South Australia a magnet for Property Investors?

© Australian Property Investor — www.apimagazine.com.au.
Reproduced with permission.

Many will think I’m writing this article because I live in South Australia, but if you’re interested in buying property in an area where the government is lending a helping hand to investors – not just first homebuyers – this might be the state for you.

To provide a boost to the construction industry, the SA Government recently introduced some incentives. They include a First Home Owners Grant of $15,000 for new homes, the elimination of stamp duty on new apartments built in some locations in or near the CBD (saving as much as $16,000) and the Housing Construction Grant (HCG) of $8500.

It’s the last one that should be of particular interest to investors. Below is an excerpt from the official state government website:

“The $8500 HCG is available for new home buyers and owner builders, and, including investors, who are purchasing or building a new home valued up to $400 000, phasing out for properties valued up to $450,000.

“The HCG applies to contracts that are entered into between 15 October 2012 and 30 June 2013 and to owner builders where construction of the new home commences on or after 15 October 2012.

“The HCG will be available to natural persons, companies and trusts and there is no limit on the number of grants available, regardless of whether a person purchases or builds a new home alone or together with others.”

Yes, this grant is available to investors and there isn’t a limit on the number of grants available. This means if you buy or build two new properties, you’ll receive two lots of $8500. If you buy or build 10 properties, you’ll pocket $85,000!

This incentive for investors is the best one I’ve seen since then-Prime Minister John Howard introduced the capital gains tax (CGT) discount in the late 1990s. In most cases, the HCG won’t be as beneficial as the CGT discount but at least it’s something.

There’s an incentive offered by the New South Wales government that’s available to investors but it’s only $5000. An $8500 grant in the cheapest mainland state will provide better bang for your buck than a smaller grant in the most expensive city in the country.

I’m not saying you should buy in SA just because you get some government assistance, but when you factor in very low interest rates and low property prices with a mining boom on the horizon, $8500 is just the cherry on the cake!

Happy House Hunting!

Written by Peter Koulizos, university lecturer, author and buyers advocate.

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