Property investors spent a record $7.2 billion in property in Western Australia last year and this upward trend is continuing during 2006 according to Paul Bennion, Managing Director of DEPPRO property depreciation specialists.
Mr Bennion said that during January 2006, investors spent $670 million, which was a jump of 58% compared to January 2005.
“DEPPRO is finding that a growing number of these investors are traditional first home buyers who are now opting to buy an investment property rather than an owner occupied home because of rising property prices.
“REWIA figures show that during the December 2005 quarter, investors accounted for 26% of all homebuyers which was an increase of 2% for the quarter while first home buyers accounted for 22% of all home buyers which was a 1% fall for the same period. DEPPRO is finding that over the last six months we have had a significant increase in first home buyers who are purchasing investment properties rather than buying an owner occupier home because of the significant tax benefits this type of strategy offers.
“With the help of the equity in their parents’ home, they are able to purchase a property and help pay for the interest payments through rental income as well as tax benefits such as negative gearing and depreciation. These first home buyers are finding that these significant financial benefits more than offset the $7,000.00 they can claim if they were buying an owner-occupier home.
“First home buyers are choosing this investment strategy to ensure they can enter the housing market because affordability is now becoming a major issue in the WA housing market due to spiralling house prices. During 2005, the median house in Perth soared by 21.8%.
“These first time buyers are buying investment properties because they understand this type of property purchase provides very significant financial benefits that do not apply to buying an owner-occupier home. For example, investors who purchase an investment property can obtain tax benefits through depreciation that can be equivalent to 60% of the total purchase price of the property.
“A large number of our clients have individually achieved tax savings of more than $20,000 in just one year through organising depreciation schedules for their investment properties,” he said.
