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Can the Sydney growth continue in 2020?

The last half of 2019 is a good indicator for what 2020 will entail in relation to the Sydney housing market. Sydney has seen strong growth in the median house price in the September quarter of 2019. Prices have risen 3.6% in the 3 months to September 30. This is up from 2.6% the year before and the strongest quarterly gain in 3 years. Low interest rates and an easing on lending restrictions has aided the growth. In 2020 another financial instrument could stimulate even more growth.

The government plans to introduce the First Home Loan Deposit Scheme which is aimed at assisting first home buyers to enter the market with only a 5% deposit. Banks usually require a 20% deposit in the current market and if a home-buyer does not have the minimum 20% required they have to pay thousandths for Lenders Mortgage Insurance. The government will guarantee mortgages for the first 10,000 home buyers. This is a good thing for not just investors or home-home-owners but also the home-buyers looking to enter the market.

Other market indicators such as G.DP growth is a little worrying as the Australian economy only grew .4% last quarter and household savings increased to 4.8%. JP Morgan Chief Economist Sally Auld says:

”If we go back maybe 10 or 15 years, GDP per capita [growth] was averaging about 3 per cent, which meant that our living standards were growing at a pretty good clip. If we take the average of the last five or six years, that’s now growing at 1 per cent. What that tells us is that the rate of increase in the economy, when we adjust for population growth, has slowed quite a lot over the last decade or so.”

Will a slowing economy put downward pressure on the house prices in Sydney? Or will the First Home Loan Deposit Scheme inject another wave of growth in the housing market? These two forces seem to be working against each other and 2020 will reveal if the growth can continue.

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Who is Jacopo Mascheroni?

If you are a fan of clean, modern lines Jacopo Mascheroni is the master of this craft. He is the founder of a Milan based architecture firm JM Architecture. They are well known for a meticulous attention to detail, finishes and material selection whilst fooling ideals of simplicity, coherence, clarity and harmony. Refined, pure and timeless architectural lines meet with the most advanced technology to provide a combination of exceptional aesthetic elegance, utility and comfort.

Jacopo Mascheroni was born in Milan in 1974. He was educated at the Politecnico di Milano and the Ecole d’Architecture Paris Belleville and he completed his studies at the University of California at Berkeley. He began his professional career in the United States at Stanley Saitowitz / Natoma Architects in San Francisco, where he worked on several residential projects. He moved to New York to join Richard Meier & Partners, where he was the project manager and design principal for the Jesolo Lido Village, which has received a number of important international prizes and awards. In 2005 he was granted a United States Green-Card for extraordinary ability in the field of architecture. Later he established JM Architecture in Milan and has been invited in numerous occasion to lecture about the firm’s projects both in Italy and abroad. The firm, and Jacopo, will continue to create breathtakingly beautiful designs over the coming years.

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“Loombah” a private estate

Having been built in 1879, “Loombah” house located in Hunters Hill sits on a staggering 5,500 sqm. The current owners purchased in 2000 for $4.5 million and completed extensive works in 2010 to the property including the pool and alterations to the homes design and extensions.

Incorporating modern finishes with sandstone has resulted in a seamless look. The home has been able to keep its grand design from a different era whilst being transformed into modern architecture.

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Tax time is fast approaching and claiming depreciation expenses can put a lot of money back in your pocket.

Investment property tax depreciation allows you to claim a tax deduction for the wear and tear of the structural elements (the actual building) and the plant and equipment (fixtures and fittings) of an investment property.

By claiming depreciation as a tax deduction, you can lower your taxable income. This in turn reduces the amount of income tax you need to pay, leaving more cash in your pocket each year. You can use this increased cash flow to pay down debt, create new investments or simply enjoy more disposable income.

You can maximise investment property tax deductions by considering the following:

Engage a registered Quantity Surveyor

To maximise investment property tax deductions, you need a detailed tax depreciation schedule. A tax depreciation schedule summarises the tax deductions you can claim on your investment property each year for up to 40 years. ATO rules insist that a tax depreciation schedule be compiled by a registered Quantity Surveyor, who will inspect your property and ensure that every depreciable item is identified and evaluated.

Claim small items immediately

To offset the usually higher cost of an investment property in the early years, claim small items as soon as possible. Items under $301 dollars can be written off immediately.

Furnish your investment property

Furnishing a property can often help achieve a higher rental return. Furniture in an investment property is depreciable and you can claim a large rebate back in the first year. This option will depend on the demand for furnished properties and the potential of an increased rental return.

Claim scrapping value when upgrading or renovating

Scrapping, or residual value, is a depreciable element that many property investors overlook. You can claim a tax deduction for fixtures and fittings that are replaced during an upgrade or renovation. Have a Quantity Surveyor review your renovation plans and estimate what you will ‘lose’ when throwing out old carpets, kitchen cabinets or other fittings. This ‘scrapping’ amount can be claimed as a tax deduction.

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How to reduce the risk of vacancy

No one wants their rental property to sit vacant. Top tips to avoid rental vacancy include maintaining your property in good condition and taking a strategic approach to advertising and leasing.

Meet the market on price

“A property simply won’t appeal to tenants if it’s priced too high,” says Tegan Murphy, residential property manager at Melbourne’s Wilson Agents.

“Even reducing the rent by just $5 per week can be the difference between letting your property and having it sit vacant.”

“Five dollars per week won’t make much of a dent in the overall annual cost of owning a rental property; yet, if the property sits vacant, the cost to the landlord can be significant because each week that passes is another week in lost rental income.”

Maintain your property in reasonable condition

“Try to view your property through the eyes of a prospective tenant. Having blinds replaced or having the interior painted can make a huge difference, and this kind of improvement isn’t expensive.”

Murphy says a fresh coat of white paint is always her top recommendation to landlords because it makes any interior look bright and inviting. She also says replacing carpets is a good way to appeal to prospective tenants.

Other cost-effective improvements include replacing kitchen cupboard doors, installing a new shower curtain or replacing worn out lino.

Let it fast

Murphy says properties that don’t let within the first two weeks are at risk of sitting vacant for longer periods.

“Interest in a property peaks within the first day or two of it being listed. That’s when you get the most enquiries and you really want to see the property let within the first fortnight.”

“As time goes by, a property listing slips further and further down the search results on real estate websites, as newer properties come onto the market,” explains Murphy.

“As your property moves down the list, prospective tenants assume there’s something wrong with it and no one wants to live in it. Many people won’t even see the listing, as lots of tenants don’t search past the third or fourth page of online results.”

Don’t advertise too early

While it may be tempting to advertise your property for lease as soon as the current tenant gives notice, Murphy says this is a mistake.

“Don’t advertise the property until you can legally gain access to it, you’ve organised a mutually convenient inspection time with the outgoing tenant and you know that it’s clean and tidy.”

“As soon as people see it advertised, they want to view it. They don’t want to wait. Ideally, you get a good number of people through in the first couple of opens, and sign up a new tenant to move in the day after the previous person moves out.”

Timing is everything

Murphy says December is often a quiet time for the rental property market.

“When we let properties in December, we sign the tenant up to a 13-month lease, so if they vacate at the end of the lease, it’s in January, which is much busier.”

“You don’t want to fall into a cycle of having to find a new tenant every December because you run the risk of it being vacant over the very quiet weeks around Christmas.”

Make it easy

If your rental property has a garden, you can attract and retain a tenant by including basic gardening as part of the rent.

“If you pay for someone to come and mow the lawn, you keep your tenant happy and the win for you is that the garden doesn’t end up an overgrown eyesore that’s costly to bring back under control.”

Keep a good tenant

A sure-fire way to avoid rental vacancy is to hang onto your tenant. Murphy says it’s worth trying to keep a good tenant, even if it means forgoing a rental increase.

“The cost of re-letting a property can quickly soak up the increased income generated by a small rent rise. If you have a good tenant in place, consider keeping the rent at the same level in the hope that they will stay.”

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