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P U L S E
D E C E M B E R
M A R K E T
C21
PUBLISHER Century 21 Australia Pty Ltd
CONTRIBUTORS Charles Tarbey Tim Lawless Chris Gray Bradley Beer Terri Scheer Landlord Insurance
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES Century 21 Australia
WELCOME TO THE
DECEMBER 2018 ISSUE OF
C21 MARKET PULSE
(02) 8295 0600
DISCLAIMER We have in preparing this information used our best endeavours to ensure that the information contained therein is true and accurate, but accept no responsibility and disclaim all liability in respect of any errors, inaccuracies or misstatements contained herein. Prospective buyers and sellers should make their own enquiries to verify the information contained herein. All information contained in the CENTURY 21 Australia Pty Ltd website is provided as a convenience to clients. All links to property prices displayed on the website are current at the time of issue, but may change at any time and are subject to availability. For more information on our Privacy Policy please refer to: www.century21.com.au/privacy
C O N T E N T S D E C E M B E R
CHAIRMAN STATEMENT
02-03
2 0 1 8
ALL YOU CAN DEDUCT
Market update and signs you need a new
Frequently asked depreciation questions.
real estate agent.
BMT Tax Depreciation, Bradley Beer
10-12
Century 21 Chairman, Charles Tarbey
LANDLORD TOP TIPS NATIONAL DWELLING VALUES
04-05
How to attract the right tenants. Terri Scheer Landlord Insurance
Australia’s housing market records weak conditions. CoreLogic Head of Research, Tim Lawless
INTERIOR DECORATING
C21 LEADS THE WAY
07
Home styling tips for beginners.
3 ways C21 gives its agents competitive advantage. Real Estate Business
INVESTMENT PROPERTY UPDATE
13
08-09
Is now a good time to renovate? Your Empire CEO, Chris Gray
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C H A I R M A N STAT E ME N T
DON’T LET TOMATO PLANTS GROW ON YOUR ‘FOR SALE’ SIGN B Y C H A R L E S T A R B E Y,
CHAIRMAN CENTURY 21 AUSTRALASIA
CoreLogic recently reported that its home value index recorded its weakest month-on-month change in dwelling values since the Global Financial Crisis. The downward pressure on prices is being led by Sydney and Melbourne where the majority of Australia’s housing assets reside. The amount of housing stock
This isn’t such good news for
Again, there appears to be little
currently on the market, for this
sellers but it is worth pointing out
seasonality in real estate but with
time of year, is the highest it has
that sellers that buy in the same
the opposite conditions in effect.
been for many years and this is
market will likely be relatively
Sales are not keeping up with rising
likely very good news for people
unaffected by the current market
stock levels and this is putting
in a position to buy. Buyers may
dynamics.
downward pressure on prices. This
have more stock to
I made the observation
choose from than
in the boom years
in past years and may also be competing against fewer other buyers. This scenario should equate to more negotiating power for buyers
that real estate
“If tomato plants have started growing up a ‘For Sale’ sign — a property has been on the market way too long and its time for a new agent.”
and perhaps better deals than they could have secured in the recent past.
seasonality seemed to
pronounced, with much off the plan stock expected to come into markets over the coming year. While this is again good news for
have become
buyers, sellers looking to secure a
non-existent.
successful sale need to be mindful
One season
of current market conditions, look
flowed into
to work closely with their agent
the other with demand remaining strong throughout and
stock levels not meeting demand in many markets.
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situation could become even more
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of choice and take a proactive approach to selling. With days on market extending in many locations, sellers would be wise to meet with their agent
on a regular basis to discuss the
If tomato plants have started
It remains very possible in the
progress of their sale. Agents
growing up a ‘For Sale’ sign – a
current market for buyers to make
should also be making time to meet
property has been on the market
a great purchase and for vendors to
regularly with their vendors.
way too long and its time for a
achieve a successful sale.
Sellers also need to constantly
new agent.
Taking time to understand the
assess their marketing strategy
Agent selection is critical in the
market, regularly meeting with your
and pay close attention to market
current market and vendors should
agent and having realistic price
changes. If sellers have approved
pay close attention to the number
expectations – whether you are
an agent’s marketing strategy and
of ‘Sold’ signs they see from a
a buyer or seller – will help you
it doesn’t seem to be attracting
particular agent in a given market
achieve the outcome you want.
the desired level of interest, they
– not the number of ‘For Sale’
should consider withdrawing
signs. ‘Sold’ signs often suggest
the sale or revising their price
performance while ‘For Sale’ signs
expectations.
point to activity.
Source: CoreLogic Hedonic Home Value Index, 30 Nov 2018.
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N AT I O N A L DW E L L I N G VA L U E S
AUSTRALIA’S HOUSING MARKET RECORDS WEAK CONDITIONS BY T I M L AW L E S S , CO R E LO G I C H E A D O F R E S E A R C H
Headlining the November results, the CoreLogic hedonic home value index recorded its weakest month-onmonth change in dwelling values since the Global Financial Crisis; national dwelling values slipped 0.7% lower in November, led by larger falls in Sydney (-1.4%) and Melbourne (-1.0%) where the pace of decline has accelerated over the past month.
Commenting on the results,
Melbourne dwelling values peaked
CoreLogic head of research Tim
four months later than Sydney, in
Lawless said, “The downwards
November 2017, and have since
pressure on national dwelling values
fallen by 5.8% through to the end of
is largely confined to Sydney and Melbourne which
Although the weaker
together, comprise approximately
“Nationally, dwelling values are down 4.2% since peaking in October last year, with dwelling values retracing back to levels last seen in December 2016. .”
55% of the value of Australia’s housing asset class,” he said. Since peaking in July last year, Sydney’s housing
Nationally, dwelling values are down 4.2% since peaking in October last year, with dwelling values retracing back to levels last seen in December 2016.
November 2018.
housing market conditions in Sydney and Melbourne are under the spotlight, Tim Lawless said, “Conditions across the Australian
market is down
housing market
9.5% which is on track to
are increasingly diverse.
eclipse the previous record peak-
Dwelling values are trending higher
to-trough decline set during the
across five of the eight capital
last recession when values fell 9.6%
cities, albeit at a relatively slow pace
between 1989 and 1991.
compared with the previous surge
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in Sydney and Melbourne. Hobart
He said, “Additionally, housing
for a strong negotiation position on
and regional Tasmania continue to
affordability constraints are more
price.
be the standouts for capital gain,
pronounced in these markets and
with values up 1.7% across both
rental yields are substantially lower,
regions over the past three months”.
indicating an imbalance between rental values and dwelling values.
Tim Lawless points towards several factors that are influencing the downwards trend in Sydney
The ramp up in housing supply has been more pronounced in these markets against a backdrop of
and Melbourne, while other
slowing demand, and Sydney and
regions continue to see some
Melbourne have also been more
level of growth. The tightening
affected by the reduction in foreign
in finance conditions has been
buying activity.”
more pronounced across the investor segment of the market,
As a consequence of less market
where Sydney and Melbourne
activity, advertised listings have
have recorded much higher
surged higher, providing buyers
concentrations of investment
with ample choice which provides
Tim Lawless said, “The rebalancing towards buyers over sellers in Sydney and Melbourne is clear across CoreLogic’s vendor metrics, with clearance rates tracking in the low 40% range while private treaty sales are showing substantially longer selling times and larger rates of discounting than they have over recent years.”
demand.
CAPITAL CITY HOME VALUE CHANGES: All data to week ending 9 December 2018
CAPITAL CITY
WEEKLY CHANGE
MONTHLY CHANGE
YEAR TO DATE CHANGE
12 MONTH CHANGE
Sydney
-0.5%
-1.8%
-7.8%
-8.2%
Melbourne
-0.3%
-1.2%
-6.1%
-6.1%
Brisbane
-0.1%
-0.2%
0.3%
0.2%
Adelaide
0.0%
0.1%
1.1%
1.2%
Perth
-0.2%
-0.6%
-4.0%
-4.4%
COMBINED
-0.4%
-1.2%
-5.6%
-5.9%
*The monthly change is the change over the past 28 days. Source CoreLogic. Results are based on the CoreLogic Daily Home Value Index. Further information and daily updates on the index results are available from: http://www.corelogic.com.au/research/daily-indices.html.
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C 21 L E A D S T H E WAY
3 WAYS CENTURY 21 GIVES ITS AGENTS COMPETITIVE ADVANTAGE Cooling conditions in some of the traditional Australian key markets and with ever-increasing levels of rivalry mean that it is more important now than ever for agents to have competitive advantage. Century 21 chairman and owner Charles Tarbey unpacks three key initiatives the network provides to get its agents ahead.
He said that this allows for early
3. Business support
identification of both growth and
But Mr Tarbey was also quick to
problem areas in the business. “Our focus is on ensuring that our
just talk and attractive branding.
value offering to agents is as strong
“We have a world-class, real-
as it can be.”
time CRM that was developed specifically for our agents and offices,” the chairman said, “along
2. Saturation marketing “Our marketing clearly promotes and differentiates our offices in the field. I believe that growth will take care of itself if we do these, and other little things, right.” To this end, Mr Tarbey points to C21’s recently launched marketing campaign, saying that
1. Tech investment
offices were well placed to benefit off the sweeping technological changes and
properties in several languages, aggressive digital marketing, clever use of video and ongoing investment into SEO. “We believe the C21 network is well supported from a technology standpoint.”
already yielding
invested heavily into Tarbey said. “So our
with a global website that promotes
the initiative was
“Century 21 has always technology,” Mr
point out that more is required than
“We believe the C21 network is well supported from a technology standpoint.”
was important to keep abreast of changes and industry dynamics.
launched one of our largest marketing in Australian
habits that have affected decade.” Mr Tarbey said that it
“We recently
campaigns
changing consumer the industry over the last
results.
history in order to promote the repositioning of our brand. This investment is already benefitting our offices and helping to strengthen the network.”
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The story 3 ways Century 21 gives its agents competitive advantage appeared on Real Estate Business (REB).
Article Link: https://www.realestatebusiness.com.au/ better-business/17759-3-ways-century-21gives-its-agents-competitive-advantage
I N V E ST ME N T P R O P E R T Y U P DAT E
IS NOW A GOOD TIME RENOVATE? B Y C H R I S G R A Y, C E O, YO U R E M P I R E
With so many people struggling to get preapproved to buy a bigger home or to buy more investment properties, could now be the time to undertake some renovations instead? APRA and the Banking Royal Commission have made it harder for nearly all of us to borrow money but they haven’t made it impossible.
considerably – even in a flat
house into a 2 bedroom house so
market – and can reduce future
you can get your dream walk in
maintenance or repairs down the
wardrobe may suit you, but may not
track.
make a lot of financial sense.
Most people’s experience of renovating is that it either takes them twice the amount of time they originally estimated or it costs twice as much as they initially calculated. And for some, it’s twice the time and twice the budget. Here are my five top tips for profitable renovations:
business and do still want to lend money as they have shareholders to keep happy. Whilst you may not be able to raise enough funds to upgrade your home or buy another investment, you still might be able to raise enough funds to renovate your current properties.
not yours. If you’ve got an investment property, you might not be the same demographic as the tenants that are likely to rent it, so it’s important to bring in a property manager to get their advice as
Banks do get you to jump through more hurdles, but they are open for
2. Renovate to your tenant’s needs
to what works and what doesn’t. 1. Renovate for a future sale. Whilst everyone has individual tastes, it’s important for the future re-sale of your property that it appeals to the audience. Speak to your trusted real estate agent to find out who is the likely buyer for your property and what they may look for in a home or investment. This can often change over time as
Renovating can improve your
prices rise and fall as demographics
property’s capital growth
change. Converting a 3 bedroom
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Dimmer switches, overhead fans and air conditioning can seem like a great idea, but if they are the things that are likely to constantly break down and are non-essential, they are probably better left out of your renovation. Go for what’s practical, hard wearing and colour schemes that work for the majority.
3. The little changes can make the
family, friends, buyer’s agents and
biggest differences.
real estate agents for advice. We
In many cases, you don’t
charge a fee for our service, but
necessarily have to undertake a large-scale renovation to lift a property’s value. Sometimes,
often we’ll save many times that in better-planned renovations and on time and on budget guarantees.
small alterations including new light fittings, landscaping, blinds or curtains, door handles and a fresh coat of paint can make a big difference to a property’s overall appearance. Carpets and walls are the majority of a property’s surface and very easy to upgrade.
5. Double-check your plans with an independent valuer. If you ask ten people for an opinion, you’ll usually get ten different views on what’s right. I often ensure that I never under or over capitalize
agency which builds property portfolios for time-poor people – searching, negotiating, renovating and managing property on their behalf. Chris’s team buys 1-2 properties
double-check my numbers. They
a week and often spends $5m+ a year
can tell you what your property
For large-scale renovations and
is worth now, what it’s likely to be
help. Paying for the best builders,
Chris Gray is CEO of Your Empire, a buyer’s
by getting an independent valuer to
4. Hire a professional. projects, don’t skimp on expert
ABOUT THE CONTRIBUTOR
renovating on others’ behalf, providing a unique insight into market conditions and buyer and seller sentiment. Chris hosts
worth post renovation and then you
“Your Property Empire’ each Friday on Sky
can make sure the renovations cost
News Business channel, where he interviews
project managers and tradespeople
you less than the difference.
various heads of property research
can often ensure that the work is
Renovating isn’t always about the
is a qualified accountant, buyer’s agent and
money, especially if you’re looking
mortgage broker.
at improving the home that you’re
For more information visit
likely to live in for a long time.
www.yourempire.com.au
completed to the best possible standard and is council-approved, which will help you come sale time. One of the best places to find great experts is through recommendations. Consult with
However, it’s always worth taking an unemotional snapshot at the same time.
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companies and major industry figures. Chris
www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire.
ALL YOU CAN DEDUCT
FREQUENTLY ASKED DEPRECIATION QUESTIONS
BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N
WHAT IS DEPRECIATION? As a building gets older and items within it wear out, they depreciate in value. The Australian Taxation
IF A RESIDENTIAL PROPERTY WAS BUILT BEFORE 1987 IS IT TOO OLD?
Office (ATO) allows property
No, investment properties do not
investors to claim a deduction
have to be new. Both new and
relating to the building and fixtures
old properties will attract some
it contains. Depreciation can be
depreciation deductions. It is a
claimed by any owner of an income
common myth that older properties
producing property. This deduction
will attract no claim. Previous year’s
essentially reduces the investment
tax returns can also be adjusted. If a
property owner’s taxable income.
property owner has not maximised their depreciation deductions, the
WHAT IS A DEPRECIATION SCHEDULE?
ATO allows investors to adjust the previous two financial years tax returns.
the depreciation deductions claimable by investment property
development applications, as well as occupancy certificates and certified final inspections.
WHAT IS THE DIFFERENCE BETWEEN PLANT AND EQUIPMENT AND CAPITAL WORKS? Plant and equipment (division 40) assets are items that can be ‘easily’ removed from the property, as opposed to items that are permanently fixed to the structure of the building. Plant and equipment assets also include electronically or mechanically
A depreciation schedule is a comprehensive report that outlines
council searches regarding lodged
HOW DOES BMT CALCULATE A BUILDING’S AGE?
owners on the property’s building
The age of the building can be
structure and its fixtures and
determined by obtaining council
fittings within it. A depreciation
documents with dates pertaining
schedule, prepared by a specialist
to the original application approval
Quantity Surveying firm, such as
date or the occupancy certificate
BMT Tax Depreciation is one of
date and final inspection date.
the best ways that you can
operated items, even though they may be fixed to the structure of the building. Plant and equipment assets include, but are not limited to:
CARPETS
HOT WATER SYSTEM
OVENS
BLINDS
Your BMT Quantity Surveyor will
RANGEHOODS
COOK TAPS
maximise the cash return from
conduct the relevant searches to
DOOR CLOSED
GARAGE DOOR MOTORS
your investment property each
accurately determine the age of a
financial year.
building. This includes historical
FREESTANDING FURNITURE
AIR CONDITIONING SYSTEM
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Capital works (division 43) is based on the historical construction costs of the building and includes such items as bricks, mortar, walls, flooring and wiring.
WHY DOES THE DEPRECIATION SCHEDULE LAST FORTY YEARS? The ATO has determined that any building eligible to claim the building write-off allowance has a maximum effective life of forty years from the date construction was completed. The owner can generally claim up to forty years depreciation on a brand new building, whereas the balance of
CAN THE BUILDING OWNER CLAIM RENOVATIONS THAT WERE COMPLETED BY THE PREVIOUS OWNER?
HOW LONG WILL IT TAKE TO GET MY SCHEDULE?
Yes. Anything in the property that
between five - seven days for our
is part of a previous renovation
team to prepare your property’s
will be estimated by our Quantity
BMT Tax Depreciation Schedule.
Once we have collected all of the details we need, it usually takes
Surveyors and deductions calculated accordingly. This includes items which may not be so obvious, for example, new plumbing, waterproofing and electrical wiring. For capital works improvements to qualify for the division 43 building write-off, they must have commenced construction within the
DO YOU INSPECT PROPERTIES? BMT inspects properties that a tax depreciation schedule is to be completed on. This ensures that we can identify all assets and maximise the depreciation deductions available. This also ensures our
qualifying dates.
schedules are fully compliant
the forty year period is claimable on
with the guidelines set out by the
an older property.
Australian Institute of Quantity Surveyors (AIQS), the Royal Institute of Chartered Surveyors (RICS) and that are required by the ATO.
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DOESN’T MY ACCOUNTANT TAKE CARE OF THIS? BMT works with your Accountant to ensure that your depreciation claim is maximised each financial year for your investment property. The
WHY IS BMT TAX DEPRECIATION MY BEST CHOICE FOR MY DEPRECIATION SCHEDULE NEEDS? •
BMT use our own staff
ATO states that Quantity Surveyors
Australia-wide, many firms use
are one of the only recognised
contractors. If an audit takes
professions with the appropriate
place and the ATO questions
construction costing skills to
anything in the depreciation
estimate construction costs for
schedule, you will have peace
depreciation purposes.
of mind knowing BMT’s trained staff will be answering any
WHO IS QUALIFIED TO ESTIMATE CONSTRUCTION COSTS FOR DEPRECIATION PURPOSES?
queries •
If you make additions to the property after you receive your depreciation schedule, BMT can update your depreciation schedule free of charge for the first addition
•
BMT work with your Accountant and Property Manager to simplify the process for you
•
BMT provide ongoing support. If you have questions, please contact one of our expert staff on 1300 728 726 or visit our website www.bmtqs.com.au
if we can’t find double our fee worth of deductions in the first full financial year, we don’t charge for our services
Quantity Surveyors are qualified under the tax legislation TR97/25
BMT provide a fee guarantee:
•
•
BMT have one fee across the
ABOUT THE CONTRIBUTOR
to estimate construction costs for
whole of Australia - we don’t
BMT Tax Depreciation also provide a free,
depreciation purposes and are one
charge extra for regional areas
easy to use tax depreciation calculator,
of a few select professionals who
and travel costs
specialise in providing depreciation schedules. Ensure a depreciation specialist like BMT is used to prepare a depreciation schedule.
•
BMT’s Tax Depreciation
which can provide you with an estimate of available deductions for any property you are considering purchasing. Find our tax
Schedule is structured to
depreciation calculator at www.bmtqs.com.
allow you to recoup missed
au/tax-depreciation-calculator.
deductions for up to two
Alternatively, you can contact one of our
years if you have not been
expert staff on 1300 728 726 for a free
maximising your deductions
estimate of available deductions. Article provided by BMT Tax Depreciation. Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit www. bmtqs.com.au for an Australia-wide service. www.bmtqs.com.au
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L ANDLORD TOP TIPS
HOW TO ATTRACT THE RIGHT TENANT
BY TERRI SCHEER LANDLORD INSURANCE
Attracting the right tenants is one of the best investments a landlord can make. This could alleviate stress, financial and time pressures — and help to make your investment work harder for you.
HERE ARE FIVE TIPS FOR ATTRACTING THE RIGHT TENANT.
Brought to you by
www.terrischeer.com.au/
HAVE A PROPERTY MANAGER A Property Manager can help in a number of ways including recommending potential tenants, knowledge of the property market and anticipated return, managing property requests and knowledge of applicable laws.
KEEP RECORDS Records of updates will demonstrate that you as a landlord are invested in your property
REVIEW APPLICATIONS Reference cheeks are a vital part of leasing your property. You will need to understand the local market and understand that this will inform the type of tenant who will be applying for your property. Checking previous rental history where it’s available will help identify tenants that may be suitable for your property. Where a tenant is renting for the first time, character references from reputable sources will be helpful.
5
1
MAINTAIN YOUR PROPERTY
4
You have a legal obligation to provide a property that is safe. Addressing maintenance requests in a timely manner helps minimise potential risk and tells your tenant that you care about your property and their enjoyment of it.
2 3
UPDATE YOUR PROPERTY A few updates to your property, could yield better rental income return. Storage space, modern appliances and fittings, and neutral colour palettes could make your property more appealing to the rental market.
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I N T E R I O R D E C O R AT I N G
HOME STYLING TIPS FOR BEGINNERS It can be hard to know how to style a room, especially if you have no experience or if your existing furniture does not suit your new house. But this should not discourage you from enjoying your home dĂŠcor journey.
interior design. Adding layers and elements of the same colour can be a powerful way to tie a room together. Specialists typically do this in the form of throw rugs, pillows and wall items.
Using items that complement each other within a room tends to create flow and balance, which are
up your room and ease the rest of
Stylish rooms often have a
likely to be the biggest item in your
centrepiece. It could be a view, a
lounge room.
artwork to name a few. The first
SYNERGY
first is usually the best way to size
room, for example, your lounge is
create amazing living spaces.
your home:
room, starting with the biggest item
item is generally the theme of the
IMPACT
king-sized bed, a fireplace or an
that could have a positive impact on
When deciding on the layout of a
your design process. The biggest
Many strategies exist to help you
Here are four interior decorating tips
BIGGEST FIRST
item to catch your eye as you enter the room is typically the centrepiece, but this does not limit you to one striking design asset per room. Finding the right balance between your focal point and accompanying elements is often the best way to create impact in a room.
fundamental attributes of stylish
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PAINT, PAINT, PAINT Paint is a renovation buzzword, and for a good reason. A layer of paint can completely change the colour palette and style of a room. This can be an effective solution if you need to rework a room to match your furniture or if you want a feature wall as your centrepiece.
DON’T SETTLE FOR AVERAGE 70% of homesellers settle for the first real estate agent they meet. Don’t settle, speak to a Century 21 agent today.
1300 24 21 21 C21.com.au/Obsessed Source: NAR Profile of Home Buyers and Sellers, 2017