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P U L S E
F E B R U A R Y
M A R K E T
C21
PUBLISHER Century 21 Australia Pty Ltd
CONTRIBUTORS Charles Tarbey Tim Lawless Tim Neary Chris Gray Bradley Beer Terri Scheer Landlord Insurance
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES
WELCOME TO THE
FEBRUARY 2019 ISSUE OF
C21 MARKET PULSE
Century 21 Australia (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 F E B R U A R Y
CHAIRMAN STATEMENT
02-03
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TAX DEDUCTIONS
Tips for buyers and sellers in 2019.
Uncover the tax benefits.
Century 21 Chairman, Charles Tarbey
BMT Tax Depreciation, Bradley Beer
NATIONAL DWELLING VALUES
04
PROPERTY INVESTMENT ADVICE
Australia’s housing market.
Top 5 tips for Landlords.
CoreLogic Head of Research, Tim Lawless
Terri Scheer Landlord Insurance
C21 BRAND EXPOSURE
05
C21 LIFESTYLE
C21, Seven deal to attract millions of viewers.
Four house moving tips that could help to
Real Estate Business Journalist, Tim Neary
simplify your move.
COMMERCIAL PROPERTY DEPRECIATION
06-07
Should you be worried about the negative gearing debate. Your Empire CEO, Chris Gray
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08-09
10-11
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C H A I R M A N STAT E ME N T
TIPS FOR BUYERS AND SELLERS IN 2019 B Y C H A R L E S T A R B E Y,
CHAIRMAN CENTURY 21 AUSTRALASIA
The Australian property market ended the year with a mixed bag of results that point to the diverse and complex nature of the current market. Corelogic results show that half of Australia’s capital cities recorded a decline in dwelling values over 2018, led by Sydney (-8.9%) and Melbourne (-7.0%). Perth (-4.7%) and Darwin (-1.5%) also recorded lower values while all other capital cities recorded an increase in values for the calendar year.
relative to the 2017 calendar year.
with added risks.
While I do not expect a housing market collapse in 2019, conditions may continue to weaken which may mean both buyers and sellers are looking for useful ways to
most prudent strategy and comes
Tighter lender conditions
“While I do not expect a housing market collapse in 2019, conditions may continue to weaken which may mean both buyers and sellers are looking for useful ways to get an edge in 2019.”
are currently catching many buyers out. Instead of securing finance before starting the buying process, many buyers are doing it the other way around. By securing finance
get an edge in 2019.
at the start of the process, buyers put themselves in a positon
BUYERS
to act quickly and this can lead to
Buyers should be conscious that
a more favourable outcome with
this current lull in the market may
agents and sellers.
Regardless of the diverse results, it
not last long and if they don’t act
would seem that the deteriorating
at some point, they could find
conditions in Australia’s largest
themselves in the same position
housing markets of Sydney and
they were prior to the recent
Melbourne, and a tighter lending
downturn. If they are buying for
environment, are having an effect
the long term, looking to save a few
on the rest of the nation with most
more thousand dollars by trying
regions recording weaker conditions
to time the market may not be the
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First home buyers have found it very difficult in recent years to access the market. There are now favourable market conditions for this group and many great opportunities. The generous incentives for first
home buyers remain on offer in
This scenario means that investors
ensure your property stands out in
many markets but no one really
should look to protect their income
what could be a crowded market.
knows how long they will be there
producing assets by trying to
for. Also, when credit conditions
secure good tenants. I have always
start to improve, first home buyers
believed that the risk of losing a
may once again be faced with stiff
good tenant over a $5 to $10 rent
competition for properties.
per week is not worth it. Landlords
These factors in combination lead me to believe that first home buyers would be wise to act decisively in 2019 while ensuring that they do not over extend themselves. Investors also have an array of opportunities currently available in the market. Some of these opportunities are in areas that they likely couldn’t have afforded in recent times. While conditions are currently favourable to investors, they should look to pay close attention to planned housing coming on line in their preferred markets. Many areas will experience an influx of new supply over the coming year and I anticipate that rental returns will fall in many of these markets, so investors would be wise to have contingency plans in place.
with good tenants should perhaps be looking to reward this group with things like free gardening or minor property improvements.
an agent that offers the lowest commission rate but I believe this tactic can be fraught with danger. I have always believed that if an agent can’t negotiate a decent commission rate with a vendor, he or she may not be best placed to negotiate the sale of a dwelling.
SELLERS
Agent selection is going to be
Sellers need to closely watch conditions in their local market and adjust their sales strategy and pricing expectations accordingly. In many markets, gone are the days where you can list a property and know it will be snapped up immediately. Your property has to be attractively priced and your sales strategy needs to be focused on garnering the largest amount of interest possible. This dynamic means that it is critical to meet with your agent regularly while constantly looking to refine your listing strategy to help
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Many people look to appoint
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incredibly important for sellers in 2019 and I encourage people in this group to diligently vet agents and look for indicators of performance in a local market, not activity. While market conditions are deteriorating and I suspect will continue to do so to at least to the end of the first half of 2019, property is still selling and buyers and sellers can achieve a positive result if they approach the process in strategic and diligent way.
N AT I O N A L DW E L L I N G VA L U E S
AUSTRALIA’S HOUSING MARKET 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
The latest CoreLogic Quarterly Auction Report found that combined capital city clearance rates dropped to just 43.6 per cent in the 3 months to December 2018, down from 53.6 per cent over the previous quarter and 62.3 per cent over the same period a year prior.
ending 7 October (49.5 per cent
year, when 32,408 homes were
across 1,817 auctions).
taken to auction.
Individual capital cities saw
In non-capital city markets, auction
a decline in clearance rates
volumes increased across all five
everywhere except Tasmania, which
regions over the December quarter
remained unchanged at 50 per
when compared to the previous
cent. The largest fall in clearance
quarter, but mirroring the combined
rates was seen across Canberra
city results, clearance rates have
(down -13.4 per cent from the
fallen over the same period too.
previous quarter), followed by Adelaide (-12.2 per cent), Perth (-11.9 per cent) and Melbourne (-11.2 per cent).
The lowest weekly the quarter was recorded over the week ending 16 December (40 per cent across 2,406 auctions), while
The largest fall in clearance rates was seen across Canberra (down -13.4 per cent from the previous quarter), followed by Adelaide (-12.2 per cent), Perth (-11.9 per cent) and Melbourne (-11.2 per cent).
the highest clearance rate was recorded over the week
increased over the December quarter with 25,894
region, down -18.8 per cent over (-17.3 per cent), Wollongong (-10.2 per cent), Gold Coast (-5.9 per cent) and the Sunshine Coast (-3.1 per cent). The Gold Coast region
homes taken to
was host to the highest number
auction across
of auctions over the 3 months to
the combined
December 2018 (616), followed by
capital cities
Geelong (579).
(up from 20,653 over the September quarter), but current volumes remain much lower
than the same period last
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rates was seen across the Hunter the quarter, followed by Geelong
Activity actually
clearance rate for
The largest fall in clearance
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C21 BRAND EXPOSURE
C21, SEVEN DEAL TO ATTRACT MILLIONS OF VIEWERS
B Y T I M N E A R Y,
AT R E A L E S TAT E B U S I N E S S
Century 21 has announced a sweeping, multiyear partnership with Seven West Media that will see the new look for the Century 21 brand, properties and agents promoted across several key media assets that attract millions of viewers and readers each month.
Chairman and owner of Century 21
“Century 21 expects the new
Australasia Charles Tarbey said the
partnership will directly generate
partnership is of immense strategic
leads for its offices, help to
value to the group.
further reposition and promote
“Seven West Media has an impressive array of complementary media assets that are well followed
homemaker brand, Home Beautiful will feature the modern Century 21 brand on the cover of the magazine and exclusive Century 21 property listings within it in 2019. Century 21 agents and branding will also feature prominently in the next highly anticipated season of House Rules that will see Jamie Durie appear on the television show for the first time. Century 21 has also been invited to contribute real estate insights on The Morning Show in 2019.
listings while growing social media followers across the network.
by buyers and sellers of real estate
“We are currently focused
in Australia.
on ensuring we leverage the
“It was important that our new branding and message was promoted to a large number
Australia’s fastest-growing
the new brand, attract buyers to
of people within this group, on
partnership to the full benefit for our offices and agents who couldn’t be more excited about its prospects.”
a consistent basis and across
Century 21 Australasia recently
Australia, in order to continue to
announced that it will be adopting
generate buzz around the new
a new logo and repositioning its
branding and to deliver our offices
brand. It said the motive is to
an advantage in the market.”
project a more modern image that
Mr Tarbey said he is “very confident” the partnership will help to achieve this outcome.
selected have a direct attraction for property buyers and sellers, renovators and Australians interested in lifestyle and property in general,” he said.
05
and offering. Last year Century 21’s rebranding campaign took out the top accolade for most innovative
“The media we have strategically
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aligns with the company’s vision
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marketing campaign at the Inman Awards in the United States. The story C21 Seven deal to attract millions of viewers appeared on Real Estate Business (REB). Article Link: https://www. realestatebusiness.com.au/ breaking-news/18209-c21seven-deal-to-attract-millionsof-viewers
N E G AT I V E G E A R I N G E X P L A I N E D
SHOULD YOU BE WORRIED ABOUT THE NEGATIVE GEARING DEBATE? B Y C H R I S G R A Y, C E O, YO U R E M P I R E
Every year the negative gearing debate resurfaces and 2019 is no different with the discussions about whether it should be removed attracting commentary from both political parties.
Like most people, I dislike paying tax and enjoy a good tax
most situations.
I don’t invest in property purely for tax purposes. Tax benefits are a bonus, not a major
Negative gearing affords investors a
motivation. I
tax concession for losses on rental
always assume
investment properties. Proposed
tax benefits might
changes could see these tax breaks
be taken out at any
reduced and negative gearing
time.
new housing.
money over the long term in
rebate cheque, but
investment
restricted to investments in
at a reasonable price, you’ll make
“One of the golden rules of investing is to never undertake any investment purely for tax purposes and property is no different.”
I’ve calculated that even without negative gearing, as long as property rises by two to three per cent over the long term, I will make money. It’s for this reason I choose to
be heavily invested.
I can’t change what the government
COULD NEGATIVE GEARING CAUSE PROPERTY PRICES TO CRASH?
decides to do with tax, so rather
Sure, anything is possible, but
SO, IS THE REMOVAL OF NEGATIVE GEARING SOMETHING YOU SHOULD BE WORRIED ABOUT?
than spend hours worrying about
I believe that if there’s a lack of
it and delaying my investing
property supply and increased
decisions, I just get on with life.
demand then prices will still rise.
One of the golden rules of
The cost of putting off the decision
Think back to when 10 per cent
to invest in property can be very
GST was introduced, everyone
high, so my advice is if you can
thought the world was coming to
afford to buy, buy now. If you buy
an end, but it didn’t and now we
investing is to never undertake any investment purely for tax purposes and property is no different.
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don’t think twice about it. The same happened in the UK and then it crept up to 20% without people even noticing. There’s talk that even if they do remove negative gearing then it’s only going to affect properties bought after that date and so that’s
ABOUT THE CONTRIBUTOR
even more reason to ignore the
Chris Gray is CEO of Your Empire, a buyer’s agency which builds property portfolios
debate and buy sooner.
for time-poor people – searching, negotiating, renovating and managing property
If you are worried about what might
on their behalf. Chris’s team buys 1-2 properties a week and often spends $5m+ a year renovating on others’ behalf, providing a unique insight into market conditions
happen, I suggest you concentrate
and buyer and seller sentiment. Chris is a qualified accountant, buyer’s agent and
on your numbers, work out a few
mortgage broker.
different scenarios based on rates,
For more information visit www.yourempire.com.au,
rents and growth and make your
www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire.
decision from there. Reality is often not nearly as bad as perception.
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C O M ME R C I A L P R O P E R T Y D E P R E C I AT I O N
UNCOVER THE TAX BENEFITS BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N
Does the idea of buying commercial property instead of renting your current business premises appeal to you? Or are you undecided whether to purchase a commercial investment over a residential property for your portfolio?
CLAIM TAX DEPRECIATION AND STILL OCCUPY THE PROPERTY Many investors buy commercial property in their own name or as part of a self-managed super fund or company trust and then lease the property back to the business they own. This enables the individual tax payer or super fund company, or trust to claim the tax depreciation allowance, which can be significant
It can be hard to understand the tax depreciation allowances
with commercial property. Here’s the great thing - it is totally legal.
OLDER COMMERCIAL BUILDINGS QUALIFY FOR THE BUILDING ALLOWANCE The building allowance refers to the decrease in value of the commercial property’s brickwork, mortar, concrete, etcetera. The date construction commenced, determines what building allowance you can claim. On non-residential properties the allowance is set at:
that are available for investors of commercial property over those found for residential properties. There are many rules which apply and the difference in depreciation found can vary significantly. By becoming more aware of commercial property depreciation, this can help you as an investor to
Date construction commenced
Claimable building allowance
20 July 1982 — 21 August 1984
2.5%
22 August 1984 — 15 September
4.0%
16 September 1987 — Onwards
2.5%
make an informed decision. Note: Traveller Accommodation, and Manufacturing properties do have different dates to those shown and can be claimed at 4% from 27 February 1992.
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turnover of less than $10 million.
CLAIMABLE ITEMS VARY BY INDUSTRY AND EFFECTIVE LIFE
During the 9th of May 2017 federal
Each year the ATO publishes a list
2018. In 2018, the federal budget
of what assets you can and can’t
proposed to extend the legislation
claim. Commercial property owners
once more and after a long delay
don’t have their own list, but some
between May and September, the
assets are claimed at different
extension of the legislation was
rates to residential properties. For
passed by the Senate on the 12th of
instance, carpets are claimed over
Septemeber 2018.
an eight year period in commercial and a ten year period in residential. There are also industry specific
budget, the instant asset write-off was extended until the 30th of June
THE TALLER THE BUILDING, THE MORE YOU CAN CLAIM
assets that the ATO has detailed for
Building height can play a role in
depreciation claims. For instance,
the amount of depreciation that
if you own a restaurant you will be
can be found for the owner of a
able to claim items specific to your
property. Taller structures tend
line of business.
to attract higher deductions due
BMT Tax Depreciation Rate Finder is an easy to use tool which can help you find out the effective life and depreciation rate for any commercial plant and equipment asset.
THE TAX BREAK HELPING SMALL BUSINESS OWNERS TO IMPROVE THEIR CASH FLOW In a move that will help boost cash flow for owners of small businesses, the Senate recently passed legislation to extend the $20,000 instant asset write-off to June 2019. Initially introduced in May 2015, the Australian government originally allowed small businesses with an agregated turnover less than $2 million to claim a $20,000 instant asset write-off. In March 2017, as part of Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016, the definition of a small business was extended and the $20,000 instant asset writeoff was extended to include those enterprises with an agregated
value of construction costs.
to the fact that there is greater capital works expenses involved in the construction of the building. Multi-storey buildings also often have common property assets such as lifts and fire services which can result in plant and equipment depreciation being available for the owner to claim. Some commercial properties may even include swimming pools, gyms, or even less obvious items like intercom systems. Overall, these plant and
Tax Depreciation help estimate the costs for you. A Quantity Surveyor is a qualified professional who specialises in building measurement and estimating the
equipment items translate to additional depreciable value for the property investor.
USE AN EXPERIENCED QUANTITY SURVEYOR The ATO recognises Quantity Surveyors as one of only a few
ABOUT THE CONTRIBUTOR
professions which possess the
Article provided by BMT Tax Depreciation. Bradley Beer
required construction costing skills
(B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive
to calculate the cost of items for the
Officer of BMT Tax Depreciation.
purposes of depreciation.
Please contact 1300 728 726 or visit:
If the original costs of construction
www.bmtqs.com.au for an Australia-wide service.
are unknown, have a qualified
https://www.bmtqs.com.au/
Quantity Surveyor, such as BMT
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LANDLORD ADVICE
TOP 5 TIPS FOR LANDLORDS BY TERRI SCHEER, LANDLORD INSURANCE
Property investment is a long-term game. Finding and financing a good property are just the initial steps. To succeed, you need to plan for all possible contingencies. Here are five tips on how to protect and grow your investments:
1. APPOINT AN EXPERT PROPERTY MANAGER
An expert property manager will
obvious. Less reliable tenants will
also be thoroughly versed in their
be filtered by the thorough vetting
responsibilities. This will alleviate
process conducted by the best
any concerns a landlord might
property managers.
have with regards to complying with regulation.
Once you’ve found good tenants, you need to keep them; you don’t
2. FIND AND RETAIN GOOD TENANTS You want reliable, long-term tenants that pay their rent on time and take care of your property. Securing responsible tenants will significantly reduce the financial
want your property to sit empty for long periods or risk taking on tenants who are less responsible. As an experienced landlord, you don’t want to pay more than you have to for the costs of advertising or vetting.
If you don’t have time and the
risks associated with investment
Quality tenants will expect your
right expertise, it’s wise to let an
property and make it less likely
property to be well maintained, so
agent manage your property. In
that you will have to endure the
ensure you have a sound budget for
addition to their fees being tax
time-consuming and potentially
maintenance and repair. Remember
deductible, a good agent will have
costly task of replacing
that a good tenant/landlord
a firm grasp on how much rent it
undesirable tenants.
relationship goes some way to
is acceptable to charge, be able to sort out maintenance issues promptly and cost-effectively, and arrange regular inspections of your property. The best agents will also be experienced in finding and scrutinising good tenants, conducting reference checks and ensuring they pay on time, thereby guaranteeing a reliable income stream.
Because of this, it is important not to skimp on advertising, and to make sure your listing is disseminated as widely as possible. You can make sure the right kind of tenants apply by ensuring the rental price is in line with similar properties in your area. This is another area where the benefit of a good property manager becomes
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retaining tenants, so keep the lines of communications open and consider your tenant’s requests.
3. KNOW YOUR RIGHTS AND YOUR TENANTS’ RIGHTS Be up-to-date on both your rights and your tenants’ rights so that you don’t unwittingly find yourself in breach of the law and can quickly resolve any issues that arise. The
rights and obligations of landlords
similar premises in similar areas, the
the interest cost and expenses of
and tenants are formalised through
length of time since the last rent
your investments, it’s prudent to
legislation passed at the state level.
increase, and what the tenant had
check whether you have adequate
All states will have something
been paying previously.
income protection insurance in case
similar to New South Wale’s Residential Tenancies Act of 2010, or Victoria’s 1997 Act. Tenancy laws in each state or territory are generally similar, but it is still important for landlords to familiarise themselves their own state’s regulations. It isn’t necessary to labour through the text of the act itself to do this; the rights and obligations they
you find yourself unable to work for
4. BE AWARE OF TAX BENEFITS TO WHICH YOU ARE ENTITLED There are many tax rules that must be followed in order to claim income and expenses properly on an investment property. You need to know what you can claim, what documents you need to provide and to have a good system for safeguarding these.
whatever reason. If you have an investment apartment, don’t assume that the body corporate insurance provides coverage for everything. While common areas like lifts, gardens, foyers, building wiring and so on will typically be covered, it is always important to check the policy the body corporate has purchased.
set out will be explained through
The Australian Tax Office’s
Some risks, such as liability
factsheets and guides published
website is a good starting point
within your apartment or units for
on each respective government
to understanding what you can
example, may not be covered.
website. Good examples include the
claim. However, your accountant
Consumer Affairs Victoria website
or tax agent will advise on issues
Insurance policies can be quite
and Queensland’s Residential
that relate to your specific
Tenancies Authority website but
circumstances. Ensure you
it’s important you find the relevant
understand all implications
document for the state in which
regarding negative and positively
your properties are located.
geared property, as well as capital
Common areas of potential conflict range from rental bonds, rental increases, rental arrears, repairs and maintenance to locks, security, access, privacy and end agreements. If a conflict cannot be resolved, the issue will go to your state’s civil and administrative tribunal. There will usually be fees associated with this. Queensland’s and Victoria’s civil and administrative tribunals offer good
gains tax.
complex and unintended gaps can occur in your coverage if the policy isn’t thorough enough. That’s why it’s wise to receive professional advice and undertake the necessary research prior to entering into new arrangements.
5. DON’T ASSUME YOU ARE COVERED FOR EVERYTHING In addition to building insurance, you will need landlord insurance
For more top tips and information on everything a landlord needs, see these handy resources from Terri Scheer.
to manage other risks associated with renting property. Landlord insurance can cover financial loss incurred from a variety of quarters, which includes, but is not limited to: water damage; the sudden death of a tenant; tenants who can’t pay
ABOUT THE CONTRIBUTOR
dispute reaches this stage.
rent due to financial hardship and
The information contained in this article is intended to
As with state legislation, tribunals
the property.
examples of what you may pay if a
will treat particular issues using methodologies that are similar across states. For instance, when a tribunal is deciding whether a rent increase is excessive, it will consider factors such as rent for
tenants who abscond from
be of a general nature only. Terri Scheer does not accept any legal responsibility for any loss incurred as a result of reliance upon it. Insurance issued by Vero Insurance.
Remember, under current tax laws, the cost of landlord insurance is tax deductible.
this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website
Also, if you are relying on part of your employment income to cover
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Read the Product Disclosure Statement before buying
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CENTURY 21
at www.terrischeer.com.au for a copy. https://www.terrischeer.com.au/
C21 LIFESTYLE
FOUR HOUSE MOVING TIPS THAT COULD HELP TO SIMPLIFY YOUR MOVE There is a lot involved in moving house – you have to organise, pack, clean and finally, move. And even though it may seem simple to put your belongings in boxes and relocate them, it is often a frustrating and overwhelming process.
PLAN YOUR NEW HOUSE
ESSENTIALS BOX
Planning where each item will go in
An essentials box is self-
your new house before you arrive
explanatory, simply set aside one
can be a great way to save time
box for your emergency essentials.
when unloading your items and
These items can range from
moving them inside. This method
toiletries, snacks, water, or even
also helps to prioritise items when
music for unpacking entertainment.
loading, which could spare you of any double handling upon arrival.
Many people make the mistake
DONATE ITEMS But there are steps you can take to help alleviate some of the stress and effort associated with moving. Here are four tips that could save you time or money during your next move:
SUITABLE TRANSPORT
of underestimating how many
Donating items is a great way to
things they own and therefore
lighten your load and declutter your
find themselves having to make
life before you move. It also helps
multiple trips. You can contact
those less fortunate, which is always
most good vehicle rental garages
a good thing.
and ask for their selection of vehicles. They will often be able to assist you in choosing the right truck. Alternatively, you can hire a removalist service to handle most of your heavy lifting. Regardless of your moving strategies or experience, it will never be an easy thing to move. But if you can recruit a few helpers and carefully plan your move, you can make it that little bit easier.
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