A Finance blog by Paul Bennion.
Building approvals for higher density homes such as apartments jumped by 127% in Melbourne over the past three financial years, new figures from the Australian Bureau of Statistics have revealed.
According to the ABS, Melbourne has the fastest higher density building approvals growth rate of any capital city in Australia and now accounts for around one third of all higher density building approvals throughout the country.
Commenting on the figures, Paul Bennion, Managing Director of tax depreciation company DEPPRO said building approvals for higher density homes in Melbourne reached 23,763 units in 2010/11, nearly twice the number for Sydney (14,130) and more than three times the number for Brisbane (6,484).
Andrew Leoncelli, Director, Residential Projects CBRE said that his company has recorded strong demand for quality unit development in Melbourne over the past year.
“CBRE markets apartment developments throughout Australia and Melbourne has seen a large number of exciting new developments being undertaken in the last financial year due to the strong population growth of the city.
“This strong demand was reflected in excellent sales results for boutique apartment developments such as E.589 and The William being marketed by CBRE.
“The growing importance of apartments and units in the property market is further underlined by the fact that last financial year they accounted for 25% of all residential building approvals in Australia compared to 16% back in 2008/2009,” he said.
DEPPRO’s Bennion added that despite a significant rise in the number of tax depreciation reports for new higher density properties throughout Australia over the past five years, many first time property investors continue to fail to obtain their full tax depreciation entitlements.
Many first time investors buying apartments for investment purposes fail to understand that the tax benefits from depreciation can be just as important as rental income.
Overall, it is estimated that only one in five residential investors make use of the tax depreciation entitlements available to all investors on all investment properties.
“Most investors do not realise that tax benefits obtained through depreciation can be equivalent to 60% of the total purchase price of the property,” Bennion said.