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P U L S E
S E P T E M B E R
M A R K E T
C21
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
SEPTEMBER 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 S E P T E M B E R
BUYER MISTAKES
02-03
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DEPRECIATION 101
4 common mistakes buyers make when
What are plant and equipment depreciation
purchasing property.
deductions?
Your Empire CEO, Chris Gray
BMT Tax Depreciation, Bradley Beer
PROPERTY MARKET UPDATE
05
VAMPIRE POWER
Australian Housing Values down 0.4% in August,
Which appliances are contributing to a scary
with trends diverging.
energy bill?
Corelogic Head of Research, Tim Lawless
On The Move
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BUYER MISTAKES
4 COMMON MISTAKES BUYERS MAKE WHEN PURCHASING PROPERTY Whilst most people think that they are completely logical when it comes to buying a home or investment property, unfortunately many get carried away with emotions and end up making a decision they may later regret. Property is often the most expensive transaction you do in your life and can make up to 75% of your wealth on retirement and so it’s important to try and get it as right as you can. I’m an ex accountant and so being unemotional is probably easier for me, but it’s something you can learn to do too.
B Y C H R I S G R A Y, C E O, YO U R E M P I R E
household, especially when it comes
takes 2-3 hours to inspect it, prepare
to knowing how much to pay for a
the comparable sales, do strata
property. Even if they haven’t been
checks to confirm the actual sizes
in the market or bought anything for
and then prepare a calculation.
years, they instantaneously seem to know what a property is worth.
I’m constantly surprised at how many property experts are out there, there seems to be one in every
a property is worth is to have been
Methods include basing it on what
inside lots of comparables that
the agent (who works for the vendor
have sold above and below the
told them), what a free or $50 online
property you’re targeting and to
app is telling them (the algorithm
do detailed calculations based on
hasn’t done a personal inspection),
price and yield.
what they overheard someone else saying, or just putting their thumb in the air and applying a set discount or premium. And they do this in about 2 minutes!
Paying the wrong price can set you back years or even decades as it means you’re not able to extract the equity and keep repeating as quick as you might otherwise be
My team and I have been buying
able. Compounding is the eighth
the same types of property in the
wonder of the world and the real key
same areas for over 20 years and
to wealth creation. You’ve got to buy
have bought literally hundreds. Even
the right property at the right price.
though we think we know the price, we still know there can be some
1) Paying the wrong price
The only way to really know what
emotion in there and so we pay an
2) Not taking action
independent valuer $660+ each
There’s always something that will
time we even consider putting an offer in. And even though the valuer knows the areas inside out, even he
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stop you getting into the market. This year it’s COVID. Last year it
was the election. Before that it was
and that’s exactly what you
2) High rental yields
the Royal Banking Commission and
don’t want.
3) Low interest rates
If you want a more stable and solid
4) Easy to borrow money from
serviceability issues. Prior to that it was because we were in a boom. Next it will be possible tax changes. Then it will be rising interest rates. After that it could be your job security or the kids going off to private school.
investment, speak to the property managers and sales agents about what buyers and renters want in the area and what they avoid. First play
5) Easy to find property
the hand of a buyer, then pretend
I’ve been investing for over 25 years
you’re a seller and see if the advice
For many people they still argue
changes. Sticking around the median
with the fact that property is
price of an area will increase your
expensive and sure it is, but do you
chances of always finding a tenant or
really think that the history of the
a buyer as it means the majority of
last few hundred years will suddenly
people can afford the price point.
reverse and the long-term trend will be down?
Buying something pretty can include buying something for
Whatever you bought 10 or 20 years
financial reasons such as purely
ago will almost have definitely made
rental income. Have a high rental
money. Property is always expensive
yield which covers your mortgage
today, but it’s nearly always cheap
and the other costs can seem really
when you’re looking back on today,
attractive but if it doesn’t grow in
many years later. So even if you do
value, will you be able to retire off
continue to make the above errors,
that extra $50 a week? High rental
ensure you just do something, as
yield areas are often further out of
often time heals most mistakes.
town and could be in one industry towns that are reliant on tourism
3) Buying something pretty Most buyers are highly emotional
I’d much rather buy an ugly duckling
dream and the better a property is marketed and styled, the more it could be hiding major deficiencies. I’ve had a good friend fall in love so much with the décor in a unit in Sydney’s Eastern Beaches, they
been an absolute nightmare in the heat of summer. The agents crammed everyone into the unit for the auction, the room was electric
I can get a mortgage and (3) when I’ve got enough cash buffer to hold on for the next few years. Buying property yourself can certainly be cheaper than outsourcing to an expert as you don’t have to buy any fees. However, sometimes spending a couple of percent on hiring a local buyer’s agent who is slightly more unemotional and unconnected, can pay dividends of hundreds of thousands of dollars over the lifetime of your property.
that’s in the right location and ticks all the boxes of parking/double bedrooms/small block etc rather than paying the same price for the beautiful property that’s further down the road. I can always renovate my property at a later date, but you
ABOUT THE CONTRIBUTOR Chris Gray is CEO of Your Empire, a buyers’ agency that buys homes and investments for time-poor people – searching, negotiating, renovating and managing property on their behalf. Chris has spent over 10 years as the
can’t move the beautiful property to
host of ‘Your Property Empire’ on Sky News
improve its location.
Business channel, where he’s interviewed various heads of property research companies and major industry fi gures. Chris
completely ignored the fact that it had no parking which would have
buy when (1) I’ve got the deposit, (2)
value, just at a time that you don’t
typically want to buy something
Sales agents are great at selling the
get all 5 and so my golden rule is to
could find your property halving in need it.
even if it is for an investment.
and I’ve never seen a time when you
or mining etc and that’s when you
when they buy property. They they could see themselves living in,
the bank.
is a qualifi ed accountant, buyer’s agent and
4) Timing the market
mortgage broker. For more information visit
Most property buyers try and time the market perfectly when they get: 1) High capital growth
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www.yourempire.com.au, www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire.
EXPANDING NETWORK
NEW C21 OFFICE OPENS IN BURWOOD NSW An experienced team of real estate professionals have opened an agency in Sydney’s inner west under the Century 21 brand. Directors Eugene Ganke, Jada Vi, Betty Lu, and Ricky Kong are a team that are passionate about property. Together they will operate the Burwood real estate business after having worked together in different roles across independent and franchise agencies. “We are incredibly excited to be partnering with the bold and dynamic Century 21 brand whose vision and values really resonated with us,” said Mr Ganke who has over 10 years of industry experience. “It’s great to have received so
Fellow Director Jada Vi offers six
Century 21 Chairman and Owner
years of real estate experience
Charles Tarbey is pleased to have
said each member of the team
this young team come together
brought a wealth of knowledge
under the C21 brand and is
and skills that complement each
confident of their success.
area of real estate.
“The passion and drive that these
“Our combined focus will be to
individuals have for real estate
ensure that the sale or management
is inspiring. By leveraging the
of our customers most valuable
strength of the C21 brand, training
assets are given the highest priority
and technology, I am sure they will
and utmost care.”
achieve their immediate goal of
The new team believes there is a gap in the local market for
The new office will benefit from
agents which they will aim to fill.
the continued partnership that
They will offer sales, property management and
“Our combined focus will be to ensure that the sale or management of our customers most valuable assets are given the highest priority and utmost care.”
our own agency. We look forward to growing with this global brand for many years to come and leveraging their processes and platforms to deliver a level of service and care that is unmatched”.
Mr Tarbey said.
Cantonese and Mandarin speaking
project marketing
much support to start
being the best agency in Burwood,”
services with an emphasis on delivering exceptional service.
Century 21 have with Bauer Media across the Home Beautiful website and magazine. With the majority of that audience owning or paying off their own home, having ownership in sight or looking to invest, the initiative not only showcases C21 properties
The office
to consumers with an interest in
will be
property, it also generates strong
rounded out by Betty
buyer and seller leads for the network.
Lu who has
experience in real estate and running her own business, and rising star Ricky Kong who in his first year with a major franchise made the Top 100 agents list on GCI.
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The story New C21 offi ce opens in Burwood NSW, fi rst appeared on Elite Agent. Article Link: https://eliteagent.com/new-c21-offi ceopens-in-burwood-nsw/
P R O P E R T Y M A R K E T U P DAT E
AUSTRALIAN HOUSING VALUES DOWN 0.4% IN AUGUST, WITH TRENDS DIVERGING Australian home values moved through a fourth month of COVID-induced falls, with the CoreLogic home value index recording a 0.4% fall in August. Although housing values continued to trend lower from their preCOVID highs, at least from a macro perspective, the rate of decline has eased over the past two months and five of the eight capitals recorded steady or rising values through the month.
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
slightly better conditions relative
relative to the pre-COVID trend,
to July. The rate of decline eased
the index has held virtually flat
across Sydney and Brisbane,
since May.
while home values held firm or showed a subtle rise across the remaining capitals. “The performance of housing
conditions. “Unlike their capital city
markets are intrinsically linked
counterparts, which usually receive
with the extent of social distancing
85% of net overseas migration,
policies and border closures which
most regional markets have avoided
also have a direct effect on labour
the drop in demand caused by the
market conditions and sentiment.
pause in migration.
It’s not surprising to see Melbourne as the weakest housing market considering the extent of the virus outbreak, and subsequent restrictions, which have weakened the economic performance of
of research, Tim Lawless, the
Victoria,” Mr Lawless said.
main drag on the headline results. “Following a similar decline in July, Melbourne home values fell by 1.2% in August, the largest fall recorded amongst the capital cities, demonstrating the impact of a worse viral outbreak relative to other cities, along with a larger
variety of factors helping to support regional housing market
According to CoreLogic’s head Melbourne housing market is the
Mr Lawless says there are a
“Looking forward we are likely
Regional markets may also be appealing for their relatively low density and lower price points. The normalisation of remote work through the pandemic could make proximity to major cities less of a factor in home purchasing decisions.”
to see a diverse outcome for housing markets around Australia, depending on how well the virus is contained and the regions exposure to other factors such as its reliance on overseas migration as a source of housing demand.”
demand side impact from stalled
Regional markets have continued
overseas migration. Through the
to outperform their capital city
COVID period to date, Melbourne
counterparts across the largest
home values have fallen by 4.6%.”
states.
Outside of Melbourne, the
While CoreLogic’s combined
remaining capital cities all recorded
regionals index has lost momentum
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Click here to read the full article
D E P R E C I AT I O N 1 01
WHAT ARE PLANT AND EQUIPMENT DEPRECIATION DEDUCTIONS?
BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N
When your specialist quantity surveyor tells you that you can claim depreciation on almost anything, they mean it. You can claim depreciation on your investment property’s walls, furniture to its mailbox and the kitchen sink.
What are plant and equipment
the diminishing value or prime cost
depreciation deductions?
method.
As mentioned, plant and equipment
When using the diminishing value
assets are easily removable or
method, the deduction is calculated
mechanical in nature. Some
as a percentage of the asset’s
common examples that BMT Tax
depreciable balance. This means
Depreciation find include:
the deductions are higher in the
• Floor coverings such as carpet
Alternatively, under the prime cost
and vinyl
method, the deduction for each
• Hot water systems
year is calculated as a percentage
• Blinds
of the cost. If this method is used the deductions are not as high in
One of the most versatile areas of
• Furniture
depreciation is plant and equipment
• Hot water systems, and
deductions.
• Smoke alarms.
property depreciation? Property depreciation is the natural wear and tear of a building and its assets over time. There are two parts of a depreciation claim – the structural component (capital works) and the easily removable or mechanical assets (plant and equipment).
early years and are spread out over time showing a more even claim per financial year.
Before we dive into the details of plant and equipment, what is
earlier years and diminish over time.
Depreciation for plant and How can you claim plant and
equipment assets can be
equipment?
accelerated using the low-value
Plant and equipment deductions are claimed differently to capital works. Capital works are typically depreciated at 2.5 per cent over 40 years, while each plant and equipment asset is depreciated across its effective life using either
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pool. Only assets that cost or are valued less than $1,000 can be placed into the pool. Once allocated, they depreciate at an accelerated rate of 18.75 per cent in the first year, and 37.5 per cent in following years.
Are plant and equipment
What to do if you’re not eligible
types of investment properties,
deductions available for every
for plant and equipment
both new and old. They ensure
property?
deductions
that no deduction is missed, and
Legislation changes introduced in
If you’re a second-hand investment
2017 affected residential property
property owner and can’t claim
BMT Tax Depreciation is Australia’s
investors’ eligibility to claim plant
previously used plant and
leading supplier of residential
and equipment deductions.
equipment items, you shouldn’t rule
and commercial tax depreciation
depreciation out.
schedules. To learn more, contact
Under the changes, owners of second-hand investment properties
You can still claim depreciation on
(where contracts where exchanged
all qualifying capital works, which
after 9 May 2017) can’t claim
on average make up 85 - 90 per
depreciation on previously used
cent of a total depreciation claim.
plant and equipment assets.
You can also claim depreciation
This means plant and equipment deductions are only available for brand-new assets, or assets in new properties.
on any new plant and equipment assets that you purchase directly for the property.
compliance is always maintained.
BMT on 1300 728 726.
ABOUT THE CONTRIBUTOR Article provided by BMT Tax Depreciation. Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief
BMT has completed comprehensive
Executive Officer of BMT Tax Depreciation.
tax depreciation schedules for all
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.
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VA MP I R E P OW E R
WHICH APPLIANCES ARE CONTRIBUTING TO A SCARY ENERGY BILL? Standby power - also known as ‘phantom load’ or, scarier still, ‘vampire power’ - is the energy that is used while your devices are turned off, but still plugged in.
BY ON THE MOVE
download content, run automatic
phantom power, with standby costs
Wi-Fi checks, and require complex
being typically around the $5 mark
standby sensors to enable them to
for an entire year. That being said,
be turned on by remote control or
in a world where households rarely
even voice activation. A gaming
have only one screen, this wasted
console on active standby uses
energy use can add up quickly.
an average of 5.4W of power per hour, clocking an extra 0.15 cents of electricity every 60 minutes.
According to the Department of
Forgetting to turn them off when
Industry, Innovation and Science,
you go on holiday could be a
Australians spend $860 million on
costly mistake.
per household each year.
ACTIVE STANDBY VS PASSIVE STANDBY Appliances which are turned off, yet still display the time or can be activated by remote control or internal timers, are typically in ‘passive standby’ mode when not in use. These use relatively little electricity, just enough to power sensors that enable it to be switched back on. But not all appliances are so simple. The ones to watch for are those who go on “active standby”. Gaming consoles, for example, routinely
the amount you spend on vampire power will vary depending on the number and type of appliances left on standby, the appliance efficiency ratings and your electricity rate.
standby power annually. To put that in perspective, that’s roughly $100
Every household is different, and
WHERE ARE THE VAMPIRES IN YOUR HOUSE? The ones to watch out for are
But no matter which way you slice it, there’s a lot of money and energy being drained by phantom consumption.
Gaming consoles; Washing machines and dishwashers. Your wireless modem is also a nasty user of phantom power. But seeing as it’s technically ‘in use’ all the time, it may not be the most practical device to shut off every day. If you are looking to cut costs, consider turning off your modem when you head to work in the morning, and definitely if you go away on holiday. You might be surprised to know that DVD players and televisions consume relatively small amounts of
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ABOUT THE CONTRIBUTOR On the Move is Australia’s leading service connections specialist providing a one-stop service for electricity, gas, phone, internet, pay TV and insurance. Since 2004 On The Move has partnered with Real Estate agencies and other organisations to give their customers a convenient and seamless move-in, lights-on experience. https://www.onthemove.com.au/
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Gas
Home Phone
NBN / Broadband
Pay TV
Insurance
