Property investment is big business in Australia. It accounts for 60% of the banking system’s assets, and over half of Australians’ wealth is held in residential concerns. That works out as $6.6 trillion over 9.6 million homes, or a respectable three times the total value of superannuation funds.
Buying your first investment property may seem daunting—it’s a major financial commitment after all. However, if done right, it can be the start of a property investment journey towards a more financially secure future.
Investment properties can be a great way to qualify for major tax breaks. But there’s a caveat to this: timing is everything.
Here are recent home loan market developments to keep you updated.
Self Managed Super Fund lending update
Another one bites the dust with the Westpac group announcing that they will stop lending in the SMSF space. The bank advised that SMSF lending will be no longer available from 31st July 2018 to the Westpac brand which also includes St. George, Bank SA, and Bank of Melbourne.
The end of the financial year is the best time to take a look at your finances and make solid plans for the future. If you’re disappointed by the amount of tax you’ve just had to pay, investing could be a great option. Thanks to government incentives and tax break schemes, if you had earned $90K and invested in a $470,000 property through Calla Property, you would have net an annual cash gain of $705 for the year. In other words, the government would be giving you $705 to invest in the property!
In past years, the Federal Budget’s focus has been on improving housing affordability but 2018 saw the biggest drop in house prices since 2015, it appears the government have slowed down their pursuit.
The Australian Prudential Regulation Authority (APRA) has recently announced its plans to eliminate the 10 percent growth restriction on investor loan growth. APRA believes that the restriction’s purpose has been served, and that it is now time to abolish.
Since early 2007, investors have had the ability to leverage their superannuation directly into property. Using an SMSF has been a popular and attractive tool to reduce risk and volatility, and improve returns. More investors are using their Self-Managed Super Fund (SMSF) as a vehicle for property investment, particularly Baby Boomers. The consistent wave of ageing Baby Boomers projects a change in focus for the superannuation industry, from wealth accumulation, to maximizing income in retirement. SMSFs currently account for approximately 32% of all superannuation funds, which is the largest individual segment; above industry, retail and other sectors.
In light of this, here are 5 areas to consider when using SMSF to invest in property.
Gone are the days where investors believed ‘I can go out, buy a house somewhere, stick some tenants in it to pay the mortgage and make a killing!’.
As property markets across the country continue to display volatility and fluctuate in price, investors, more than ever, need to conduct extensive research before they invest. To ensure their property outpaces the market, and to safeguard against unpredicted fluctuations in price, investors should search within a location that displays strong local economic growth.
At Calla Property, we believe that property investment is one of the best vehicles of wealth creation in Australia. We are passionate about education and want to share our knowledge and insights so investors get the best possible outcomes.
This year, Calla Property presents The Property Investor Series 2018 – a series of seminars held over the course of the year to support you in building a successful property portfolio.
On 28 February, we held our first seminar on ‘Growing Your Property Portfolio’ at The Grace Hotel, Sydney. Our Managing Director – Susan Farquhar, was joined by Will Li – Director of Sf Capital, to educate current and potential investors about the property market and the investment process.
Here are 5 reasons you should come along to our seminars: