Rockingham real estate and negative gearing.

If you are looking for a seaside lifestyle with plenty of amenities, recreational facilities and entertainment options, Rockingham might be the suburb for you. Rockingham is a well-established outer LGA of Greater Perth, situated about 50 kilometres south of the city. It has a diverse range of properties for sale, from apartments and townhouses to detached houses and land.

In this blog post, we will explore the real estate trends in Rockingham over the last 12 months and compare them to the Perth greater region. We will also explain how negative gearing works and how you can use it to your advantage if you are interested in investing in Rockingham.

Real Estate Trends in Rockingham

According to REIWA, the typical price for houses in Rockingham was $495,000 as of October 2023, up 6.5% from the previous year. The median weekly rent for houses was $490, up 11.4% from the previous year. The gross yield for houses was 5.1%, higher than the Perth average of 4.3%.

The time on the market for houses in Rockingham was eight days, much lower than the Perth average of 18 days. The vendor discounting was --3.9 %, indicating a strong seller's market.

There were 362 house sales in Rockingham in the past 12 months, with an average online view per property of 168, slightly higher than the Perth average of 167.

The data shows that Rockingham has experienced robust growth in both prices and rents over the last year, outperforming the Perth greater region. This is likely due to the high demand for properties in this area, driven by its attractive location, lifestyle and affordability.

Negative Gearing Explained

Negative gearing is a tax strategy that allows you to deduct the expenses of owning an investment property from your income, reducing your taxable income and therefore your tax liability.

Expenses that can be deducted include interest on your loan, property management fees, maintenance costs, council rates, insurance premiums and depreciation.

Negative gearing is only possible when your rental income is less than your expenses, meaning that you are making a loss on your investment property. However, this loss can be offset by the capital growth of your property over time, which can result in a positive return when you sell.

How to Take Advantage of Negative Gearing

If you are looking for a long-term investment opportunity, you might want to consider using negative gearing to maximise your tax benefits and capitalise on the high rent yields and growth potential.

However, negative gearing is not suitable for everyone and depends on your personal circumstances, financial goals and risk appetite. You should always seek professional advice before making any investment decisions.

Some factors that you should consider before investing using negative gearing are:

- Your cash flow: Negative gearing means that you will have to cover the shortfall between your rental income and expenses out of your own pocket. You need to have enough cash flow to support this strategy and avoid financial stress.

- Your income: Negative gearing works best when you have a high income that can benefit from the tax deductions. If you have a low income or no income at all, negative gearing might not be effective or even feasible for you.

- Your loan: The interest rate and terms of your loan will affect how much interest you can deduct and how much equity you can build in your property. You should shop around for the best loan that suits your needs and budget.

- Your property: The type, location and condition of your property will affect its rental income, expenses and capital growth. You should do your research and due diligence before buying any property and choose one that has strong rental demand, low maintenance costs and good growth prospects.

- Your goals: Negative gearing is a long-term strategy that requires patience and commitment. You should have a clear vision of why you are investing and what you hope to achieve from it. You should also have an exit strategy in case your circumstances change or the market conditions turn unfavourable.

Conclusion

Rockingham is a suburb that offers a lot of benefits for both home buyers and investors. It has seen strong growth in both prices and rents over the last year, outperforming the Perth greater region. It also has a high gross yield for houses, making it an attractive option for investors who want to use negative gearing to reduce their tax liability and increase their capital growth.

However, negative gearing is not a one-size-fits-all strategy and requires careful planning and consideration. You should always consult a professional adviser before making any investment decisions and ensure that you understand the risks and rewards of negative gearing in Rockingham.

Contact us today if you want to discuss anything related to property investment and taxes!