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PUBLISHER Century 21 Australia Pty Ltd
CONTRIBUTORS Chris Gray Tim Lawless Bradley Beer On The Move
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES Century 21 Australia (02) 8295 0600
WELCOME TO THE
JUNE 2020 ISSUE OF
C21 MARKET PULSE
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 U N E
WINDOW OF OPPORTUNITY
02-03
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MAXIMISE CASH FLOW
How long is the window of opportunity open for?
More important than ever to claim depreciation.
Your Empire CEO, Chris Gray
BMT Tax Depreciation, Bradley Beer
PROPERTY MARKET UPDATE
05
ECONOMICAL HEATING
Housing values edge lower in May, while transactions
Cost effective home heating.
partially recover.
On The Move
Corelogic Head of Research, Tim Lawless
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WINDOW OF OPPORTUNITY
HOW LONG IS THE WINDOW OF OPPORTUNITY OPEN FOR? B Y C H R I S G R A Y, C E O, YO U R E M P I R E
Chris Gray began his property investing journey when he was 22 years old. With only $35,000, he spent the next nine years learning about investing firsthand, and applying that knowledge to his own portfolio now worth over $15m. If you’ve been waiting for a dramatic drop in the property market, so you can buy the property you couldn’t afford a few months ago, you might need to get your socks on. The repercussions of COVID-19 are definitely not over and there will be more to come, but there’s many signs that it’s not going to be as bad
property experts around the world
early indications don’t show. In 2019
that reckon they can predict the
the market changed at 9am on
bottom of the property market, but
Monday morning after the election
even those in the know, can’t do it
and then within weeks and months,
with any great accuracy.
with prices rising higher and higher,
In our recent credit crunch in 2018 most people weren’t buying. Why
That could happen again now. Some
buy now they said, when the market
markets are already seeing more
is going to continue to fall. This
demand, especially as open homes
continued into 2019 and with the
are very keen to chat
still weren’t buying. Labour were
“Some markets are already seeing more demand, especially as open homes are more accessible and live auctions are back.”
talking about grandfathering negative gearing, which made logical sense to buy before, otherwise you would miss out.
to active buyers, but as they get busier, they’ll be focusing back on the vendors and you might not get your calls answered. We all know that
No one did
some markets may have bottomed
Many people will be waiting
There are millions of armchair
are more accessible and live auctions are back. Agents
upcoming election, they
as many people initially thought and out already.
most thought they had missed it.
there is more than one property market and not all
to see a few green shoots before
properties will react the same. There
entering the market, but often those
will be a number of markets that will
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continue to fall and a lot more pain to come. Most of it comes down to supply and demand – does the area you’re interested in have lots of properties on the market and how much demand is there from local buyers? Those areas where there is a large supply and a lack of buyers could well fall more and it could be a good 6, 12 or 18 months till they return. Think high rises, foreign buyers, international travel – these are variables that might take a while to return. Two months ago, health experts were talking about potentially hundreds of thousands of deaths in Australia from COVID-19, yet today we’re still under 100 and they’re talking about pubs and restaurants re-opening and many people going back to work. Having bought and invested in property for almost 30 years I’ve gone through a number of financial and health scares and they’ve all been labelled as one offs that we’ve never seen before. There’s no
ABOUT THE CONTRIBUTOR
doubt they have all been unique,
Chris Gray is CEO of Your Empire, a buyers’
but property has always continued
agency that buys homes and investments for
to survive and thrive even if it has
time-poor people – searching, negotiating, renovating and managing property on their
dipped down for a couple of years.
behalf. Chris has spent over 10 years as the host of ‘Your Property Empire’ on Sky News
I don’t want to play down the
Business channel, where he’s interviewed
seriousness of COVID-19 and the
various heads of property research
emotional and financial pain it’s
companies and major industry figures. Chris
caused, but there is always a way
is a qualified accountant, buyer’s agent and
out and there is always opportunity
mortgage broker. For more information visit
for those that search it out. Speak to
www.yourempire.com.au, www.chrisgray.com.au and follow Chris on
your advisers, keep a calm head and
Twitter: @ChrisGrayEmpire.
let logic make the decisions.
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P R O P E R T Y M A R K E T U P DAT E
HOUSING VALUES EDGE LOWER IN MAY, WHILE TRANSACTIONS PARTIALLY RECOVER According to the CoreLogic Home Value Index results for May, Australian dwelling values posted their first month-on-month decline since June last year. The national index was down 0.4% over the month, with five of the eight capital city regions recording a fall in values.
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
market has remained resilient to a
and borrower repayment holidays
material correction. With restrictive
will expire. In the absence of these
policies being progressively
policies, housing values could come
lifted or relaxed, the downwards
under some additional downwards
trajectory of housing values could
pressure if economic conditions
be milder than first expected.”
haven’t picked up towards the end of the year,” said Mr Lawless.
Across the state capitals, Melbourne’s housing market has
Although housing values are
posted the largest falls over the
currently slipping or stabilising,
month, down 0.9% in May, following
recent history implies most home
a 0.3% reduction in April. Values
owners have some level of buffer
were also down over the month
that will help protect against
in Perth (-0.6%), Sydney (-0.4%),
negative equity. National home
Brisbane (-0.1%) and Darwin
values remain 8.3% higher than they
The reduction in values through
(-1.6%), but rose in Adelaide
were a year ago, with Perth (-2.1%)
May comes as transaction activity
(+0.4%), Hobart (+0.8%) and
and Darwin (-2.6%) the only capital
in the market shows more positive
Canberra (+0.5%).
cities where values remain lower
signs. The CoreLogic estimate of sales activity bounced back by 18.5% in May after
Regional markets have been more resilient to value falls, with
a (revised) drop of 33% in April. CoreLogic head of research, Tim Lawless, said “Considering the weak economic
the combined
“Regional markets have been more resilient to value falls, with the combined regional index holding firm through May.”
conditions associated with the pandemic, a fall of less than half a percent in housing values over the month shows the
regional index holding firm through May. Although
than at the same time last year. The high annual capital gain is mostly attributable to the earlier growth trajectory of housing values across Sydney (+14.3%) and Melbourne (+11.7%), with the remaining capitals showing a more sustainable history of price rises.
some areas have avoided a reduction in values since March, every region
has lost momentum and the longer term outlook remains uncertain. “Eventually government stimulus will wind back
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Click here to read the full article
MAXIMISE CASH FLOW
MORE IMPORTANT THAN EVER TO CLAIM DEPRECIATION
BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N
The COVID-19 pandemic is placing financial strain on many property investors across the country. It’s more important than ever that investors do all they can to maximise their cash flow in these unprecedented times.
WHAT IS PROPERTY DEPRECIATION?
If your investment property was
Depreciation is the natural wear and
what depreciation deductions are
constructed before this date,
tear of a building and its assets over time. The Australian Taxation Office (ATO) allows owners of incomeproducing properties to claim this depreciation as a tax deduction. Depreciation can be claimed under two categories – capital works and plant and equipment.
Property depreciation can help all investors unlock hidden cash flow
you should still enquire to see available as often these buildings have undergone some form of renovation which can result in capital works deductions.
WHAT ARE PLANT AND EQUIPMENT DEDUCTIONS? Plant and equipment assets refer
WHAT ARE CAPITAL WORKS DEDUCTIONS?
to a property’s easily removable
deduction, meaning that investors
Capital works deductions relate to claims for the wear and tear that
Depreciation deductions for these
don’t need to spend money to be eligible to claim it.
occurs to the structure of a building
from their investment properties. Depreciation is a non-cash
If you have not yet claimed depreciation on your investment
and any fixed items like the walls, doors and driveways.
property, here is what you need
Owners of residential investment
to know.
properties that commenced construction after 15 September 1987 can claim capital works deductions at a rate of 2.5 per cent for forty years.
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fixtures and fittings like carpet, blinds and hot water systems. assets are calculated based on their individual effective life set by the ATO. Depreciation for plant and equipment assets was affected by 2017 legislation amendments. Under the current legislation, owners of second-hand residential properties who exchanged contracts after 7:30pm on 9 May
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2017 cannot claim deductions for previously used plant and equipment assets. Owners of second-hand properties can still claim depreciation for any brand new assets installed in the property once it’s income producing.
CAN I CLAIM DEPRECIATION FROM PREVIOUS YEARS?
WHAT HAPPENS IF I RENOVATE MY INVESTMENT PROPERTY?
BMT Tax Depreciation is the
If you renovate your investment
tax depreciation schedules for
property, it’s important to organise a tax depreciation schedule. When you renovate, you can claim any undeducted deductions for eligible assets in the year of removal through a process called scrapping.
Research shows that an average of
It’s important to note that if you live
80 per cent of investors fail to claim
in the property while renovating,
full depreciation deductions.
any newly installed plant and
If you have owned an investment property for a number of years and haven’t claimed depreciation, you
equipment assets will be classed as second-hand and cannot be claimed.
most trusted depreciation specialist in the industry, having completed 650,000 residential and commercial properties Australia wide. Currently, BMT continues to operate and complete site inspections. A detailed site inspection is essential to achieve the highest possible deductions while maintaining full ATO compliance. BMT are taking every precaution to ensure the health, safety and wellbeing of their clients and staff during site inspections.
could be missing out on thousands of dollars. A BMT Tax Depreciation Schedule allows you to adjust previous tax returns to ensure that you claim every dollar you’re entitled to.
HOW CAN I CLAIM DEPRECIATION ON MY INVESTMENT PROPERTY? The easiest and best way to claim depreciation on your rental property is to get a tax depreciation schedule prepared.
ABOUT THE CONTRIBUTOR 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.
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E C O N O M I C A L H E AT I N G
COST EFFECTIVE HOME HEATING BY ON THE MOVE Heating and/or cooling your home accounts for up to 40% of your household’s total energy use, making it a significant component of your monthly power bills.
• Reverse-cycle air conditioners are
With heating making up a
excellent for both individual
significant percentage of total
rooms and large spaces like
energy usage, reconsidering how
open-plan living areas, and their
you’re staying warm could be well
heat-pump technology makes
worth it. Whatever system you
them highly economical
decide on, make sure it’s the right
and efficient.
size for your home and your needs. Additionally, check you’re boosting
WHOLE HOUSE ELECTRIC HEATING
efficiency by measures such as
spending more than you need to
Ducted reverse-cycle air
a programmable thermostat.
n heating costs? We explore
conditioning is one type of whole-
different economical heating
house electric heating, and it uses
options for your home.
a compressor and ducted outlets
So how can your household stay warm and comfortable without
PORTABLE HEATERS The main types of portable heaters are electric heaters, gas heaters, and reverse-cycle air conditioners. • Portable electric heaters are cheaper to buy and excellent for dedicated smaller spaces
insulating and sealing your home, eliminating leaks in ducts and using
in individual rooms. These require a large initial outlay but the latest systems can be very economical to run, especially if you generate your own electricity from solar panels.
WHOLE HOUSE GAS HEATING
and shorter periods, as opposed
Ducted gas central heating offers
to whole-house heating all
another economical option for
day long.
whole house heating. These use
• Portable gas heaters can be highly cost efficient and offer good value for your initial outlay. They can run from either the gas connected to your home or bottled LPG.
an outdoor or underfloor gas furnace to generate heat and push it through ducting vents through your rooms. While installation requires an initial outlay, a ducted
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system might end up to be more
their customers a convenient and seamless move-in,
cost effective than two gas space
lights-on experience.
heaters in the long run.
https://www.onthemove.com.au/
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