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PUBLISHER Century 21 Australia Pty Ltd
CONTRIBUTORS Chris Gray Tim Lawless Connectnow SaleFunder Terri Scheer
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES Century 21 Australia (02) 8295 0600
WELCOME TO THE
JUNE 2021 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
PROPERTY SHORT FALL TIPS
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MOVING TIPS
How do you cash flow a property short fall?
Why hiring removalists is a good move.
Your Empire CEO, Chris Gray
Connectnow
PROPERTY MARKET UPDATE
05
FAMILY FRIENDLY PROPERTIES
Housing boom rolls on with values lifting another
Family friendly properties.
2.2% in May.
Terri Scheer, Insurance Distribution Channel Manager,
CoreLogic Head of Research, Tim Lawless
Sarah Barton
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PROPERTY SHORT FALL TIPS
HOW DO YOU CASH FLOW A PROPERTY SHORT FALL?
B Y C H R I S G R A Y, C E O, YO U R E M P I R E
When you buy an investment property in Australia and finance it with an 80% - 100% mortgage, the chances are, there will be a negative difference between the rent you collect and the mortgage payments and other expenses of owning it. So how can you own one or multiple properties without that shortfall affecting your lifestyle too much? In 2021, we’ve got it about as good
The key to cash flowing this loss
to understand the often contrarian
as it gets from a property cash
over the long term really comes
philosophies and mindsets and then
flow perspective. When I came
from being able to pull the equity
adapt it to your situation. For those
to Australia in the late 1990’s
out by refinancing and using that to
without a high disposable income,
things were very different. Inner
pay the difference.
the strategy might be to buy further
city rents were around 5%, but mortgages were around 7% – 8%, meaning that a property could be costing you about 2% – 4%. That was a whopping $20k - $40k on a $1m property before tax and depreciation, but luckily properties only cost $300-400k in those days and so it might have only been $5k - $10k. Many investors are whining about the decreasing rents these days, but it’s the difference between the rent and the mortgage that counts. Many rents are now down to 3%, but so are mortgages, if not even less and so a property might be costing you either nothing or about 1% which is only $10k on a $1m mortgage.
So, I think of a property costing me say $10k - $20k a year but going up by $50k - $100k over the long term. If I can borrow an extra $50k
out of town where the properties are cash flow positive. They might not grow by as much, but at least they don’t drain your wages.
from the equity, that will help me
When I wrote my Effortless Empire
cash flow the property for
book in 2008, the examples I used
2.5 - 5 years.
were based on 4-5% rent and 7-9%
In the good old days of low doc loans, you could just tick a box to say you can afford the extra repayments, whereas these days they do want to prove that you can service it from rent and from your wages. So, if someone is on $50k, there will be a limit of how much the bank will lend them, hence that’s why it’s more a high-income earner strategy especially if you want to buy multiple inner-city
mortgage i.e., a 2-3% gross loss on a $500k property. In 2017 I republished the book with the same words, but I changed the examples to $1m as I knew it was very hard to buy at $500k. However, I didn’t change the interest rate examples. I thought if it works at 4-5% rent and 7-9% mortgage, then it would definitely work with a 3-4% rent and 2-3% mortgage i.e., a 1% gross profit.
But what if you own, or want to own,
properties where the rent doesn’t
A strategy like this is definitely not
5 properties? That’s still $50k you’ll
cover the mortgage.
for everyone and if you walk into a
need to find from your wages to pay the shortfall.
You don’t need to follow the strategy 100% - the main idea is
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high street bank and say I want to cash flow my property losses by
capitalising the interest and using my equity they’ll show you the door pretty quickly. It’s not a common mindset to have personally, but in a business it’s normal – i.e., using your balance sheet to provide working capital to fund a business in the short term. Many mortgage brokers are fairly used to this strategy with multiple propertyowning investors as they know that in time, properties rise and so do rents and within a property cycle that property can then turn positive cash flow. Whether or not this strategy is for you, try and be open to different ways of thinking and then, with the aid of your professional team of
ABOUT THE CONTRIBUTOR
advisers, choose which is the best
Chris Gray is CEO of Your Empire, a buyers’
way forward for you.
agency that buys homes and investments for time-poor professionals – searching, negotiating, renovating and managing property on their behalf. Chris has spent over 10 years as the host of ‘Your Property Empire’ on Sky News Business channel, where he’s interviewed various heads of property research companies and major industry figures. Chris is a qualified accountant, buyers’ agent and mortgage broker. For more information, visit www.yourempire.com.au and follow Chris on
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Facebook: @ChrisGraySydney CENTURY 21
Visit: C21.com.au
P R O P E R T Y M A R K E T U P DAT E
HOUSING BOOM ROLLS ON WITH VALUES LIFTING ANOTHER 2.2% IN MAY Housing markets around Australia continued to surge in May with CoreLogic’s national Home Value Index up 2.2% over the month.
BY T I M L AW L E S S , H E A D O F R E S E A R C H , CO R E LO G I C
compared with a 2.0% rise across
rate of price appreciation across
the combined regional areas.
most of the capital cities, whereas
Across the capital cities, the monthly change in dwelling values ranged from a 1.1% rise in Perth
early in the growth cycle it was the most affordable end of the market that was the strongest.
through to a 3.2% jump in Hobart.
“From a geographic perspective, it
Across the non-capital city regions,
was the smaller capital cities that
The rise in May was a stronger
conditions were more diverse.
led the housing market out of the
result compared with April (1.8%),
Regional NSW led monthly gains
COVID slump, but now Sydney has
but weaker than the 32-year high
(2.5%), while values in regional WA
risen through the ranks to record
recorded in March when values
had the weakest result (-0.1%).
the largest capital gain over the past
surged 2.8%.
Mr Lawless reaffirmed the
three months with values up 9.3%.”
CoreLogic’s research director, Tim
fundamentals driving strength
Although housing values are now
Lawless, observes that growth
in the housing market remain
rising the fastest once again in
conditions remained broad based
in place. “The combination of
Sydney, at least in trend terms,
both geographically and across
improving economic conditions
the annual growth rate is generally
the housing types and valuation
and low interest rates is continuing
higher across the smaller capitals,
segments.
to support consumer confidence
as well as Regional New South
which, in turn has created
Wales and Regional Tasmania.
persistently strong demand
Darwin cracked the 20% annual
for housing. At the same time,
growth barrier in May, with values
advertised supply remains well
now 20.3% higher over the past 12
below average. This imbalance
months. For Darwin dwellings, this is
between demand and supply
the strongest annual gain on record.
is continuing to create urgency
Housing values across Regional
amongst buyers, contributing to
New South Wales are up 18.6%
the upwards pressure on housing
while in Regional Tasmania values
prices.
are 18.1% higher.
“Values were up by more than 1% across every capital city over the month, with both house and unit values lifting across the board. Of the 334 SA3 sub-regions analysed by CoreLogic, 97% have recorded a lift in housing values over the past three months. Such a synchronised upswing is an absolute rarity across Australia’s diverse array of housing markets.” For the second time in three months, growth conditions in capital city home values outpaced
“Despite the consistently strong headline results, the underlying trends have shifted over the past year,” Mr Lawless said.
the regional markets. The combined
“The most expensive end of the
capital city index rose 2.3% in May
market is now driving the highest
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Click here to read the full article
MOVING TIPS
WHY HIRING REMOVALISTS IS A GOOD MOVE Moving house can be costly, so it’s only natural you want to save money where you can. However, hiring a removal company is one expense you shouldn’t skimp on. Here’s why hiring removalists will help save you time, money, and hassle.
BY CONNECTNOW
pianos. And if necessary, they will disassemble any furniture so it’s easy to transport to your new home. You can even hire reusable crates and purchase packing materials like bubble wrap, tape, and boxes directly from them too.
get the job done faster and might save you a trip to the physio! They know what order to move your stuff, how best to stack it in the truck, and move it all into your new place more efficiently.
belongings, not damage them. They the best way to transport and store protected. Plus, they’re insured and even offer extra cover to make sure you’re compensated should anything go wrong.
4. BE SPECIFIC WITH YOUR REQUIREMENTS
services, like electricity and gas connections, all in one phone call with connectnow. For further information, visit www.connectnow.com.au or call 1300 554 323.
ABOUT THE CONTRIBUTOR
charge by an hourly rate, make sure
service that helps make moving easier for
you clearly detail what you want
Australians by sorting their electricity,
in each room and provide that
heavier items like wardrobes or
organising your other essential
Connectnow is a free* utility connections
Removalists have a range of trucks
equipment to move it all, especially
removalists do the work for you. You
As most removalist companies
them to do. Itemise all furniture,
your possessions and have the right
they’ll literally take a weight off
can get a removalist quote when
that their job is to handle your
2. THEY'VE GOT THE GEAR and vans available to suit the size of
get a professional on board,
A good removalist understands
your items to make sure they’re
to lift and stack safely, which helps
times in your life. But once you
focus on other things and let your
Besides their brawn, removalists
easier. They know the right ways
home is one of the most stressful
3. YOU'RE COVERED
1. EXPERTS IN THEIR FIELD
expertise to make your move a lot
We’ve all heard that moving
your shoulders. It means you can
know how to avoid accidents and
also have the knowledge and
4. A LOAD OFF YOUR MIND
boxes and ad hoc belongings information to the removalists. This means they can provide you with an accurate quote and you won’t get any surprises on the day!
gas, internet, pay TV, and home phone connections all in one simple call. With over 19 years’ experience, connectnow works with a range of trusted service providers to deliver a quality home moving service. www.connectnow.com.au *While their services are free to their clients, standard service provider connection fees and charges may still apply.
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Moving home soon? No need to make multiple calls to connect your...
Electricity
Gas
Internet
Pay TV
Home Phone
Save time and choose from our panel of trusted service providers in one simple phone call. Visit connectnow.com.au or call 1300 554 323 to get things sorted today.
*While our services are free to you, standard service provider connection fees and charges may still apply.
FAMILY FRIENDLY PROPERTIES
FAMILY FRIENDLY PROPERTIES For property owners and investors, choosing a suitable tenant is a crucial part of their investment strategy. Firstly, it’s important to consider what tenant demographic you would like to attract and choose a home that is likely to suit them. If you’d like to appeal to the young families market, there’s a number of things to consider to ensure the property is family-friendly.
LOCATION OF PROPERTY
BY SARAH BARTON,
INSURANCE DISTRIBUTION CHANNEL MANAGER, TERRI SCHEER
SIZE AND TYPE OF PROPERTY Growing families need space to play and unwind. A larger home with
While attracting families to live at
3 – 4 bedrooms and a decent size
your investment property can be
backyard is likely to attract families
part of a good long-term investment
rather than an inner-city apartment.
strategy, it’s not without risks.
A family may also consider a house with two living areas more attractive if they have a number of children. A single-storey home might also hold more appeal to parents and prospective tenants with young children. A flat, moderate sized lawn area in the backyard which is fully enclosed will provide a good area for children to play and give parents
The process of attracting families
peace of mind that they’re safely
as suitable tenants can begin well
contained.
before you’ve even purchased your rental property. You will need to
PETS
consider a property that is likely
For many families, having a pet at
to appeal to them. For example, a family will generally need a property that is close to good schools, childcare, public transport, health care, shops and other amenities. Rental properties in key school zones are highly sought after for this reason and are likely to attract strong interest from the family market. Properties located near a park, playground, dog park, bike or pram-friendly walking tracks will generally also hold greater attraction for families.
SPECIALISED LANDLORD INSURANCE
a rental property makes them feel more at home. Making your property pet-friendly can have many benefits and may improve profitability of your investment. Families who have pets may also consider signing a longer lease knowing they can bring their beloved pet with them. Landlords may consider pet-proofing the property with a gated front and back yard or installing animal runs to enclose cats and dogs to specific areas of the home.
Accidents may happen when small children are involved. For instance, an accidental hole or damage to a wall may need repair. Tailored landlord insurance which includes tenant damage can cover landlords for these risks. For further information, visit www.terrischeer.com.au or call 1800 804 016.
ABOUT THE CONTRIBUTOR Terri Scheer Insurance Pty Ltd ABN 76 070 874 798 (Terri Scheer) provides insurance cover for landlords, helping to protect them against the risks associated with owning a rental property. These include malicious damage by tenants, accidental damage, landlord’s legal liability and loss of rental income. Terri Scheer acts on behalf of AAI Limited ABN 48 005 297 807 AFSL 230859 trading as ‘Vero Insurance’, the insurer which issues the insurance cover. Terri Scheer has not taken into account the reader’s objectives, financial situation or needs. If you are interested in any of Terri Scheer’s insurance products, the relevant Product Disclosure Statement should be considered first. It can be viewed online at www.terrischeer.com.au or obtained by calling 1800 804 016. Based in Adelaide, Terri Scheer services all states, territories and capital cities.
DISCLAIMER 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 as a result of reliance upon it. Insurance issued by 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 or visit our website at www.terrischeer.com.au for a copy.
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