The Coronavirus pandemic is having a devastating impact on the rental market especially in CBD areas and popular tourist destinations. Landlords are now slashing rents by hundreds of dollars a week and some are even temporarily cutting asking prices in half to secure a tenant as rental demand plummets amid the coronavirus pandemic. This is because a massive reduction in overseas migrants, tourists as well as international students coming to Australia has resulted in surging vacancy rates.
For example, last year Australia had a net migration of 240,000. This year could be close to zero but, no matter what, 170,000 dwellings are being completed this year.
The increasing supply of new rental properties combined with a decline in demand by tenants is resulting in a steep rise in vacancy rates. The blow out in empty rental properties is underlined by the latest rental figures by SQM research. It reveals that the number of empty properties in the CBDs of Australia's three biggest cities has blown out, with new figures recording the largest monthly increase of the national vacancy rate in more than a decade.
Australia's rental market has now been flooded with vacant properties with more than 88,000 homes were left empty last month.
For example, the vacancy rate in the Sydney CBD more than doubled from 5.7 per cent in March to 13.8 per cent in April - a record high on the SQM series - with the Brisbane CBD close behind with an increase from 5.7 to 11.3 per cent.
While the vacancy rate in Melbourne's CBD was slightly better increasing 2.6 percentage points to 7.6 per cent, however in Southbank the vacancy rate jumped from 5 per cent to a huge 13 per cent. For property investors wanting to ride out the impact of the Coronavirus, it is critical they focus on their cash flow.
Taking advantage of the "hidden tax benefits" of buying a property investment is a keyway investors can boost their cash flow during 2020. It is estimated that each year hundreds of millions of dollars in legitimate tax benefits are never claimed by property investors throughout Australia. This occurs because many property investors do not use the service of a qualified tax depreciation specialist to identify items throughout their property that can be claimed for tax depreciation purposes. These 'hidden' tax benefits can amount to thousands of dollars in additional tax benefits for individual investors each year if they are correctly identified.
The reality is that many Australian property investors are unaware that a tax depreciation report undertaken by a professional tax depreciation company can identify hundreds of items in an investment property for which you can claim legitimate depreciation benefits.
The tax benefits associated with negative gearing can be very signification with DEPPRO clients achieving tax benefits obtained through depreciation equivalent to 60% of the total purchase price of the property. In some cases, these tax benefits can total $300,000 based on a purchase price of $500,000.