The value of Australian property market jumps by more than $145 billion over the June 2017 quarter
By Paul Bennon, Managing Director, DEPPRO
The latest ABS Property Price Index released this week had very positive news for property sector with the Index showing that collectively the value of property in Australia has surged by $145 billion to more than $6.7 trillion over the June 2017 quarter.
Overall the ABS index found that the mean price of residential dwellings rose $12,100 to $679,100 and the number of residential dwellings rose by 40,000 to 9,906,100 during this three-month period.
The rising equity level of Australian property is positive because it generates further confidence in the real estate market at a time when other forms of investment such as the stock market are highly volatile.
Of the eight capital cities, the ABS Index found a wide variation in the capital growth of properties depending on the location of the city.
Both Sydney and Melbourne led national property price growth at an annual rate of 13.8% with Darwin at the bottom of the property price growth table taking the 'wooden spoon' with a 4.9% drop in property values over the past year.
Overall, the price index for residential properties covering the combined capital cities rose 1.9% in the June quarter 2017. The index rose 10.2% through the year to the June quarter 2017 which is more than 5 times the annual inflation rate.
The positive news for the property market is that six out of the eight capital cities recorded positive price growth in property values over the past year.
Of the two capital cities that recorded negative price growth - Perth and Darwin- there is now a growing consensus that they have reached the bottom of their property cycle and there are now better days ahead of these two real estate markets.
With Australia's annual inflation rate at just 1.9% and the value of property increasing by 10.2% across all capital cities annually, it is logical that property investors will continue to be a driving force in the real estate market despite recent curbs by APRA to curb lending to investors by raising interest only home loan rates.
In that regard, property investors need to ensure that they protect their cash flow by claiming the generous tax depreciation benefits associate with buying an investment property that can total up to 60% of its purchase price.
On a new apartment costing $600,00, these tax depreciation benefits can amount to $360,000.