J A N U A R Y
M A R K E T
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P U L S E
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PUBLISHER Century 21 Australia Pty Ltd
CONTRIBUTORS Tim Lawless Bradley Beer Eliot Hastie Chris Gray Terri Scheer Landlord Insurance
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES Century 21 Australia
WELCOME TO THE
JANUARY 2019 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 J A N U A R Y
NATIONAL DWELLING VALUES
02-03
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REASONS TO CONSIDER RENTVESTING
Australia’s housing market performance.
5 reasons to consider rentvesting this year.
CoreLogic Head of Research, Tim Lawless
Your Empire CEO, Chris Gray
HOW TO INCREASE YOUR CASH FLOW
04
PROPERTY DAMAGE FAQS.
Increase your cash flow by claiming depreciation.
All you need to know.
BMT Tax Depreciation, Bradley Beer
Terri Scheer Landlord Insurance
GLOBAL AWARD
05
C21 LIFESTYLE Tips for transforming a new house into a home.
Century 21 brings home global award. Real Estate Business Journalist, Eliot Hastie
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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 PERFORMANCE 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
Most regions of Australia recorded weaker housing market performance in 2018 relative to 2017.
national reading, most regions
are down a larger 6.7% since
around the country have reacted
peaking, while regional dwelling
to tighter credit conditions by
values have been more resilient to
recording weaker housing market
falls, down by 1.5%.
results relative to 2017. The two exceptions were regional Tasmania,
Four of the eight capital cities
where the pace of capital gains
recorded a decline in dwelling
was higher relative to 2017
values over the calendar year led
resulting in a nation
by Sydney (-8.9%) and Melbourne
leading 9.9% gain
(-7.0%), while values were also lower
in values over
across Perth (-4.7%) and Darwin
the 2018
(-1.5%). The remaining capital cities
calendar
recorded a rise in values, although
year, and
conditions weren’t as strong as 2017
Darwin,
with every capital city recording a
where the
weakening in the pace of growth
annual rate
or an acceleration in the rate of
of decline
decline over the year.
improved
According to CoreLogic head of research Tim Lawless, the broad weakening in housing market
Although Sydney and Melbourne recorded the weakest conditions, the peak to current declines are much less severe relative to Perth and Darwin where values
The December CoreLogic housing market results take national dwelling values down by a cumulative 5.2% since peaking in October 2017.
from -8.9% in
have been falling since mid-2014. Sydney values are now 11.1% lower relative to the July 2017 peak and
2017 to -1.5% in
Melbourne values
2018.”
are down 7.2% since
conditions in 2018 highlights that
The December CoreLogic
this slowdown goes well beyond
housing market results take
The downturn has been running
the correction in Sydney and
national dwelling values down by a
much longer in Perth and Darwin,
Melbourne. He said, “Although
cumulative 5.2% since peaking in
resulting in cumulative falls of 15.6%
Australia’s two largest cities are
October 2017.
and 24.5% respectively.
the primary drivers for the weaker
Values across the combined capitals
At the end of 2018, Sydney values
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peaking in November 2017.
were back to where they were in
growth territory over the year
The strongest capital city sub-
August 2016, while Melbourne
(+0.5%). In Sydney, upper quartile
regions were confined to Hobart,
values are back to February 2017
dwelling values are 10.0% lower
Canberra, Brisbane and Adelaide
levels. Perth values are back to
over the year, compared with a 6.8%
where housing prices are generally
levels last seen in March 2009
decline across the lower quartile of
more affordable relative to
and Darwin dwelling values are
the market.
household incomes (although
at October 2007 levels. Housing market conditions have also shown substantial differences across the broader valuation cohorts. The top quartile of the market, based on dwelling values, has underperformed relative to the lower quartile. Nationally, Mr Lawless said this trend can be explained by the weaker conditions in Sydney and Melbourne, where housing values remain substantially higher than other markets. Melbourne’s top quartile housing market has led the way with dwelling values down 11.2% over the year, while the lower quartile of the market has remained in subtle
Mr Lawless said, “The stronger performance across lower value properties likely reflects both affordability challenges and lending policies focused on reducing exposure to borrowers with high debt to income ratios. These
housing affordability has rapidly deteriorated across Hobart). Outside of Hobart, where dwelling values were 8.7% higher over the year, even the best performing regions returned a relatively mild annual growth rate.
factors, as well as incentives for first
Seven of the top ten sub-regions
home buyers in New South Wales
returned an annual gain of less than
and Victoria, are likely channeling
3%. Mr Lawless said, “Such a soft
market activity towards the lower
result amongst the best performing
range of dwelling values.”
areas highlights that housing market
“Overall, housing market conditions showed a diverse performance over the year, demonstrating how varied
weakness is broad-based and not just confined to Sydney and Melbourne.”
the market is based on location and price points.”
CHANGE IN DWELLING VALUES Index results as at 31st December 2018. CAPITAL CITY
MONTH
QUARTER
ANNUAL
TOTAL RETURN
MEDIAN VALUE
Sydney
-1.8%
-3.9%
-8.9%
-5.7%
$808,494
Melbourne
-1.5%
-3.2%
-7.0%
-3.8%
$645,123
Brisbane
-0.2%
-0.1%
0.2%
4.2%
$493,568
Adelaide
0.2%
0.5%
1.3%
5.8%
$434,924
Perth
-1.0%
-2.5%
-4.7%
-1.0%
$446,011
Hobart
0.4%
2.0%
8.7%
14.3%
$457,523
Darwin
-1.8%
-1.2%
-1.5%
3.9%
$416,149
Canberra
0.0%
0.6%
3.3%
8.0%
$601,275
NATIONAL
-1.1%
-2.3%
-4.8%
-1.2%
$532,327
Source: CoreLogic
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HOW TO INCREASE YOUR CASH FLOW
INCREASE YOUR CASH FLOW BY CLAIMING DEPRECIATION
BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N
The owners of any investment property that generates an income are eligible to claim significant taxation benefits.
asset,” said Mr Beer. So, what is depreciation, and how much of a difference can claiming it make to an investors available cash flow? Depreciation is a non-cash
Of all the tax deductions available to property investors, depreciation is the most often missed. According to Bradley Beer, the Chief Executive Officer of BMT Tax Depreciation, a staggering 80 per cent of property investors fail to take advantage of property depreciation and therefore miss out on thousands of dollars in their pockets. “On average, most property
deduction that The Australian Taxation Office (ATO) allows any owner of an investment property to claim due to the wear and tear of a building structure and its fixtures over time*. If you would like a free estimate of the depreciation deductions available for your investment property, simply contact
*Under new legislation outlined in the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 passed by Parliament on 15th November 2017, investors who exchange contracts on a second-hand residential property after 7:30pm on 9th May 2017 will no longer be able to claim depreciation on previously used plant and equipment assets. Investors can claim deductions on plant and equipment assets they purchase and directly incur the expense for. Investors who purchased prior to this date and those who purchase a brand new property will still be able to claim depreciation as they were previously. To learn more visit www.bmtqs. com.au/budget-2017 or read BMT’s comprehensive White Paper document at www.bmtqs.com.au/2017-budgetwhitepaper
BMT Tax Depreciation on 1300 728 726 today.
investors can claim between $5,000 and $10,000 in deductions in the first year for a residential
ABOUT THE CONTRIBUTOR
investment property. By simply
Article provided by BMT Tax Depreciation.
requesting a tax depreciation
Bradley Beer is the CEO of BMT Tax
schedule from a specialist Quantity
Depreciation. Please contact 1300 728 726
Surveyor, an investor may be
for an Australia-wide service.
able to turn a negative cash flow
https://www.bmtqs.com.au/
investment into a positively geared
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G L O B A L AWA R D
CENTURY 21 BRINGS HOME GLOBAL AWARD
BY ELIOT HASTIE, AT R E A L E S TAT E B U S I N E S S
Century 21 Real Estate, franchisor of the Century 21 brand, has received global recognition for its brand reinvention at the Inman Innovator Awards in the US.
continues to dynamically change
will provide our offices with a
and evolve, we’re constantly
competitive advantage in their local
challenged to progress and push
markets,” Mr Tarbey said.
the industry forward, which was a huge motivating factor behind this year’s rebranding campaign,” the CMO said.
to connect the new brand with
currently in the process of being
consumers.
updated after it was announced at their Australasia conference.
forward-thinking
Chairman and owner of Century 21 Australasia Charles Tarbey announced
individuals and companies in the industry. Chief Marketing Office for Century 21 Cara Whitley said that real estate was in a
“Connecting a brand in a positive way with consumers is a proven tactic that can both build brand equity and drive sales,” the chairman said.
state of flux and that was what prompted the reinvention by Century 21. “As the real estate industry
21 was connecting with the
Century 21 offices in Australasia are
for most innovative marketing recognises visionaries and
with how the new-look Century industry, and now they just needed
Century 21 took out the accolade campaign at the awards, which
Mr Tarbey said that he was pleased
the pending launch and said that the seven-figure marketing spend would leverage all
way with consumers is a proven tactic that can both build brand equity and drive sales,” the chairman said. The 2018 Inman Innovator Awards were announced at the Inman Connect conference in San Francisco and brought together over 4,000 agents, brokers, CEOs and other members of the industry.
types of media to promote the group’s new brand.
“We are confident that our upcoming marketing campaign is aspirational and powerful enough to do this and
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“Connecting a brand in a positive
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The story 3 Century 21 brings home global award on Real Estate Business (REB). Article Link: https://www.realestatebusiness.com.au/ breaking-news/17538-century-21-bringshome-global-award
REASONS TO CONSIDER RENTVESTING
5 REASONS TO CONSIDER RENTVESTING THIS YEAR B Y C H R I S G R A Y, C E O, YO U R E M P I R E
Rentvesting – renting where you want to live and buying where you can afford – is a great long-term wealth creation strategy, suitable for seasoned investors and new market entrants alike.
prices will generally increase faster than your ability to save, so it makes financial sense to enter the market somewhere affordable while renting elsewhere.
2. TREAT IT AS A BUSINESS If implemented correctly, rentvesting can provide long-term financial and lifestyle benefits, even better than living in your own
CHRIS GRAY’S ADVICE FOR ADOPTING A RENTING INVESTMENT STRATEGY:
home. For instance, if you own a $1 million property, but want to upgrade to a more expensive property, it would make more sense to keep your existing property,
With housing affordability an ongoing hurdle to home ownership
1. DO YOUR HOMEWORK
rent it out, then buy another $1 million property - rather than
in many Australian suburbs, it’s
If you’re considering adopting
buying a $2million home. Why? If
no surprise that rentvesting has
rentvesting to build a property
you receive approximately $800
become more popular in recent
portfolio, I would suggest you do
or $900 dollars a week for each of
years. In fact, rentvesting has
your homework. For rentvesting to
them, that’s a total $1,800 monthly
formed an integral part of my
be effective, you need to compare
income. That $1,800 a week rental
personal property investment
the rental returns and capital
income could then be used to rent a
strategy for the last 15 years. I’ve
growth predictions for a median-
$3-4million property for the buyer
not lived in my own home for many
priced investment property to
to live in themselves. Rent money is
years and don’t see myself doing
the relative rental returns and
only dead money if the equivalent
so in the foreseeable future - the
capital growth of a more expensive
funds are not reinvested elsewhere.
financial and lifestyle benefits are
property that you would ideally live
too great.
in. If the difference is in your favour,
For first home buyers especially,
then it can work.
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3. SEEK ADVICE FROM PROFESSIONALS
any investment, it is essential to
If you’re unsure about rentvesting,
removing fixed mindsets associated
consult an independent valuer. They can give you advice on how rentvesting can be used to build a property portfolio. Not only do they have a good understanding of the typical prices in your area, but will also be able to provide you with an unbiased assessment of a property’s true value.
4. CONCENTRATE ON THE NUMBERS
concentrate primarily on what the numbers say. That includes with renting from purchase decisions. In Australia, there is a perception that renting is for poor people; unlike other parts of the world, few high income earners want to go into their office and admit they rent, which is understandable. I have rented
5. BE OPEN-MINDED For rentvesting to be effective, you’ve got to like change. A fear of being unable to rent a property for a long period of time is a factor that holds many consumers back from renting. In most cases though, landlords are unlikely to evict good tenants and even if they do, it doesn’t necessarily have to be a negative - it can be an opportunity
multi-million dollar properties
to upgrade to a better property.
with 360-degree views of Sydney
If you’re thinking about rentvesting,
Harbour and still experienced renting stigma from owneroccupiers in the area. Being labelled
Many investors can fall into the
a ‘poor renter’ is a small price to
trap of making an emotional
pay to rent at a quarter of the price
purchase decision, preventing
others are paying to live in the
them from seeing the long-term
same area.
now could be the optimum time to trial it for yourself - it could give you the lifestyle you’ve always dreamt of, while setting you up for a profitable future.
financial benefits of an investment strategy like rentvesting. As with
ABOUT THE CONTRIBUTOR Chris Gray is CEO of Your Empire, a buyer’s 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 a week and often spends $5m+ a year renovating on others’ behalf, providing a unique insight into market conditions and buyer and seller sentiment. Chris hosts “Your Property Empire’ each Friday on Sky News Business channel, where he interviews various heads of property research companies and major industry figures. Chris is a qualified accountant, buyer’s agent and mortgage broker. For more information visit www.yourempire.com.au, www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire.
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PROPERTY DAMAGE FAQs
ALL YOU NEED TO KNOW BY TERRI SCHEER, LANDLORD INSURANCE
One of the unfortunate realities of investing in real estate is the damage that can occur to your property, and the unexpected expenses that arise as a result.
of protection can landlords
maliciously or out of spite. An
expect? This property damage
example of this is knowingly
FAQ highlights some of the most
painting a feature wall, or
common questions landlords have:
hammering a nail into the wall to hang a picture up – without
Q. WHAT IS TENANT RELATED DAMAGE?
permission.
1. Malicious damage refers to Even good tenants can accidentally damage your property, and whilst it’s not possible to prepare for every possible damage risk, it is possible to prepare yourself by being aware of what could eventuate. Furthermore, a good landlord’s insurance policy is an essential form of risk mitigation, as it helps ensure you’re not left out of pocket by thousands (or tens of thousands) of dollars due to someone else’s mistakes. What are some of the biggest real estate risks and what kind
damage to your property that your tenant or their guests purposefully cause, out of spite or malice. An example would be a tenant
Q. IS TENANT-RELATED DAMAGE COVERED UNDER STANDARD BUILDING AND CONTENTS INSURANCE POLICIES?
punching a hole through the wall or
A. Tenant-related damaged,
intentionally smashing a window.
categorised as malicious, accidental
2. Accidental damage refers to damage that your tenants have caused by mistake. They might spill red wine on the carpet during a dinner party, or accidentally drop a heavy object, which causes a crack in the tiles. 3. Deliberate damage is not accidental, but is not performed
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or deliberate, may not be covered under standard building and contents insurance. It is a good idea to carefully read over your policy paperwork to learn what you are covered for. A landlord’s policy will help ensure that you have protection for a range of damage claims, including malicious, accidental and deliberate events.
Q. DO STANDARD BUILDING AND CONTENTS POLICIES COVER WATER DAMAGE?
Q. IS THERE A WAY TO MINIMISE THE RISK OF PET DAMAGE?
A. Insurers may opt not to
A. The decision to allow tenants to
cover water damage in certain
keep pets at your property requires
circumstances, such as due to
much consideration. On one hand,
tenant accidents. It’s up to you as
allowing tenants with pets makes
the landlord to weigh up the risk
your property more desirable. On
and decide whether protection
the other, pets are more likely to
against flood, storm and general
cause damage, both inside the
water damage is important to you.
house and out.
If so, speak to your insurer so you’re 100% clear about what your policy covers and excludes.
Q. IS PET DAMAGE COVERED UNDER A LANDLORD’S POLICY? A. Because every policy varies, your
It’s also important to maintain a good, open and honest relationship with your tenant, as this will result in issues being discussed before it’s too late and tenants following your pet policy more closely.
If you do decide to allow pets, an
ABOUT THE CONTRIBUTOR
effective way of minimising the
The information contained in this article is intended
risk of pet damage is to enforce
to be of a general nature only. Terri Scheer does not
an agreement with the tenant that
accept any legal responsibility for any loss incurred
lays out rules for their pets. It may
as a result of reliance upon it. Insurance issued by
indicate that pets aren’t allowed inside or on carpeted areas, with these conditions written into the
Vero Insurance. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016
particular policy may not cover pet
lease.
damage. Before allowing pets inside
Be sure to conduct inspections if
for a copy.
you suspect that a pet is secretly
https://www.terrischeer.com.au/
your investment property, check with your insurer to confirm what coverage you have.
or visit our website at www.terrischeer.com.au
being housed at your property without permission.
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C21 LIFESTYLE
TIPS FOR TRANSFORMING A NEW HOUSE INTO A HOME If you have recently moved into a new house or apartment, it can take a few weeks until you are completely settled in. There are many new things you have to familiarise yourself with, including your new suburb, appliances, neighbours and spaces. Because of this, your new home probably feels more like a new
PERSONALITY
your home might begin to feel more
Often a good way to ease the
to unwind.
like a hotel room, making it difficult
adjustment is to personalise your spaces with items or furniture that have value or meaning to you. Collectables, travel souvenirs, family heirlooms and artworks are all great examples of items that can give a room a more personable feel.
furniture can add warmth and homeliness, and can be a great way to soothe the transition.
RUGS & BLANKETS Buying quality rugs for your tiles or
COMFORT
floorboards can make rooms more
house or a new apartment.
Your home should be the place you
Here are three touches that could
feel most comfortable and relaxed.
help transform your new house into
But if you focus too heavily on style
a home:
and impact when decorating, you may end up sacrificing your own comfort in the process. As a result,
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Filling your home with comfortable
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personable and inviting. They are nice to walk on and are natural air filters. Additionally, buying soft blankets for your living, lounge, rumpus and media rooms can make them more relaxing and cosy.