Hi,
I own a property and am looking at increasing the rent, but I want to make sure the increase is below the CPI increase over the same period.
I was wanting to find out the CPI figures for the last few years. I did a web search and all I could come up with were some news articles. They mentioned CPI has been averaging around 2.9% per annum for the last few years. Is that correct?
I naively assumed there would be some nice web site that lists the CPI figures for each financial year. The ABS are money hungry %$#% who probably charge for the info. Could someone help?
Thanks,
Tom
Try this link Tom:
http://www.rba.gov.au/Statistics/measures_of_cpi.html
If you go to “total” on the yearly link, that will give you the last few years’ inflation rates. You’ll note the total of the year 2000/2001 was 5.9- that was due to the implementation of the GST. This year’s total to the last quarter was 2%. The RBA always has a target of 2-3% Annual rise to be seen as managing a non-inflationary economy.
kay henry
Thanks heaps Kay you are a genious.
Hi Tom
I am just doing the same thing, putting the rent up in line with the CPI. I found the following page on the ATO web site:
http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/cpi.htmTerryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry- i don’t quite get that CPI table- could you explain it, please?
kay henry
Hi Kay,
Try this, it took me a few shots to understand, but if you read the figures via its quartely mark, you will see the trend that takes place. Then with this trend you can determine what the indexation will proceed to be for future values.
Capital gains: indexation
Indexation is only relevant in working out the cost base of an asset acquired before 21 September 1999. If the indexation method (rather than the discount method) is used to work out a capital gain from such an asset, some of the cost base expenditure of the asset may be indexed to account for inflation up to the September 1999 quarter. Changes to the law mean that indexation is frozen at that time.Cheers,
sissis- i know how to read about CPI. And the thing that you pasted from the bottom of the page is about CGT, not CPI.
CPI is always around 2% or 3% or 4%. the figures on the table that Terry pasted didn’t appear at all like that.
And sis, CPI is farily easy to predict. The RBA is always discussing CPI and their predictions. Basically, CPI is usually about 2.6% and will probably remain so in future unless there is a deregulation of CGT or global conditions which change inflation for us.
kay henry
Hi Kay,
thanks for the info, though i never mentioned anything about CPI, just the trends in that table, that show and follow.
The Indexation of the figures are only relevant, to work out the cost base of the asset.
There are 2 typs of ways to use the figures to cacaluate the following figures.
- Indexation method.
- Discount method
Knowing this and putting this value against your currnet rental value, you will see the indexation figure has some what a high degree with working out the CPI rate, that is caculated against the weighted average of the 8 capital cities used.
Cheers,
sisa mate of mine just put rent up $5 a week and the tenant left – pfffff! is a bold investor that puts rents up now. CPI has such a mish mangle of components and has no connection to rents anyway (even though I woudl imagine rent is a component of the CPI calculation). comparative rentals can be the only way to justify it
Hi Guys,
This table is fine to work against, though this is the first time, ive seen it and im finding that for differnt properties in the same suburb, will all have different rental yeilds. Honestly i very much think CPI is only good to workout what the future wages maybe or what we could accurately guess or estimate what the current future values hold out.
Cheers,
sissis,
the question that was asked by Tom was about CPI. That’s why I asked Terry about the table. I understand about CGT. The first table is a far more easily readable reference to CPI. All you’ve written about, sis, is CGT- it’s a little frustrating, sis- as one has nothing to do with the other, although CGT will have an impact upon CPI (inflation) rates.
Merely copying stuff from the net doesn’t indicate that one has an understanding of it.
kay henry
>>The RBA always has a target of 2-3% Annual rise to be seen as managing a non-inflationary economy.<<
Always ?
A number of years ago the powers that be decided to change the make up of the CPI factors and manipulated it blatantly in such a manner that would have left the crook NAB currency dealers for dead.
I cannot for the life of me remember what factor exactly they decided to ignore but it made a substantial difference.
Does anyone remember what that was all about ?
Pisces133
Pisces,
Since the 1990’s, the inflationary target set by the RB has been between 2%-3%:
“By the mid-1990s, the Reserve Bank’s approach to monetary policy aimed to achieve dual objectives. The first objective was to keep underlying inflation to an average of 2 to 3 percent over the course of the cycle. The second objective was to achieve desirable output and employment outcomes.”
From: http://www.economics.unimelb.edu.au/TLdevelopment/econochat/StempEcon10.html
This approach of inflation targeting is still continuing in 2004.
kay henry
Hi Kay
I beleive that table is just an accumulative index of the CPI since the time it first came into use. The quarterly figure is just addedd on top.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
>>The first objective was to keep underlying inflation to an average of 2 to 3 percent over the course of the cycle.<<
Kay, one doesn’t achieve a change in the underlying inflation by merely fiddling with the figures.
It doesn’t sound as if you know what I am referring to.
Pisces133
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