The Economist’s report scores each city out of 100 for stability, healthcare, culture and environment, education and infrastructure. It also looks at factors such as crime, how good the food is and even how bearable the temperature is in each of the 140 cities surveyed. Housing affordability is not considered.

Melbourne’s overall rating is 97.5 out of 100. Little wonder that the population of the city has continued to swell dramatically by around 2000 people a week, a quarter of them from Sydney.

Melbourne is not the only Australian city listed in the Survey. Adelaide is at 5th place (with Calgary in Canada), Perth at 7th place, Sydney at 11th and Brisbane at 16th. Sydney used to be in the global top 10 and is now overtaken by two smaller Australian cities.

Melbourne wins most liveable city again in EIU’s Global Liveability Survey Rankings for 2017. Image credit: The Economist

CSI Properties (Cornerstone International) proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Properties (Cornerstone International) does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Last Chance: Save ~A$20K Before Stamp Duty Increase on Melbourne Property

Stamp duty will be increasing in Melbourne again. This increase is caused by the removal of the off-plan stamp duty concession on Melbourne property, which will affect all buyers. THIS WEEK COULD PROVE THE LAST CHANCE FOR YOU TO SAVE ~$A20K in stamp duty on Melbourne property.

WANT TO KNOW MORE ABOUT THE STAMP DUTY INCREASE? WATCH THIS VIDEO:

This video follows articles that we had written and published on our website previously regarding this change from as far back as 2 months ago.

To read our article on the new stamp duty increase, please click HERE.

To read about Vacant Residential Property Tax (VRPT), please click HERE.

These articles and video are our way of sharing knowledge with our clients and friends.

This is another Knowledge Series by CSI Properties (Cornerstone International).

CSI Properties (Cornerstone International) proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Properties (Cornerstone International) does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Melbourne: Vacancy Tax to Hit Foreign Property Buyers

Foreign buyers who don’t have a tenant in their property (or live in it themselves) for more than 6 months in a year, will be hit with a vacancy tax, effective 1 January 2018. Image credit: sourceable.net

Government measures for affordable housing at expense of foreign investors:

(i) Vacant Residential Property Tax (VRPT)
(ii) New residential developments restricted to only 50% foreign buyers

 

Last month we published an article announcing the latest raft of changes by the government to scrap off-the-plan stamp duty concessions in order to waive stamp duties for first-time buyers of houses worth up to $600,000 in Melbourne. (Click HERE to access the article).

More restrictions are in store for foreign investors. The Victoria government has also now effected a vacancy tax (Vacant Residential Property Tax or VRPT) which will will cost foreign buyers who don’t have a tenant in their property (or live in it themselves) for more than 6 months in a year, an annual penalty of 1% of the property’s capital-improved value. This means investors with a home worth $500,000 will pay $5,000 in tax if they don’t rent the place out.

The tax takes effect on 1 January 2018 and will target homes around inner and middle suburbs of Melbourne. This would include the following local council areas: Banyule, Bayside, Boroondara, Darebin, Glen Eira, Hobsons Bay, Manningham, Maribyrnong, Melbourne, Monash, Moonee Valley, Moreland, Port Phillip, Stonnington, Whitehorse and Yarra.

At press time, it is still unknown how the new tax will be applied or policed, but a on the State Revenue Office (SRO) of Victoria website states that the tax will be self-reporting, i.e, owners of vacant residential property will be required to notify the SRO of any vacant properties they own.

Meanwhile, moving forward, developers can only sell 50% of properties in new developments to foreign buyers. This means that at least 50% of new homes will be sold locally.

The suite of changes introduced by the government has drawn mixed reactions from the public and industry players. Some agree that it is a great move towards housing affordability, but there are parties — including from within the party — that have criticised this move.

What’s clear is that while this is a populist move that brings in the votes, it is a temporary measure that could cause the property market to remain on the boil.

CSI Properties (Cornerstone International) proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Properties (Cornerstone International) does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Why Investors Must Buy Melbourne Property NOW Before 1 July 2017

The Victoria government has made changes to the stamp duty laws, which effectively means no more off-the-plan concession for investment properties. Image credit: Win Real Estate
  • From 1 July 2017, purchasers of off-the-plan (not yet built) commercial or residential investment properties will be liable to stamp duty on the purchase price or market value of the property (whichever greater)
  • Investors will possibly pay approximately $15K – $20K* more than what they are currently paying
  • Off-the-plan concession only for purchasers who make the property their principal dwelling

Investors should get into the Melbourne property market NOW and exchange by 30 June 2017 to avoid hefty stamp duty charges, which could cost some $15K to $20K* more than current rates. From 1 July 2017, investors of Melbourne property are no longer eligible for stamp duty concessions, resulting in payment of tens of thousands of dollars more. Note: Victoria is the only state in Australia that has stamp duty concessions.

The increase in stamp duty charges are due to the Victoria government’s changes to the First Home Owner Grant and new stamp duty exemptions and reductions for first home buyers (i.e, concessions have been removed to fund these reductions and exemptions). First home buyers in this case refers to local Australians or foreigners with PR who are purchasing a property for the first time with the intent of occupation.  

Effective 1 July 2017, off-the-plan stamp duty concessions will only be available for people who intend to live in the property. First home buyers no longer need to pay stamp duty on properties valued under $600K, while discounts are available on a sliding scale for purchases between $600K – $750K.

Impact of new stamp duty on investors

The new laws will impact borrowing capacity as investors will need to include the new stamp duty into their calculations. We advise that you speak to a mortgage broker to understand its full implications.

How does stamp duty currently work?

Victoria has the highest stamp duty rates in all Australia. However, unlike other states, Victoria stamp duty is split into land and construction.

Investors/owners of completed properties pay FULL stamp duty, fulfilling both the land and construction components.

Investors/owners of off-the-plan property that has yet to commence need only pay stamp duty on the land component.

Investors/owners of off-the-plan property that has begun construction will need to pay duty on the land component plus a tiered payment for the construction component depending on how far along construction has taken place.

Example:

Your apartment is valued at $500,000 and its land is valued at $100,000

PROGRESS OFF-THE-PLAN CONSTRUCTION BEGUN COMPLETED PROPERTY
PAYMENT DUE $2,150 $2,150 + tiered amount $25,070

AVOID FULL STAMP DUTY COSTS OF $15K – $20k* – INVEST IN MELBOURNE NOW AND EXCHANGE BY 30 JUNE 2017.

*The $15K-$20K estimation is benchmarked on a 1-bedroom property priced at $400K-$500K. A 2-bedroom property priced at $1million or more will cost higher stamp duty charges

CSI Properties (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Properties does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

Source: http://bit.ly/2prHWAb or http://bit.ly/2p405Y7

 

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Australia’s Housing Market to Remain Bubbling

Looks like the Australian housing bubble is here to stay for some time yet. Image credit: globalriskinsights.com

Very recently, the Victorian government announced the abolishment of the controversial stamp duty for first-time homebuyers. This ‘lifeline’ to young people struggling to get on the property ladder takes effect from July 2017 and is applicable for any homebuyer in Victoria whose property costs less than AUD$600K.

In a market where experts and market watchers are spouting concern over housing undersupply and skyrocketing house prices, this could well be the road to hell being paved by good intentions’.

Why?

Because simple economics tells us that cheaper property prices (in the form of the abolished stamp duty in this case) will stimulate demand. And increased demand in an overheated market will push prices higher in that price range. Even Federal Treasurer Scott Morrison has shared his reservations, which you can read here.

Compounding this is the low interest rates (the central bank slashed rates twice last year) which  contributed to the boom in house prices, particularly in Melbourne and Sydney. Experts argue that to put a dent in the housing market, the RBA would need to raise interest rates, which is unlikely due to concerns about inflation and the risk that it would impact the economy significantly.

Sharp increases in interest rates may not be the wisest thing to do because it will affect growth and if anything, the RBA would likely increase rates on a gradual basis.

Which is why it may be some time yet before the prices of property will collapse as interest rates would have to rise to a certain level before the property bubble will pop. An article in The Daily Reckoning reports that when the US housing market blew up in 2007/2008n, it was the result of the Federal Reserve raising rates 17 times (25 basis points each time) from 2004 to 2006.

So it seems most likely that the housing market may well bubble merrily away…and house prices in Melbourne at the very least will continue going higher for some time to come.

Read more at http://bit.ly/2m6wLL1

CSI Properties (Cornerstone International) proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Properties (Cornerstone International) does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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The Right Time to Invest in Perth

Artists impression pictures of the new footbridge to connect East Perth with the Burswood peninsula as part of the new Perth stadium project.
Source: Government of WA

“I like Perth and am thinking of investing in property there, but everyone says now’s a bad time. When is it a good time to invest?”

Here’s a valid and oft-asked question. True, the Perth property market has hit a low but could now be the best time to focus on the Perth property market? Our answer is: “YES”.

Questions will arise as to why now is a ‘bad’ time for investment, but here are 5 Reasons that challenges the status quo and explains why the time is NOW.

#1 Affordable prices. Big choices. Greater yield potential

The Perth property market is at the bottom of the current property cycle. Property prices here are among the most affordable of any capital city in mainland Australia, and half that of Sydney — perhaps the most affordable it has ever been. Perth residents are spending 21.5% of their monthly household income on mortgage repayments, the lowest in 10 years, says a report from Moody’s. By contrast, homeowners in Sydney are spendng 39% and 34% respectively of their income on mortgage. Simple math works out that you can buy more at $500K in Perth, with a pick from some of the most prime locations (compared to Melbourne or Sydney) and still likely achieve a discount off the listed price.

Once the property market starts to go up again, you stand to reap significant benefits. The market is already buzzing that Perth property market cycle will turn in 2017, with prices going up albeit at a slow and steady rate.

#2 Perth Economy – More than Just Mining

Western Australia is rich with resources in a region and world in need of iron ore, bauxite and liquefied natural gas. But Perth is more than a mineral supply; Western Australia is well positioned to serve as a base for military back operations and transportation and logistics businesses that service the western half of the continent.

Plans are afoot to bring a vibrance to the economy and transform Perth by 2021 thanks to several multimillion-dollar infrastructure projects:

  • New additions to Perth CBD & skyline to include apartment towers and a Ritz-Carlton Hotel at Elizabeth Quay, a public square and marketplace at the Perth City Link and a new museum in the cultural centre
  • A $12 billion boost to tourism by 2020 will see four new hotels built in the CBD, whilst suburbs such as Shenton Bay, Cottlesloe, Armadale, Gosnells and Butler, among others, would start to take shape as development stepped up along major transport routes.

But back to mining: both Pilbara Minerals and Altura Mining have announced plans to secure abandoned workers camps in Roy Hill for their future mining projects. Additionally, there is growing investment in lithium and the world’s premier producer of lithium concentrate from spodumene, Tianqi Lithium, has confirmed plans to build a $400-million lithium hydroxide plant in Kwinana which will create 500 jobs.

Estimated & projected population, larger Greater Capital Cities – 1973 to 2053. Source: ABS

#3 Growing Population

Perth today is like Sydney 20 years ago, some say. With the growth in infrastructure, the City of Perth’s population alone is forecast to grow from 22,324 last year to 27,317 in 2021. But that aside, Perth’s population is on a long-term upward trajectory with expert predictions that its population could be at least 3.9 million people or nearly double what it is today by 2050. Perth is expected to supersede Brisbane in becoming Australia’s third largest city by 2028 according to the Australian Bureau of Statistics (ABS). ABS also predicts that Perth will grow at a rate of 187% between 2012 and 2061.

#4 Long Term Success

The west has gone through a number of cycles before, previously in the 1990s and then the early 2000s, with the last good year being 2012 during the mining boom (if you held property over the long term, you would have gained significant capital growth). Long-term residents and business operators well understand the west’s cycle of growth and development and realise how these cycles represent opportunity for expansion and investment.

Perth is now in a state of adjustment and has been since 2013. Experts are predicting the market will pick up in 2017 albeit at a slow pace, and savvy investors are taking their pick of properties in the city, in anticipation of growth. Nerida Conisbee, REA group chief economist says, “It’s not about the short term. Perth is for someone with a slightly stronger appetite for risk, but they’ve got a longer window for investment so it’s for someone on a high income, who is in a younger age bracket, someone who can absorb the first couple of years being slightly choppy in terms of performance.”

Artist impression of the Perth City Link project. Source: https://yhoo.it/2giZDic

#5 Jobs Growth

Yes, unemployment has taken a bit of a dip, but there are job opportunities on the cards, what with new infrastructure in the city, which includes a new sports stadium, road and rail upgrades, new social projects planned along the Swan River, among others (see #2). In September, recruitment specialists DFP Recruitment says there is a cause for cautious optimism after a 16.3% increase in job ads in WA (mainly in mining) over the past 12 months — the biggest growth of any state.

Conclusion: Buck the Trend

Most property investors follow the herd, investing in growth markets and competing with each other, causing prices to increase. Investing at the bottom of the cycle, with careful observation of the market, means you get substantial growth when the cycle peaks. Remember, all property markets go through cycles.

CSI Properties (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: Cornerstone International does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Will the Australian Property Market Crash?

Is the Australian property market going to crash? Image credit: http://bit.ly/2f3ezlS

Word is going round again that the Australian property market is up for a crash. Over the last five years or so, this topic has been a popular refrain among doomsayers, yet Australia has managed to avoid the Global Financial Crisis and property prices have gone up, almost doubling in Sydney.

True, there has been a slight dip in investment now compared to last year, but the numbers are still strong according to CoreLogic RP Data’s latest report in October and FIRB’s latest annual report for the FYE 2014-2015, if that is anything to go by. Prices have continued to rise with Sydney and Melbourne leading the pack. And, for all the concerns that have been voiced, capital city auction clearance rates remain high, led by Sydney (>80%) and Melbourne (>70%).

Taking a step back, the prediction about a property crash is resultative of and/or predicated upon several factors including:

  • General unaffordability of property especially in Melbourne and Sydney
  • Tighter regulations on foreign property ownership in Australia
  • Lower rental yields
  • Tightening of lending policies to foreigners by Australia’s top banks
  • Property (over)supply in cities like Brisbane, Melbourne & Sydney

We’re not about to ‘cry wolf’ as the future of the Australian property market should be based on the history of its performance and on facts. Here’s our take on why the Australian property market won’t crash.

Fact #1: Robust Population

Australia has been charting robust population growth. From 2013 to 2016, its population increased by approximately 1 million! Part of this growth is attributable to immigration, with the large majority of immigrants moving to Sydney, Melbourne and Brisbane. An increased population usually results in increased demand for housing. Logically, the reported oversupply of apartments should be absorbed by the incoming population.

Latest demographic data from the Australian Bureau of Statistics (ABS) showed that over the 12 months, the national population increased by 1.4% which translates into an increase of 327,610 persons. Charting the growth is the state of Victoria, as Melbourne remains the powerhouse of population expansion in the country.

Latest figures released by Australian Bureau of Statitics in Sept 2016 show growth in population over the last 12 months, with Victoria charting the growth. Image credit: CoreLogic. Source: ABS& CoreLogic

Click here to WATCH a SPECIAL NEWS REPORT on the growing population of Melbourne.

Fact #2: Sound governance & banking system

The state governments of Victoria, NSW and Queensland have imposed stamp duty taxes on foreigners while the FIRB is now levying new fees on foreign buyers. In the meantime, Australia’s main banks have tightened lending policies to foreigners, at the same time that the Reserve Bank has cut interest rates — now at the lowest level on record. The tightening measures imposed by the government and financial sector is a means to keep a lid on house prices.

On the issue of rates reduction — it is a move to stimulate the property market. Reduced rates encourage more people to take loans and buy property. It seems unlikely that the bank will implement this if the property bubble was a concern as reduced interest rates will mean more people buy and prices rise further.

Fact #3: Fragmented market

Australia’s property market is fragmented. It is inaccurate to blanket the entire market as one, as each state is at its own stage of a property cycle. Even in each state, different segments of the markets behave differently.

Real case study

In Sept 2016, demand for houses and apartments nationally grew 3.1% and 1.9% respectively, yet it was dragged below April levels by a softening WA market. Demand was high, driven by Sydney and Melbourne, yet in WA there was reduced demand. And yet, despite the decline, pockets of Perth bucked the trend: demand for WA houses and apartments fell 6% and 2.9% respectively, but demand for dwellings was at 2.9% increase in September.

Fact #4: Investor Appetite

Offshore investor interest is still high despite the 4 main Australian banks pulling the brakes on lending to foreign buyers earlier this year, as other banks continue lending. HSBC, for example, is enjoying steady lending to foreigners especially with the cuts to interest rates this year. This is the 12th cut since 2011 and the lowest since. In addition, tightening governmental policies have done little to dim the allure of Australian properties among Asian investors.

Fact #5: Sound economy & low unemployment rate

Australia’s seasonally adjusted unemployment rate was at 5.6% in Sept 2016 – the lowest jobless rate since September 2013. Unemployment rates source: ABS. Image credit: Trading Economics

Australia generally enjoys a sound economy, despite the slight dip in its performance this year. But growth is poised to strengthen in 2017 as the nation continues to transition from a mining-based boom to non-resource drivers of growth. Australia currently enjoys the lowest unemployment rate in the last three years according to the Australian Bureau of Statistics and the government is expecting employment growth to remain solid.

Conclusion

The property market has always been a cyclical one. Too many doomsayers have come forth in the past, but none of their predictions have come to pass. This is not to say that everything is hunky-dory. Yes, we think there will problems — there will be a correction and moderation in certain segments of the housing market just as there had been before; as an example the CBDs in major cities like Melbourne and Sydney have already been correcting over the past few years (we have been advising clients to stay clear of the CBD if they are expecting strong short term capital growth). Yes, there is all that, but certainly not enough to cause the economy to implode.

CSI Properties (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: Cornerstone International does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Melbourne – 3 Weeks to Stamp Duty Increase

Victoria-stamp-duty-increase-csiprop
Victoria is due to impose on foreign real estate purchasers a 4% hike in stamp duty effective 1 July 2016. This totals to a 7% hike. Image credit: http://bit.ly/1rfUryG

TICK TOCK.

The clock is ticking. Come 1 July 2016, the 4% increase in stamp duty surcharge imposed by the Victoria state government on foreign property investors shall take effect. This increase, announced late April 2016, comes hard on the heels of the 3% stamp duty surcharge introduced on 1 July last year.

Victoria’s new stamp duty for foreign buyers of residential property is similar to changes adopted by the governments of Hong Kong, Singapore (and Malaysia), which charge an additional 15% stamp duty over and above the amount paid by domestic buyers.

Below is a FAQ detailing what the increase in stamp duty surcharge means for the foreign investor, and the implications to housing and investment into Victoria moving forward.

What is the new stamp duty rate imposed on foreign purchasers on 1 July 2016?

On 1 July 2016, foreigners will have to pay a stamp duty of 7% on purchases of houses, apartments and vacant residential zoned land in Melbourne and across Victoria. This is a 4% increase from the stamp duty surcharge introduced barely a year ago.

When does it take effect?

The new stamp duty surcharge applies to contracts signed on or after 1 July 2016.

Why is there a hike in stamp duty surcharge?

The Andrews Labour Government is taking action to ensure foreign buyers of residential property — who do not pay payroll tax and GST — contribute their fair share to the liveability of the state, and maintenance and development of government services. We believe that this new and rather sudden increment could be politically motivated: a federal election to determine all 226 members of the 45th Parliament of Australia will take place on Saturday, 2 July 2016 (one day after new stamp duty rate taks effect) after an eight-week official campaign period. This is Australia’s first double dissolution since the 1987 election. Yup, the stakes are high and this is a big deal, politically.

Melbourne’s population is set for massive growth, overtaking Sydney in 2053.

Statistics show that Victoria will have the largest population in Australia in the future, driven by massive and rapid growth in Melbourne city (source: CBRE). The Australia Bureau of Statistics projects that Melbourne will overtake Sydney as Australia’s biggest city in 2053. An increased population will lead to continual sprawl in the city and drive the demand for housing. And as migrants continue to move into Melbourne, there will be a greater need for rental accommodation.

With this increased surcharge, the Victorian government expects to raise $486 million over the next four years.

Are there any exclusions?

Yes; permanent Australian residents and New Zealanders will be excluded from the surcharge.

How does this affect the foreign investor and how should you take advantage of the situation in the short term?

(i) Save RM50K++ in duties*

Foreign investors are rushing to lock in their investments before the increased surcharge takes place. Timing is crucial and the window leading up to the surcharge increase, is small. If you have been thinking of investing in Melbourne property, now is a good time o decide. Acting quickly could save you more than RM50K++ in duties and ensure that you snap an investment in a good location.

For example, you could save approximately RM50K in stamp duties on a property worth $400K and about RM100K for a property worth $800K.

*dependent on price of property

(ii) Wise decisions go a long way

You should not invest for the sake of it or if you are not ready. We are strong advocates of making informed decisions: a thriving locality with potential for job growth, a growing economy, good amenities and increased infrastructure are key to a good investment. The best areas for investment and living in Melbourne are within the fringe of the CBD (click here to find out why). These include areas like Brunswick, North Melbourne, St Kilda and South Yarra, as well as landed housing across Melbourne, as they fetch better rental, capital appreciation and have higher chance of resale to Australians (by law, foreigners are only allowed to purchase brand new property. As such foreign investors can only dispose of their property to Australians who generally prefer to live outside the CBD).

What happens if you do not buy now?

You will merely have to purchase at a higher price, which means your rental return will be diminished. We stand by our advice to not be hasty, but to make informed decisions.

What are the ramifications of the stamp duty hike on foreign investment?

We foresee a slowdown in investments into Victoria and Melbourne in the short term. This could translate to a slowdown in construction of new builds, thus affecting supply of housing. This also means that Melbourne will become a more expensive city to invest in than Sydney, which is starting to see a comeback in investment. However, with the impending  growth and changes in Melbourne, we feel that foreign investments into Victorian property will continue unimpeded in the long run.

CSI Properties (Cornerstone International) proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Properties (Cornerstone International) does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Keeping a Close Watch on Perth Property

Property in Melbourne and Sydney often hog  the limelight, but savvy and seasoned investors are keeping a close watch on the West Australian city of Perth.

West Australian property is proving its broad appeal, with new figures from the Foreign Investment Review Board (FIRB) revealing a total of 2043 approvals for foreign buyers, an increase of almost 30% from the 1572 in the previous financial year.

To recap, Victoria topped the list with 16,775 approvals, followed by NSW with 12,349 and Queensland with 5023, with a big number of approvals for overseas buyers from the Chinese.

The Numbers are Looking Good

In the not too distant past, news had circulated of the mining slump adversely affecting Perth’s economy and softening the housing market. However, sales volume data up to March 2016 show signs of a bounce in consumer confidence. It appears that the property market is close to or at the bottom of the cycle with industry experts predicting a cautiously optimistic outlook for Perth in 2016.

This chimes with official figures released by the Australian Bureau of Statistics (ABS) which show a 0.5% jump in Perth’s residential property prices in the December 2015 quarter, marking an end to the trend of sliding property prices recorded since late 2013.

“The performance of the housing market is tied to the economy, which is reflected in unemployment rates/employment opportunities,” says CSI Properties (Cornerstone International) spokesman Virata Thaivasigamony.

“And, here’s the thing: all that negative predictions of a boom or bust in the WA economy that has been going around, has not been reflected in employment stats. In reality, Perth’s economy is more diversified and not solely driven by the mining industry as people make it out to be.

“ABS’ labour force figures for March 2016 show WA’s unemployment rate had fallen to 5.5% — which is below the national unemployment rate of 5.7%. Of course Australia’s economic performance in general is tied to the global economy, but from these numbers, the WA economy isn’t a lost cause and the reason why the Perth property market hasn’t tanked drastically as has been predicted,” Virata adds, citing Melbourne as yet another city that has defied years of doomsaying.

According to ABS, WA’s unemployment rate is lower than Victoria’s (5.7%), Queensland’s (6.1%), South Australia’s (7.%) and Tasmania’s (6.8%), and marginally higher than NSW’s (5.3%).

Meanwhile, Perth’s population is expected to increase by 70% to 3.5 million by 2050. ABS statistics show that Perth’s population growth is scheduled to overtake Brisbane by 2028, becoming the third largest city in Australia. Wise investors are looking to leverage on this growth by investing in strategically located property at currently affordable prices (while there is little competition among buyers) in order to achieve strong capital growth in the coming decades. Note that prices of inner city property is far more affordable than a similarly located project in Sydney.

10 Years Rental Assurance

Investors looking to also benefit both in the short term (rental income) and long term (capital growth) can apply for the National Rental Affordability Scheme (NRAS), a joint Australia and WA Government initiative to increase the supply of new affordable rental dwellings in WA.

Under the NRAS, applicants can apply for annual incentives to buy and rent their homes to low and moderate income households (tenants must be approved by Australian Government).

NRAS landlords rest assured that their property will be the first pick among the rental community as the property must be rented at a 20% discount. However, this amount is paid back by the government to the landlord as an incentive. These incentives, totalling over A$100K, is tax-free.

In fact, these incentives are worth more than the discount given, which essentially means the landlords benefit a great deal at the end of the day.

Landlords end up with a 7.2% gross rental yield vs a typical property which generates only 4% – 5%. This also means that investors are essentially assured of rental for 10 years at a higher return.

Call us at 03-2162 2260 to learn more about Perth property, discuss options or how you can be part of the NRAS programme.

CSI Properties (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence.

Disclaimer: Cornerstone International does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

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Foreign Investment in Australia Property at Record High

Approvals for foreign investment in Australian property hit a record high of  A$61bn, an increase of 75% in the 2014-15 financial year, possibly accounting for approximately a quarter of new developments Down Under.

This increase is on the back of a 102% spike on the year before.

The Foreign Investment Review Board (FIRB) records 36,841 (60% more than FYE 2013-14) applications by non-citizens and non-permanent residents to buy residential properties, representing 81% of total value of residential building approvals in 2014-15.

According to UBS economists, 75% of these new properties are located in NSW and Victoria, with data strongly suggesting that most were concentrated in the inner-city high-rise markets of Melbourne, Sydney and Brisbane.

“From these approvals, it is estimated that roughly about 1 in 3 convert into actual investment which means foreign investment accounts for about 25% of the new developments in Australia. The highest proportion of real estate investments by foreigners into Australia comes from China while Singaporeans and Malaysians have also been identified as some of the top investors in Australian residential real estate,” said CSI Properties  (Cornerstone International) spokesperson Virata Thaivasigamony.

“Australia’s popularity amongst investors is not unfounded due to its sound economy and policies. However, investors should study the markets well and find out which states and sectors general investment monies are going into before putting money down on property for investment. We place a lot of emphasis on research and we cannot stress more how important knowing the market is.”

Newsflash: Victoria Doubles Foreign Buyer Stamp Duty

“Victoria’s surcharge on foreign owners of residential real estate has been in effect since July 2015, but it has had little impact on foreign demand. Similarly, we don’t see a significant impact with this new surcharge increase, but we are bracing ourselves for a surge in demand over the next two months as investors rush to save on the surcharge hike,” said Virata.

With the increase in foreign investment in property in Victoria, the government is taking action to ensure foreign buyers of residential real estate contribute their fair share to the liveability of the state.

To this end, the Australian government is increasing stamp duty surcharge on foreign buyers of residential property from 3% to 7%, applicable to contracts signed on or after 1 July 2016.

Additionally, land tax surcharge on absentee owners will also rise from 0.5% to 1.5% from the 2017 land tax year.

“Australia is headed for an election and one of the biggest challenges the government faces is the complaint from voters that foreigners are buying and pushing up prices; this could be a form of appeasement.

“Victoria’s surcharge on foreign owners of residential real estate has been in effect since July 2015, but it has had little impact on foreign demand. Similarly, we don’t see a significant impact with this new surcharge increase, but we are bracing ourselves for a surge in demand over the next two months as investors rush to save on the surcharge hike,” said Virata.

CSI Properties  (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: Cornerstone International does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260