A U G U S T
M A R K E T
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P U L S E
C21
PUBLISHER Century 21 Australia Pty Ltd
CONTRIBUTORS Charles Tarbey Tim Lawless Eliot Haste Chris Gray Bradley Beer Terri Scheer Insurance
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES
WELCOME TO
THE AUGUST 2018 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 A U G U S T
CHAIRMAN STATEMENT
02-03
2 0 1 8
MAKE THE MOST OF TAX TIME
Is it time to panic?
Smart tax tips for the new financial year.
Century 21 Chairman, Charles Tarbey
BMT Tax Depreciation, Bradley Beer.
GLOBAL AWARD FOR CENTURY 21
04
EVICTING TENANTS
C21 brings home global award.
How and when to evict tenants.
Real Estate Business Journalist, Eliot Hastie
Terri Scheer Landlord Insurance.
HOUSING DOWNTURN
05
ENHANCE SPACE OF SMALL BACKYARDS Making the most of a small backyard.
Housing downturn gathers momentum in July. Corelogic Head of Research, Tim Lawless
REASONS TO CONSIDER RENTVESTING
06-07
Five reasons to consider rentvesting this year. Your Empire CEO, Chris Gray.
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C H A I R M A N STAT E ME N T
IS IT TIME TO PANIC? B Y C H A R L E S T A R B E Y,
CHAIRMAN CENTURY 21 AUSTRALASIA
Many Australians might have become quite nervous about the property market of late. While it can be difficult to predict the future, it is often helpful to step back and view the market in context. Sydney recently posted the largest
and look at the market in context.
markets of Sydney and Melbourne
annual fall in house prices since
Firstly, while the market posted a
have been pulling the market down
the GFC and in July, Melbourne led
1.6 per cent decline in capital city
lately, many other regions are
the country in terms of declining
values over the past twelve months,
performing well or very well.
values - recording a near one per
CoreLogic reports that values are
cent decline.
still an incredible 31 per
Negative media headlines are likely concerning the public and leading to a type of self-fulfilling prophecy when it comes to negative housing sentiment. The reverse can also be true, with positive headlines during boom times often creating a ‘fear of missing out’ buying environment. Common questions I hear at the moment are: “Is this the start of crash?” “Should I rush to sell now?” “How far will the market fall?”. While it can be dangerous to try to predict the future, I thought it might be helpful to take a step back
On an annual basis, Brisbane (+1.2%), Adelaide
cent higher than they
(+0.7%) and
were five years
Canberra (+2.4%)
ago. So while
“...CoreLogic reports that values are still an incredible 31 per cent higher than they were five years ago.”
the market has lost some momentum of late, in this context, recent falls may not be as
recorded price increases in their respective markets. Some are arguing that the
dramatic for the
Perth property
market as many are
market may have hit the
saying. The second interesting point worth noting about the market is that while Australia’s largest property
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have all
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bottom and green shoots are starting to appear.
Hobart has recorded an incredible
While I do not expect that spring
I don’t believe that the current
11.4 per cent increase in prices over
will deliver incredible growth
slowdown in the market is a
the previous year and led the nation
statistics like it has in previous
precursor to a property market
in terms of growth over the recent
years, it still may provide us with
crash. In fact, a slight downturn in
quarter.
a better understanding of how the
prices, or more moderate growth
market is truly travelling.
levels, could be a good thing for
While many are right to be
the market over the medium to long
concerned about the slowdown in
I often say that real estate is a great
the larger markets, there remains
place to be if you don’t have to sell
‘markets within markets’ in Australia
and this may be especially true in
My preference has always been
and to say that the entire market
this market. Long term investors
for the market to achieve modest
is experiencing dramatic price
often reap incredible rewards by
price growth. In my experience, this
declines is inaccurate.
riding out different market cycles
type of scenario often creates more
and consistently building their
sustainable markets which can
portfolios with high quality assets.
benefit all property owners.
Lastly, we are in a traditional slow winter real estate season. Auction clearance rates are falling in many
Due to the ongoing health of the
markets and a lot buyers and sellers
Australian economy and the low
have chosen to sit on the sidelines
interest rate environment,
until spring.
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term.
G L O B A L AWA R D F O R C E N T U R Y 21
CENTURY 21 BRINGS HOME GLOBAL AWARD
B Y T I M N E A R Y, JOURNALIST 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, recently received global recognition for its brand reinvention at the Inman Innovator Awards in the US. Century 21 took out the accolade for most innovative marketing campaign at the awards, which recognises visionaries and forwardthinking individuals and companies in the industry. “As the real estate industry continues to dynamically change and evolve, we’re constantly
the pending launch and said that
tactic that can both build brand
the seven-figure marketing spend
equity and drive sales,” the
would leverage all types of media to
chairman said.
promote the group’s new brand.
The 2018 Inman Innovator Awards
“We are confident that our
were announced at the Inman
upcoming marketing campaign is
Connect conference in San
aspirational and powerful enough to
Francisco last week and brought
do this and will provide our offices
together over 4,000 agents,
with a competitive advantage in
brokers, CEOs and other members
their local markets,” Mr Tarbey said.
of the industry.The story Century
Mr Tarbey said that he was pleased with how the new-look Century 21 was connecting with the
21 brings home global award first appeared on Real Estate Business (REB).
industry, and now they just needed to connect the new brand with consumers. “Connecting a brand in a positive way with consumers is a proven
challenged to progress and push the industry forward, which was a huge motivating factor behind this year’s rebranding campaign,” the CMO said. Century 21 offices in Australasia are currently in the process of being updated after it was announced at their
The story Century 21 bring home global award, first appeared on Real Estate Business (REB).
Australasia conference earlier this year.
Article Link: https://www.realestatebusiness. com.au/breaking-news/17538century-21-brings-home-globalaward
Chairman and owner of Century 21 Australasia Charles Tarbey announced
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HOUSING DOWNTURN
HOUSING DOWNTURN GATHERS MOMENTUM IN JULY
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 Corelogic July home value results confirmed that national dwelling values continued their weak run with both capital city and regional dwellings values trending lower over the past three months. National dwelling values slipped 0.6% over the month to be down 0.9% over the rolling quarter and 1.6% lower over the past twelve months; the largest annual fall since August 2012. .
decline since September 2011 and
were down 1.8% over the past three
the rolling quarterly change, at
months, followed by Perth (-1.5%)
-0.9% hasn’t been this low since
and Sydney (-1.1%). Melbourne’s
January 2012. Five of the eight
decline phase commenced five
capital cities saw values slip lower
months later than Sydney’s, with the
over the past three months and
market peaking in November last
trends across the regional housing
year. Since that time, Melbourne
markets, where conditions have
dwelling values have fallen by
generally been more resilient to
2.9%, while in Sydney, where values
falls, have also turned negative.
peaked twelve months ago, the
Dwelling values were down 0.2% across the combined regionals
market is down 5.4%. Even the Hobart market, where the annual pace of
index over the three
capital gains has
months ending July, driven by falls
“Since peaking in September last year, the Australian housing market has recorded a cumulative 1.9% fall in value...”
across regional
held in double digit growth
Since peaking in September last
NSW (-0.2%),
year, the Australian housing market
regional Qld
has recorded a cumulative 1.9% fall
(-0.6%) and
in value; a relatively mild downturn
regional WA
to date considering values remain
(-3.5%). While
31% higher than they were five
three of the
years ago. According to CoreLogic
seven ‘rest of
head of research Tim Lawless, the
state’ regions saw
weakness in dwelling values is being
a fall in values over
driven by the long running declines
the three month period,
in Perth and Darwin along with an
the pace of growth across the
still strong but the slowest annual
acceleration in the rate of decline
remaining regional areas has clearly
growth rate since February 2017.
across Sydney and Melbourne and
decelerated, contributing to the
slowing growth rates across most of
overall softer result.
the remaining regions.
January 2017, is starting to slow down. Dwelling values were steady over the month and
the annual rate of growth slowed to 11.5%;
Across the capital cities, Melbourne
The month of July saw the housing
has been leading the downturn,
downturn gather some momentum;
with the quarterly rate of decline
on a national basis, the 0.6% month
outpacing Sydney since May this
on month fall was the largest
year. Melbourne dwelling values
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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. With housing affordability an
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,
CHRIS GRAY’S ADVICE FOR ADOPTING A RENTING INVESTMENT STRATEGY:
even better than living in your own home. For instance, if you own a $1 million property, but want to upgrade to a more expensive property, it would make more sense
1. DO YOUR HOMEWORK
to keep your existing property, rent it out, then buy another $1
ongoing hurdle to home ownership
If you’re considering adopting
million property - rather than
in many Australian suburbs, it’s
rentvesting to build a property
buying a $2million home. Why? If
no surprise that rentvesting has
portfolio, I would suggest you do
you receive approximately $800
become more popular in recent
your homework. For rentvesting to
or $900 dollars a week for each of
years. In fact, rentvesting has
be effective, you need to compare
them, that’s a total $1,800 monthly
formed an integral part of my
the rental returns and capital
income. That $1,800 a week rental
personal property investment
growth predictions for a median-
income could then be used to rent a
strategy for the last 15 years. I’ve
priced investment property to
$3-4million property for the buyer
not lived in my own home for many
the relative rental returns and
to live in themselves. Rent money is
years and don’t see myself doing
capital growth of a more expensive
only dead money if the equivalent
so in the foreseeable future - the
property that you would ideally live
funds are not reinvested elsewhere.
financial and lifestyle benefits are
in. If the difference is in your favour,
too great.
then it can work.
For first home buyers especially, prices will generally increase faster
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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 same
them from seeing the long-term
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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MAKE THE MOST OF TAX TIME
SMART TAX TIPS FOR THE NEW FINANCIAL YEAR BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N For most people, a new financial year means time to prepare an income tax return.
financial year the time to do so. They’ll be able to assist in reviewing the performance of your investments and advise on whether you should set new goals or adjust
They’ll lodge their return, hopefully
your current investment strategy.
get a refund (or maybe have to pay
It’s also a great way to get a holistic
some extra tax) and then forget
view of your finances, which can be
about it until next tax time rolls
hard to do on your own.
around.
A good accountant or financial
For property investors, it has added
advisor will also ensure you’re
meaning. It’s a great time to take
claiming everything you’re entitled
stock of how your investment is
to as an investor. Speaking of
performing and set some things in
which....
average of $5,000-10,000 in deductions in the first financial year alone, it’s important to take advantage of these deductions if you want success as an investor. Combined with all the other deductions you’re entitled to for your investment property, such as repairs and property management fees, these deductions really do add up and shouldn’t be overlooked. Visit BMT’s tax depreciation calculator for an estimate of the deductions you may be entitled to.
place to ensure you’re in an even better position next tax time.
HERE ARE FIVE SMART TAX TIPS FOR THIS NEW FINANCIAL YEAR: 1. VISIT YOUR FINANCIAL ADVISOR If you haven’t visited your financial advisor in a while, make this
2. MAKE SURE YOU’RE CLAIMING ALL THE DEDUCTIONS YOU’RE ENTITLED TO As a property investor you’re
3. BE SMART WITH RENOVATIONS Are you planning on renovating your investment property in some form this coming year?
entitled to a range of tax
If so, you should be smart about
deductions, one of which is
it and realise that the assets you
depreciation.
choose can maximise future
Considering depreciation often sees residential investors get an
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deductions. Selecting which assets to replace
during a renovation can make a
Accurate record keeping is
difference to future deductions.
essential for investors – it’s a good
This is because each asset’s rate of
idea to jot down conversations
depreciation is calculated based on
you’ve had and agreements you’ve
its individual effective life.
made with your property manager
For example, deductions available in the first full year depreciation
or with your tenant if you selfmanage your property.
claim for carpets, floating timber
This is particularly important for
floors and tiles differ.
owners of holiday rentals, who need
You can use BMT’s depreciation rate finder to calculate the effective life and depreciation rate for various plant and equipment assets. Furthermore, if you’re planning a renovation this year, you should contact a specialist quantity surveyor before starting work. This is important during the removal or demolition of any existing structure or fixture onsite that would have been eligible to claim deductions for depreciation (division 40) or capital works deduction (division 43). These removed and scrapped assets could entitle the owner to additional claims. An updated tax depreciation schedule may be required after a renovation to capture all newly installed plant and equipment assets or capital works expenditure.
4. KEEP ACCURATE RECORDS AND RECEIPTS Your accountant would have told
to have accurate records of exactly how many days their property was available for rent in the past year to make legal claims.
5. CONSIDER HOW YOU CAN RE-INVEST YOUR TAX RETURN There’s no doubt that the best part of tax time is getting a tidy tax return. While it’s tempting to put that extra cash towards a holiday, a car or even put it into your savings, as an investor you should consider if there are better ways you can use this extra cash. For example, you could choose to reinvest this in shares, put it towards a deposit on a new investment property to grow your portfolio, or use to it renovate or update your existing investment property, which could result in a higher weekly rent and increase the
*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 secondhand 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-budget-whitepaper
overall value of the property.
you time and time again to keep receipts of things you need to claim. This advice still stands. One exception to this is if you’re ordering a tax depreciation
ABOUT THE CONTRIBUTOR
schedule from BMT. In this case
Article provided by BMT Tax Depreciation.
you don’t need receipts for work
Bradley Beer is the CEO of BMT Tax
completed or new assets installed
Depreciation. Please contact 1300 728 726
– this is what our site inspections
for an Australia-wide service.
are for.
https://www.bmtqs.com.au/
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EVICTING TENANTS
HOW AND WHEN TO EVICT TENANTS BY TERRI SCHEER LANDLORD INSURANCE It’s a worst case scenario but there may come a time when a landlord needs to evict tenants from their rental property. There are a number of reasons for a landlord or property manager to
REASONS FOR EVICTION
ISSUING NOTICES
Landlords need to have a legal and
Before you can evict tenants, the
valid reason to evict tenants.
correct notices need to be delivered
The following situations could constitute a breach of lease agreement and warrant evicting your tenants: • Failure to pay rent after
is due to them breaching the terms
• Consistently late rental
of their lease agreement.
payments.
If an agreement cannot be reached,
• Malicious damage caused to
and the tenant will not leave of their
step is eviction. It’s important to refer to your state’s residential tenancy authority before evicting tenants as the rules can differ from state-to-state.
the opportunity to remedy any issues. Notice types and periods can differ
evict tenants however, generally this
own accord, the unfortunate next
to them and the tenant must have
receiving reminder notices.
the property.
from state-to-state. The reason for eviction can also impact how much notice is to be given. For example, in most states tenants must be served a Notice to Remedy if they haven’t paid their rent. They will be given 14 days to make the
• Using the property for
payment.
Only at the end of that period, and
illegal purposes, such as drug
manufacturing.
if the rent hasn’t been paid, can the
• Being a nuisance to neighbours.
landlord issue an eviction notice.
• Breach of any other obligation
Some reasons to evict tenants
written in the lease agreement.
Landlords should note that there may be grounds for a tenant to appeal these reasons for eviction, including age, health, and lack of alternate accommodation.
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require longer notice periods than others. Breaches of lease agreement generally only required 14 days’ notice. Meanwhile, landlords who sell their property and need it vacated must give tenants 30 days’ notice for ceasing their lease.
EVICTING THE TENANT After all notices have been
•
delivered, to end the lease and evict tenants, you need to provide them with a termination notice. The termination notice must: • •
Be in writing. Be signed and dated by the property manager or landlord / property owner.
•
Be properly addressed to the tenant with correct, legal name.
•
Where appropriate, give the grounds or reason for the notice.
•
Be sure to keep a copy of this notice as proof of evicting the tenants.
When evicting tenants, it’s important to follow the correct steps. Failing to do so could result in a landlord being taken to court or
ABOUT THE CONTRIBUTOR The information contained in this article is intended to be of a general nature only. Terri Scheer does not accept any legal responsibility for any loss incurred
tenancy tribunal, where they could
as a result of reliance upon it. Insurance issued by
be ordered to pay compensation.
Vero Insurance. Read the Product Disclosure Statement before buying this insurance and consider whether it is
Give the day on which the lease
right for you. Contact Terri Scheer on 1800 804 016
agreement is terminated and by
or visit our website at www.terrischeer.com.au
which date the tenant is required
for a copy.
to vacate.
https://www.terrischeer.com.au/
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E N H A N C E SPAC E O F S M A L L BAC K YA R D S
MAKING THE MOST OF A SMALL BACKYARD Many Australians love their backyards, using the space to entertain, play outdoors with the family and to enjoy the enviable Australian climate. Even if your backyard is on the smaller side, it is still possible to create a spacious impression. Here are some simple tips to make a small outdoor area more functional or enhance the space in preparation
backyard into a small area. Work out
so try not to fill your backyard with
what features are important, what
too much furniture. Choose pieces
you will use most and where they
wisely, such as folding chairs or
will best fit.
extendable tables that are stylish as well as functional.
HANGING GARDENS Rather than spreading out, consider spreading gardens up and down your fences and walls. Colourful
When choosing material for items
flowers, vines or even herbs planted
such as pavers, decking or outdoor
in hanging pots or baskets can add
paint, consider embracing lighter
the feel of greenery to your outdoor
colour schemes to create the
areas without taking up too much
impression of a more spacious
valuable room.
area. Sometimes, it may also help to continue indoor colour schemes
for sale.
PRIORITISING FEATURES It is important to carefully plan your space before you dive head first into a renovation. Don’t attempt to cram all the typical features of a
CHOOSING THE RIGHT COLOURS
and decorative styles into the
STREAMLINE YOUR FURNITURE
outdoor area, creating a seamless transition into what feels like one
Avoid choosing large or bulky outdoor furniture and instead opt for a more streamlined look. Clutter should be avoided in a small space,
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large space.
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.
C21.com.au | C21.co.nz Source: NAR Profile of Home Buyers and Sellers, 2017