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Building capital gains with a brand-new home

Date Monday, 12 September 2016 12:48 PM

Capital gains can be unlocked if you hold onto your home for longer.

There is good money to be made in the real estate game, but it doesn't just happen overnight. The latest data from CoreLogic RP Data states that the profits for capital city dwellings are showing 10.7 per cent growth through August 31, 2016. Sydney and Melbourne are leading the charge with 13 per cent and 12.5 per cent respectively, and only Perth recorded a drop (0.4 per cent).

That's great news for anyone looking to build wealth through property. Capital gains don't just pop up overnight - there tends to be a long wait for any change to be seen. If you're building a new home with G.J. Gardner Homes, there are a few things to consider about making the most of your investment.

When do capital gains tend to arise?

The CoreLogic Pain and Gain Report from March 2016 shows the percentage of homes that were sold in the first quarter of the year for a profit or a loss. A mere 2.2 per cent of Sydney homes fell into the 'pain' category, which means that for Q1, 97.8 per cent of all home sales in the city returned a profit.

Melbourne wasn't too far behind, with only 2.4 per cent of homes selling for a loss. There's a good chance your next home will make a sound profit if you build in Australia's two largest cities.

In terms of the length of a title being held, however, the story is completely different. Take the Sydney suburb of Camden, for example. Homes that made a profit had an average return of $252,500 - that's a very handy pocket of extra cash. The average length of title hold for this profit was nine years, so it wasn't an overnight event. Such money can be made from property, but it's clear that it takes time.

Money can be made from property, but it's clear that it takes time.

On the other hand, when a home sold for a loss, it lost a huge amount - an average of $200,818, in fact. The period of time the owners of these properties held the title for was only 1.1 years. If you flip a property only a few months or even a couple of years after you buy, it's far more likely that you'll lose money.

Making the most of your investment

To get the most out of the money that you invest in your new home from G.J. Gardner Homes, it'll pay to hold onto it for a fair amount of time. Give it 10 years and you'll be looking at a hefty return when you do sell. Get in touch today to start the process toward making capital gains.