C21 Market Pulse | January 2018 by CENTURY 21 Australasia

J A N U A R Y

M A R K E T

2 0 1 8

P U L S E

C21

PUBLISHER Century 21 Australia Pty Ltd

M A R K E T P U L S E

C21

CONTRIBUTERS Charles Tarbey Tim Lawless

Real Estate Business (REB) Chris Gray

Bradley Beer

EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600

ADVERTISING ENQUIRIES

WELCOME TO

THE JANUARY 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:

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C J

O A

N N

CHAIRMAN STATEMENT

T A

02-03

S 1

INSURING YOUR INVESTMENT PROPERTY

08-09

HOME LIFESTYLE

10-11

Five tips for a bathroom blitz.

Setting the scene for softer market conditions. Corelogic Head of Research, Tim Lawless.

TAX TIPS 05

Three commercial property depreciation tips. BMT Tax Depreciation, Bradley Beer.

Century 21 opens four more NSW offices. Real Estate Business (REB) Magazine.

FIRST HOME BUYERS

Terri Scheer Insurance.

Century 21 Chairman, Charles Tarbey.

CENTURY 21 IN THE MEDIA

Common insurance claims for landlords.

What 2018 has in store for property.

CORELOGIC NEWS - MARKET TRENDS

06-07

Making the transition to home ownership. Your Empire CEO, Chris Gray.

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CHAIRMAN STATEMENT

WHAT 2018 HAS IN STORE FOR PROPERTY

BY CHARLES TARBEY CHAIRMAN CENTURY 21 AUSTRALASIA

With new years come new beginnings, and we appear to be transitioning into a new market dynamic across Australia’s capitals. During the last quarter of 2017 we saw seller confidence decline which in turn created a more level playing field for buyers. Despite an overall re-balancing of the marketplace, we expect that 2018 will be a year of opportunity for both homeowners and those looking to invest or enter the market for the first time. RETURN TO BALANCE Across the country, property value growth is continuing to level out and although this may seem like

a negative thing for homeowners, it may be a positive thing for

the Australian market. A market experiencing moderate growth can often result in a healthier

long-term market. Looking back

on 2017, national dwelling values were 4.2 per cent higher over

the calendar year according to

CoreLogic – which is a slower pace of growth relative to 2016 when

national dwelling values rose 5.8

per cent and in 2015, when values

nationally were 9.2 per cent higher.

The CoreLogic December Hedonic

line with cooler conditions. Vendor

that national dwelling values slipped

those selling property in Sydney

Home Value Index results reported lower over the month, led by falls

across Sydney, Darwin, Melbourne and Perth. The most significant

declines were seen in Sydney and

Darwin where dwelling values were down 0.9 per cent in both markets. International market conditions will likely continue to influence Australian market conditions, particularly the US and Asian

markets. As the US property market is on the move, it may help support the Australian market and keep it balanced. Vendors should ensure

their expectations are realistic this

year, and their property goals are in

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discounting is a likely prospect for and Melbourne markets, however, this may level out in the second

half of the year. Engaging with an experienced real estate agent can

help vendors set a realistic market price of their property as they can take advantage of an agent’s on-

ground knowledge of the area and

involvement in recent transactions. Not only this, a good agent may

prove invaluable should the need for discounting arise, helping to

navigate the negotiation process

between buyer and seller which is

often emotional and taxing. Vendor discounting may help to improve

housing affordability in some parts.

The market is showing signs that

Lastly, amidst some of the ‘doom and

position to negotiate a favourable

vacancy rates have fallen and there

market, I encourage Australians to

Buyers may be placed in a better

price compared to previous years. Apartment settlements may be placed under valuation pressure in markets across the

country, with the Brisbane apartment

market and

outlying areas of Sydney

and Melbourne

it has moved through its worst, as

gloom’ talk surrounding a levelling

are lower levels of stock compared

consider the demonstrated value

to previous years. At the

end of last year, Perth saw its first rolling

“A market experiencing moderate growth can often result in a healthier longterm market.”

especially affected. The Brisbane

apartment market may

quarterly capital gain since late 2014 with

CoreLogic a 0.3 per

market to keep an eye on this year.

of properties resold at a profit

over the September 2017 quarter

the underlying demand for property

in dwelling

that is still there in many markets

values over the

and that will likely remain over the

three months to

November 2017. They

also reported that settled

(59 days compared with 68 days a

believe Perth will also remain a

Report showed the total gross value

$453.8 million. This also attests to

cent lift

with first homebuyer’s incentives buying opportunities present. I

CoreLogic’s latest Pain & Gain

resales losses which amounted to

sales are rising (+3.8 per cent year

may see unique and affordable

investment over the long term.

was $17.7 billion, far outweighing

reporting

be a key market to watch for first

home buyers. New supply combined

of property as a safe and profitable

course of the year despite signs of moderating price growth.

on year) and homes are selling faster year ago). There may be many good opportunities to purchase Perth

property in the coming months and to benefit of any upside in prices.

9.2%

5.8%

Source: CoreLogic

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2017

2016

2015

NATIONAL DWELLING VALUE GROWTH

4.2%

CORE LOGIC NEWS - MARKET TRENDS

SETTING THE SCENE FOR SOFTER MARKET CONDITIONS The transition towards weaker housing market conditions has been clear but gradual and is likely to continue throughout 2018 according to CoreLogic head of research Tim Lawless. According to the CoreLogic

December Hedonic Home Value

Index results, national dwelling

values slipped lower over the month, led by falls across Sydney, Darwin,

Melbourne and Perth. Commenting on the results, Mr Lawless said,

“From a macro perspective, late

2016 marked a peak in the pace of capital gains across Australia with national dwelling values rising at the rolling quarterly pace of 3.7

per cent over the three months to

November. In 2017 we saw growth rates and transactional activity

gradually lose steam, with national month-on-month capital gains

slowing to 0 per cent in October and

November before turning negative in December.” According to CoreLogic, the 0.3 per cent fall in December

BY TIM LAWLESS, CORELOGIC HEAD OF RESEARCH

was the catalyst for dragging the

per cent lower over the December

negative territory for the first time

relative to their August 2017 peak.

quarterly capital gains result into

since the three months ending April 2016. Nationally, dwelling values

were 4.2 per cent higher over the

2017 calendar year which is a slower

pace of growth relative to 2016 when national dwelling values rose 5.8

per cent and in 2015 when values

nationally were 9.2 per cent higher.

quarter and 2.2 per cent lower

The city’s annual rate of growth is

now tracking at just 3.1 per cent; a

stark difference to the recent cyclical peak when values were rising at the annual rate of 17.1 per cent

only seven months ago. Despite the

reversal in growth rates since August 2017, Sydney dwelling values remain 70.8 per cent higher than their

cyclical low point in February 2012.

CAPITAL CITY CYCLES

For Darwin, Mr Lawless believes the

Across Australia, Mr Lawless

housing downturn is entrenched,

national dwelling values is being

2014. The calendar year saw Darwin

combined capitals tracking half a

2014 peak, Darwin housing values

quarter, while across the combined

cent. While conditions for capital

were half a percent higher over the

across Darwin, rental prices are

weakest conditions are concentrated

year. The substantial fall in values

said, “Sydney’s housing market has

rental yields to their highest level

on the headline growth figures.”

Darwin rental yields are the highest

confirmed that the shift to falling

with values trending lower since May

driven by the capital cities, with the

values down 6.5 per cent. Since the

percent lower over the December

have fallen by a cumulative 21.5 per

regional areas of Australia, values

gains have been exceptionally weak

quarter. Amongst the capitals, the

down by only 1.5 per cent over the

in Sydney and Darwin. Mr Lawless

relative to rents has pushed Darwin

become the most significant drag

since July 2015 (5.9 per cent) and

Sydney dwelling values were down

of any capital city.

0.9 per cent over the month to be 2.1

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CENTURY 21 IN THE MEDIA

CENTURY 21 OPENS FOUR MORE NSW OFFICES Century 21 has closed 2017 off by celebrating the opening of four new office locations, boosting the network’s already significant footprint across Australasia. In New South Wales, Century 21 has welcomed C21 Tao Real Estate in

West Ryde, C21 Masterpiece in Lane

Cove, C21 Property Care in Glenfield and C21 Centennial in Kensington. Chairman and owner of Century

21 Australasia Charles Tarbey said that the future of real estate is

intrinsically tied to the skill and

expertise of real estate practitioners. “The coming year may herald in a new phase of the real estate cycle

where expert agents will be vital to

help manage and complete successful transactions,” the chairman said.

“Combined with the global strength of the Century 21 brand, our new

practitioners all possess unique skill sets that will bode well for them

and their businesses in the coming

years.” He said that the group’s new

franchisees are all uniquely qualified for the task that lies ahead of them.

BY TIM NEARY, EDITOR OF REAL ESTATE BUSINESS

“From multilingual practitioners to

life.” Mr Tarbey also said that the

experience from leading brands,

growth phase in New Zealand,

agents with decades of real estate it’s a strong group of new agents

with big plans for the future,” Mr

Tarbey stated. “We welcome them

Century 21 brand is in a major

with new office openings expected in 2018.

to the Century 21 family and look

forward to supporting their success in the real estate industry.” The news compliments Century 21’s confirmation earlier that eight

of its best performing franchises have renewed their agreements,

sold on leveraging the brand’s high profile and national footprint. Mr Tarbey said at the time that he is “delighted” that so many offices

have chosen to continue their real

estate journey bearing the Century 21 brand. “These offices are full of talented and committed real estate professionals, and it has

been wonderful to see them use our brand, systems and platforms to

excel in the industry,” the chairman said. “They have leveraged the

brand’s visibility into building their local reputations, and now many

of these agents aren’t just seen as

agents in their areas but trusted and

respected contributors to community

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The story Century 21 opens four more offices as year comes to an end first appeared on Real Estate Business (REB). Article Link:

https://www.realestatebusiness.com.au/

breaking-news/16782-century-21-opens-fourmore-offices-as-year-comes-to-an-end/

FIRST HOME BUYERS

MAKING THE TRANSITION TO HOME OWNERSHIP While rising house prices in many parts of Australia have made home ownership more difficult in recent times, with the right strategy, careful financial planning and plenty of persistence, you can make the transition to home ownership a reality.

BY CHRIS GRAY, YOUR EMPIRE CEO

does not happen overnight. While

bedrooms and a lock up garage, as

ownership can be challenging, the

potential tenants in the future.

making the transition to home

long-term financial benefits to be

gained far outweigh the short-term sacrifices involved. Regardless of

whether you choose to buy a home

and live in it, or buy an investment

and continue renting, entering into

the property market should provide you with lasting rewards.

How do you make the switch from renting to owning a home? It’s a

question asked by many budding

home buyers eager to make their

ownership, including increased

privacy, the freedom to renovate

to your taste and the opportunity

to hold a safe, solid asset that will continue rising in value over the long term. While renting can be a more affordable option in the

short term, as the saying goes, rent money is dead money unless rental

funds are invested elsewhere. When it comes to entering the property

market, keep in mind that making a profitable investment takes

considerable time and effort and

2. START SAVING NOW Develop a realistic savings plan,

the sooner you get in the routine

of taking money from your wages before you spend it, the better.

Property rises quicker than you can save and consequently you need to

TIPS FOR ENTERING THE PROPERTY MARKET:

move into the property market.

There are several benefits in home

these attributes will help attract

commit as much as you can into the plan. Home ownership comes with

additional expenses to renting and

taking a first step into the property

1. ESTABLISH A GOAL

market requires a deposit of at least

Work out the exact type of property

ongoing mortgage repayments and

you would like to purchase and the ideal suburbs you want to invest

in. Having a clear objective to work towards will save time and set you on the path to home ownership

much sooner. Generally, it’s best to invest in properties located within 1km from the heart of the suburb, a close walk to schools, leisure facilities, public transport and

beaches. It’s also a good idea to aim for properties with two or more

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five per cent, as well as stamp duty,

maintenance fees. Even with tenants

in an investment property, there will be a difference between the rent and the mortgage that will need topping up from your salary.

3. DON’T FEAR THE GEAR Taking out a mortgage is a daunting prospect, but if you never take

the risk, you’ll never own a home.

Instead of viewing debt as a

disadvantage, focus on the positives. Manageable debt can provide you with the stepping stones to long-

term financial security. Rent money is dead money, but investing your money into an asset will provide long term benefits.

5. GET AN INDEPENDENT PROPERTY VALUATION Property is one of the most

expensive investments you will make in your lifetime and it’s

important to purchase at the best possible price. When it comes to

property, many buyers are inclined to make an emotional purchase

4. DO YOUR RESEARCH

decision, especially if they plan on

Pick two or three suburbs and then

any property purchase consult a

inspect at least 50 – 100 properties across the area, comparing them

based on price and offerings, before making a purchase. The more

research you do, the more idea

you’ll have of what is good value.

Sites like CoreLogic and Residex can give you reports on average values

living in their investment. Before professional valuer to ensure you

are paying a fair purchase price. A valuer is not emotionally involved

in the purchase and will be able to

provide you with an accurate idea of a property’s worth today and in the immediate future.

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

for a suburb and potential yields,

on others’ behalf, providing a unique insight

and your local council can provide

into market conditions and buyer and seller

an idea on current area trends and

sentiment. Chris hosts “Your Property Empire’

demographics. It’s worth consulting

each Friday on Sky News Business channel, where he interviews various heads of property

a buyers’ agent as they can remove

research companies and major industry figures.

a lot of the legwork and research

Chris is a qualified accountant, buyer’s agent

involved in sourcing a property and

and mortgage broker. For more information visit

will be able to provide specialist

www.yourempire.com.au, www.chrisgray.com.

market knowledge to help ensure a

au and follow Chris on Twitter: @ChrisGrayEmpire.

profitable investment.

https://www.yourempire.com.au/

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INSURING YOUR INVESTMENT PROPERTY

COMMON INSURANCE CLAIMS FOR LANDLORDS If you own a rental property, it’s worth considering Landlord Insurance to protect both your investment and your rental income. Landlord Insurance is designed to specifically cover you for tenantrelated risks that may not be

included under your standard

building or contents insurance. As Australia’s leading landlord

insurance specialist, Terri Scheer has been assisting landlords with their

claims for over 20 years. These are some of the most common claims landlords should be aware of:

1. LOSS OF RENTAL INCOME Even the best tenants can sometimes experience sudden and unexpected financial difficulties, leaving them

unable to pay the rent for a period of time. Examples of hardship

could include the tenant losing

their job, or being diagnosed with

BY TERRI SCHEER INSURANCE

the loan on their investment

property. Collecting arrears can

be a very drawn out and expensive process. Terri Scheer reports that rent default is the most common

claim for landlords, accounting for more than a third of all claims. A landlord insurance policy can cover you for a

2. MALICIOUS AND ACCIDENTAL DAMAGE Damage to property can leave

landlords with large repair bills and significant replacement costs. This

is the second most common landlord insurance claim. Malicious damage to your

property, either

range of rent loss

by the tenant,

circumstances,

“It’s important to be aware that the bond may not cover all incurred losses...”

such as

when the

tenant’s lease has been

terminated

by court order following

failure to pay

their family or friends,

is damage

motivated

by malice,

vindictiveness

or spite.

Examples

of malicious

rent, the tenant

damage can

absconds, tenant

include holes kicked

hardship or sole tenant

death. It’s important to be aware that the bond may not cover all

incurred losses, and that a specialist landlord insurance policy can help protect against financial loss.

into doors and walls, slashed

curtains and smashed windows.

By contrast, accidental damage is

sudden or unexpected damage that is not deliberate or malicious, such as cracked floor tiles after a heavy

a serious illness. This can leave

saucepan is dropped, or wine spilt

and potentially unable to service

can be invaluable in the event of

on carpet. A tailored landlord policy

uninsured landlords out of pocket

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such events, as a standard building and contents insurance policy may not cover landlords for tenant related damage.

4. THE DEATH OF A TENANT The death of a tenant is tragic

and, unfortunately, not all that

uncommon. Landlords will need to adopt a compassionate approach

3. WATER DAMAGE Water damage to the contents of a rental property is also a common insurance claim. In some cases,

it may be caused by the tenant or

faulty appliances and fittings (e.g. leaks from a washing machine or dishwasher) or by problems

relating to the property (such as a

burst pipe or a leaking sink). Many standard building and contents

policies exclude water damage due to accidents caused by the tenant, or limit cover to the contents, not the building, so it’s important to

have landlord insurance to cover as

when dealing with the tenant’s family and friends, and also

cooperate with the police. They will also ensure the tenant’s belongings are taken care of, the property is cleaned, and all appropriate

paperwork is obtained. Where the

tenant is the sole person named on the lease, you may be covered for

the loss of rent incurred as a result of the tenant’s passing. Landlord

insurance provides investors with financial protection for a range

of situations relating to property

ownership and should be seriously considered by every investor.

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 as a result of reliance upon

many contingencies as possible. As a

it. Insurance issued by Vero Insurance. Read the

property owner, it is also advisable

Product Disclosure Statement before buying this

to check the extent to which you are

insurance and consider whether it is right for

covered for storm, flood and general

you. Contact Terri Scheer on 1800 804 016 or

water damage to your property, and

visit our website at www.terrischeer.com.au for a copy.

to understand any exclusions of cover.

https://www.terrischeer.com.au/

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HOME LIFESTYLE

FIVE TIPS FOR A BATHROOM BLITZ In the eyes of potential buyers, bathrooms are amongst the most crucial rooms in the house. As future occupants will be using the room every day, it is important vendors create an appealing space for inspections. In order to make the best impression and attract buyer attention, here are

five tips to freshen up your bathroom ready for sale.

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1. CLEAR THE CLUTTER

2. FIX THE LEAKS

3. MODERN FIXTURES

Just like the rest of a house, an

If you have become accustomed to

Old or rusty fixtures can create an

a big turn off. Clear the clutter and

it, the time has come to take action.

potential buyers, they may appear

overload of personal clutter can be

even look to add additional storage if you need it, and if it doesnâ&#x20AC;&#x2122;t

impact on the spaciousness of the room too much.

a dripping tap and avoided fixing

Selling your house means making

all the little repairs that you have ignored.

Shaping the perceptions of

Mirrors are another easy addition

to be expensive and can be

bathroom is on the smaller side

simple additions. White towels

appear fresh, creating an aura of cleanliness.

house that is older, so an easy fix is to update your taps, handles, hooks contemporary.

5. MIRRORS

achieved with a few cheap and

as red f lags for further defects in a

or towel rails to something more

4. FRESH WHITE TOWELS potential buyers does not have

outdated impression. In the eyes of

to open up a space. If your

then this is a handy trick to

consider. Choose a mirror style

or frame to suit the feel of your home and a size that is not too

overwhelming for the available space.

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TAX TIPS

THREE COMMERCIAL PROPERTY DEPRECIATION TIPS Many commercial property owners remain unaware of their depreciation entitlements. According to Bradley Beer, the Chief Executive Officer of BMT Tax Depreciation, around 80 per cent of commercial property owners donâ&#x20AC;&#x2122;t claim depreciation and therefore miss out on thousands of dollars.

BY BRADLEY BEER, BMT TAX DEPRECIATION

is a deduction due to the wear and

tear of a buildings structure (capital

works deduction) and its fixtures and fittings (plant and equipment items).

2. NO PROPERTY IS TOO OLD Capital works deductions can be

claimed for any commercial property in which construction commenced

after the 20th of July 1982. Despite these restrictions outlined by the

ATO, the owner may still be entitled renovations which have taken

place, even those completed by a

previous owner. Plant and equipment depreciation can be claimed

regardless of the age of the property. Examples include carpets, air

conditioning units and light fittings.

1. WHAT IS DEPRECIATION?

Commercial property owners should

The Australian Taxation Office (ATO)

will conduct a site inspection to take

requires investors to report any

income earned from a commercial

property as part of preparing their income tax assessment. As part of this assessment, commercial

property owners are entitled to

claim depreciation. Depreciation

Both owners and tenants have the

right to claim depreciation when it comes to any fit-out installed in a

commercial property. Commercial

to claim depreciation for recent

TO HELP COMMERCIAL PROPERTY OWNERS MAXIMISE DEDUCTIONS. HERE ARE THREE DEPRECIATION TIPS:

3. DEPRECIATION OF FIT OUT

contact a Quantity Surveyor who

pictures of assets and note additions which will provide evidentiary

support to the ownersâ&#x20AC;&#x2122; claims. They

will then provide a tax depreciation

tenants can claim depreciation on any fit-out they add to a property. Examples include desks, blinds,

shelving, firefighting equipment

and security systems. Commercial building owners also may be able

to claim depreciation on any fit-out

left behind by previous tenants once their tenancy has ceased. If lease conditions mandate that tenants return a property to its original

condition at the end of a tenancy, a Quantity Surveyor can prepare

a depreciation schedule conveying

the items which have been removed

and the remaining depreciable value of these items can be written off

as a deduction in the year of their removal by the tenant.

ABOUT THE CONTRIBUTOR Article provided by BMT Tax Depreciation. Bradley Beer is the CEO of BMT Tax

schedule outlining all the deductions

Depreciation. Please contact 1300 728 726

(forty years).

https://www.bmtqs.com.au/

available for the life of the property

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for an Australia-wide service.

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Think Future, Think C21 Century 21 is building the future of real estate. Our innovative technology enables our agents to generate more leads so they can list and sell more property. Talk to us today about the possibilities of joining a forward thinking network.

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