J U L Y
M A R K E T
2 0 1 8
P U L S E
C21
PUBLISHER Century 21 Australia Pty Ltd
CONTRIBUTORS Charles Tarbey Tim Lawless Tim Neary Chris Gray Bradley Beer Terri Scheer Insurance
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES
WELCOME TO
THE JULY 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 J U L Y
CHAIRMAN STATEMENT
02-03
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BUYING OFF-THE-PLAN
Where to buy in a falling market?
Depreciation and off-the-plan properties.
Century 21 Chairman, Charles Tarbey
BMT Tax Depreciation, Bradley Beer.
NATIONAL DWELLING VALUE UPDATE
04
EVICTING TENANTS
Dwelling values trend lower amidst tight conditions.
How and when to evict tenants.
CoreLogic Head of Research, Tim Lawless
Terri Scheer Landlord Insurance.
HISTORY IN THE MAKING
05
Real estate brand announces historic marketing push.
INTERIOR MAKEOVER FOR WINTER Simple tips for an interior makeover this winter.
Real Estate Business Journalist, Tim Neary
WINTER PROPERTY PREPARATION
06-07
5 tips for preparing your property for sale this winter. Your Empire CEO, Chris Gray.
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C H A I R M A N STAT E ME N T
WHERE TO BUY IN A FALLING MARKET? B Y C H A R L E S T A R B E Y,
CHAIRMAN CENTURY 21 AUSTRALASIA
In June, the property market continued to slow with prices falling by 0.2%. This means that the market is down nearly 1% over the year. These conditions may have many property investors salivating and watching the market closely for buying opportunities. Many agents are reporting
some instances, settlement prices
The city recorded a larger quarterly
challenging selling conditions and
are coming in lower than purchase
decline in prices than any other
increasing days on market for much
prices.
capital in Australia and this trend,
of their stock.
With falling clearance rates,
like Sydney, shows no immediate signs of reversing.
Australia’s largest property market
investors may have less competition
– Sydney – is down 4.5% over the
in many areas in Sydney and
I expect that housing affordability
year and shows no immediate signs
Melbourne. This environment often
may improve naturally over the
of picking up.
means investors have more power
short to medium term as prices
to negotiate and pick up bargains.
decline and less buyer interest
While property is typically a great
empowers first home buyers to
investment in most areas if one
That being said, the Victorian
takes a long term view, at present
Coalition’s muted plans to create
I especially like the outer CBD
almost 300,000 new lots by 2020
Regardless, housing affordability
areas around Brisbane, Sydney and
is a story that investors should
remains a very real and ongoing
Melbourne for investment.
watch closely. Such a large influx
issue in many markets across
of new supply could put further
Australia. It has been widely
downward pressure on property
reported that the ‘Bank of Mum and
prices and rents across that state.
Dad’ has become one of the nation’s
As has been widely reported, Brisbane has a great deal of apartment stock coming through the pipeline and this may create
Melbourne is already experiencing
unique buying opportunities for
falling property prices which will
investors and homeowners alike. In
assist with housing affordability.
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make purchasing decisions.
largest lenders and this statistic would be concerning for many parties.
Parents that are looking to assist
Hobart’s incredible growth
hot right now so property investors
their children in this way may
story continues with the market
may find better opportunities in
be wise to help children buy
recording a 0.2% increase in prices
markets like Perth where prices are
apartments not houses. This
in June. Dwelling values are up an incredible 12.7% over
strategy will minimise
the previous year
their exposure to the market while still giving children a foot hold into property. While this strategy may not be popular with many children,
“With falling clearance rates, investors may have less competition in many areas in Sydney and Melbourne.”
paying off an apartment will help them build equity and over time, can provide an effective launch pad into a larger home.
and since January 2015, rents are 20% higher.
much competition for stock. The aforementioned information paints a complex and dynamic picture where there are clearly markets within markets in Australia.
Despite these
Savvy investors would be wise to
headline
recognise and exploit this situation.
numbers, investors should remember that Hobart was coming
off quite a low base in terms of prices and rents. Whether this means that the market has more growth in it is hard to tell. The market is clearly very
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Australia has a robust economy and stable government. These characteristics along with the country’s beauty and safety bode well for the future of the nation. In turn, this outlook continues to make property investment an attractive long term proposition in my mind.
N AT I O N A L DW E L L I N G VA L U E U P DAT E
DWELLING VALUES TREND LOWER AMIDST TIGHT CONDITIONS
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
CoreLogic’s June Home Value Index results have revealed that Australian dwelling values tracked lower in June, down 0.2% over the month to be 0.8% lower over the year. June marks the ninth consecutive month-on-month fall in national home values, taking the cumulative decline to -1.3% since the housing market peaked in September last year. According to CoreLogic research director Tim Lawless, despite recent and consistent monthly falls, national dwelling values remain 32.4% higher than five years ago. He said, “This highlights the wealth creation that many home owners have experienced over the recent growth phase, but also the fact that recent home buyers could be facing negative equity.” “Tighter finance conditions and less investment activity have been the primary drivers of weaker housing market conditions and we don’t see either of these factors relaxing over the second half of 2018, despite APRA’s 10 per cent investment
speed limit being lifted this month.” The June quarter results saw national dwelling values fall by half a per cent, driven by a 0.8% drop in values across the combined capital
The regional markets of Victoria have shown the highest rate of capital gain over the June quarter (+1.8%), closely followed by regional Tasmania (+1.7%).
cities. The capital city decline
Declines are more pronounced
was partially offset by a 0.6% rise
across the most expensive quarter
in values across the combined
of the market. Based on the
regional markets. The largest
CoreLogic stratified hedonic index,
decline amongst the capitals over
values across the most expensive
the June quarter was in Melbourne,
quartile of capital city properties
with dwelling values down 1.4%,
were down 1.5% over the past three
followed by Sydney (-0.9%), Darwin
months while the least expensive
(-0.8%) and Perth (-0.7%).
quartile saw values hold firm.
Hobart continues to show the strongest capital gain trend amongst the capital cities with dwelling values rising a further 2.3% over the past three months.
Similarly, over the past twelve months, the most expensive end of the market recorded a decline of 3.6%, while the least expensive end of the market recorded a 1.4% gain.
Although housing market trends
Declines across the most expensive
remain very positive across Hobart,
sector of the capital city market is
the quarterly pace has eased
largely attributable to the declines
relative to the March quarter when
in Sydney and Melbourne, where
values were up 3.4%. Values also
the upper quartile of property
trended higher across Adelaide
values fell by 7.3% and 2.5%
(+0.9%), Brisbane (+0.3%) and
respectively over the past twelve
Canberra (+0.2%) over the second
months. Mr Lawless said, “A surge
quarter of 2018.
in first home buyer activity has
Outside the capital cities, the combined rest of state regions recorded a 0.6% rise in dwelling values over the quarter, although values did show a moderate fall in regional Queensland (-0.2%) and regional Western Australia (-0.1%).
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helped support demand across the more affordable price points in these cities.”
HISTORY IN THE MAKING
REAL ESTATE BRAND ANNOUNCES HISTORIC MARKETING PUSH One of Australia’s largest networks has announced that it will kick off its most aggressive marketing campaign yet, as it looks to capitalise on key recent market movements. Century 21 Australasia will launch the largest marketing campaign in its history this July. Outlined at the network’s annual
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
aimed at showcasing the new
an integrated cross-channel media
logo and brand message while
partnership with ESPN.
strengthening the connection between Century 21 and the modern consumer.
Century 21’s national marketing manager, Bianca Anton, said that the campaign will focus around
“We went through an incredibly
two key themes: “Don’t Settle for
detailed process to isolate the right
Average“ and “Relentless Moves”.
creative, message and channels to reach the largest possible numbers of buyers and sellers of real estate.” Mr Tarbey is confident the balance is now spot-on.
She said that both aim to challenge Century 21 agents and encourage consumers to raise their expectations of agents. “During this monumental shift in
convention on Hamilton Island this
“The campaign will run for close to
brand identity, we needed to ensure
month, the seven-figure marketing
a year and we expect it will deliver
the consumer was aware of who we
spend will leverage television,
tangible results for our offices
are becoming, and why,”
cinema, social media, billboards,
due to the excitement it will build
Ms Anton said.
public relations and events to
around the brand and message.”
promote the group’s new brand
Television advertisements and show
for such a large multi-channel
sponsorships on Foxtel, billboards
rebranding strategy — we wanted to
on buses and in shopping centers,
reach as many different consumers
The campaign comes on the back of
and movie ads in cinemas are just
as possible with a bold new
a recent global announcement that
a few channels that consumers can
message.”
Century 21 would be repositioning
expect to see the new C21 visual
its brand to project a more modern
identity and message promoted.
image that better aligns with the
The rebranding is also occurring
repositioning, message and vision for the future.
company’s new value proposition of “delivering extraordinary real estate experiences to consumers”.
“This is why we decided to go
Ms Anton said that the overarching goal of the campaign is to build excitement and drive leads.
across the 80 countries where Century 21 operates in, marking one of the momentous changes in the
Chairman Charles Tarbey said that
business’ nearly 50 years of global
it is an important time for the new
operations.
brand to assert itself.
In the United States, an enormous
“This historic marketing campaign
campaign is launching the new
in Australia and New Zealand is
visual identity across TV, digital, social and print components, plus
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The story Famous Aussie real estate brand announces aggressive, historic marketing push first appeared on Real Estate Business (REB). Article Link: https://www.realestatebusiness.com.au/ breaking-news/17409-famous-aussiereal-estate-brand-announces-aggressivehistoric-marketing-push
W I N T E R P R O P E R T Y P R E PA R AT I O N
5 TIPS FOR PREPARING YOUR PROPERTY FOR SALE THIS WINTER Renovating in winter can be a simple way to add value to your property; all you need to know is what adds value with little outlay. During the cooler months, if you present your home or investment property in the best possible light, perhaps even refurbish it with a simple paint and carpeting job, it will attract more buyers. Although many people think of dark and gloomy properties when they think about winter, if your property has natural light and warmth, it will still present well in winter.
B Y C H R I S G R A Y, C E O, YO U R E M P I R E
If you’re preparing your property for sale this winter, here’s my advice:
1. CREATE WARMTH
2. LIGHT IT UP
In Sydney, most prospective buyers
In Sydney, most prosper property
are looking for north and north-east
is dimly lit, consider upgrading
facing aspects as these properties
the lighting. As winter days can be
tend to be both warmer and lighter.
quite dark, this is a simple way to
In fact, this is something that I
lighten up your property as well
always look for, particularly in the
as modernise your home. While
cooler months. Ensuring that your
it can be tempting to opt for an
property is warm and light inside
inexpensive light fitting, it’s worth
can create a positive mood from
spending a little extra to purchase
the minute that you step in. Buyers
a high quality one, which can act as
often attend many inspections in
a centre-piece in a room and help
the one day, so you don’t want them
your home appear on-trend. It’s also
to remember your property as the
a good idea to choose light paint
one where they were shivering the
shades when you’re re-painting the
whole time.
walls.
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3. DON’T IGNORE THE MINOR DETAILS
4. PRESENT OUTDOOR AREAS WELL
5. BE REALISTIC
Small touches can make a
Although it can be easy to
significant difference to your
neglect outdoor areas in winter,
how long your renovation will take
home’s overall appeal. To create
I recommend you envision a
a lasting positive impression with
courtyard or veranda as another
prospective buyers, invest in new
room. It’s therefore important to
coverings, rugs and cushions
present an outdoor area well so
in warm shades such as beiges,
that buyers can envision how it will
taupes or yellows. As kitchen
be used in summer, for instance.
renovations can be expensive,
These areas can be a main selling
often involving the replacement
point, if presented well. Using an
of several different elements, I
outdoor heater will help create
would suggest changing your
a comfortable environment and
kitchen cupboard doors – and to
encourage buyers to look outside.
It’s important to determine exactly and allocate finances accordingly. If you’re adamant about doing it yourself, my tip is to double your expected cost. As most novice renovators go under budget when estimating the costs, if you double the timeframe and cost, then you can work out if you’re still going to make a profit.
a light colour. These make up the majority of your kitchen’s surface and upgrading them can easily maximise your home’s appeal.
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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BUYING OFF-THE-PL AN
DEPRECIATION AND OFFTHE-PLAN PROPERTIES BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N Investors who are looking to purchase a new property often look at buying off-the plan. Buying off-theplan essentially means you are entering into a contract to purchase a property prior to, or during the construction phase, of a property or a development.
between $8,000 and $14,000 in
For this reason, investors may want
depreciation deductions in the first
to consider the brand and price
full financial year, so it is fair to
range of assets in an off-the-plan
say that the new owner can make
property.
significant savings and increase their available cash flow by claiming depreciation for the property once it is income producing.
depending on the model or price
off-the-plan will contain new
range.
fixtures and fittings*. Therefore the depreciable value of these items will be higher. The owners are also capital works deductions for the
off-the-plan that investors often
building structure, which means
fail to consider is the property
more deductions are available to
depreciation benefits available.
claim over the life of the property
There are significant depreciation
(forty years).
It is important to note however that the property must be completed and be generating an income to claim depreciation deductions. A completed property purchased
illustrates how the depreciation
Newly built properties constructed
One big benefit of purchasing
a property purchased off-the-plan.
the-plan property, the below table deductions available will vary
eligible to claim the maximum
deductions available to the owner of
Focusing on a kitchen in an off-
When it comes to the fixtures and fittings in an off-the-plan property, investors should be aware that not all assets are created equal. In most cases, those assets with a higher starting cost will generate higher depreciation deductions.
08
a higher starting cost generate higher deductions than those with a lower base cost, both in the first full financial year and over the first five years combined. As one example, a high range oven costing $5,150 will receive $858.51 in first year deductions and $3,080.74 in the first five years, while a low range oven purchased for $1,425 will get $237.55 in first year deductions and $1,183.42 over the first five years. This is a difference of $1,897.32 in the first five years.
off-the-plan will typically attract
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As you can see, those assets with
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If this is the difference an investor
A specialist Quantity Surveyor
can see from just one asset,
such as BMT Tax Depreciation will
it’s understandable why they
liaise with the Property Developer
would want to give due thought
to request information about the
to all the plant and equipment
property. This information is used
assets installed, as they add
to provide a detailed estimate of the
up to substantial depreciation
depreciation deductions that will
differences.
become available once the property has been completed and is income
Please note that the low-range
producing.
microwave oven purchased for $220 would receive a 100 per cent
By obtaining this information,
write-off in the first year.
the owner will have a far more
It is recommended that investors consult with their Accountant to
comprehensive idea of the end cost involved in holding the property. The additional cash flow created
seek advice when purchasing a
from a depreciation claim can be
property off-the-plan and also
put towards future loan repayments
speak with a reputable Quantity
or to help save for future
Surveyor to get an estimate of the likely depreciation deductions
investment property purchases.
available for the property.
ASSET
COST
FIRST YEAR DEDUCTIONS
FIRST FIVE YEARS (CUMULATIVE DEDUCTIONS)
*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
ABOUT THE CONTRIBUTOR Article provided by BMT Tax Depreciation. Bradley Beer is the CEO of BMT Tax Depreciation. Please contact 1300 728 726 for an Australia-wide service. 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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INTERIOR MAKEOVER FOR WINTER
SIMPLE TIPS FOR AN INTERIOR MAKEOVER THIS WINTER The change of seasons can be the perfect time to give your home a makeover. The good news is that you don’t need to spend an exorbitant amount of money redecorating your home.
REORGANISE
USE LIGHT
As time passes it can be amazing
The winter months offer the least
how many objects don’t return
amount of natural light. One way to
to their proper place. It can even
counter this is to make use of lamps.
be the new possessions that we
If you are able to use warm yellow
accumulate but don’t really have a
light producing bulbs, they can
place to store them. Look over the
bring a feeling of warmth as well
rooms of your house, and see what
as light. Lamps also work as a great
really needs to be out on display
way to add interest to a room and
Below are some helpful tips to help
and what you might be able to store
act as a focal point.
you decorate for the cooler months.
away.
REARRANGE
ACCESSORISE
Simply rearranging your furniture
Add some pops of colour into
can give a room an instant lift.
a neutral pallet with various
Winter can be a great time to
accessories. Throw cushions,
create cosy nooks and personal
picture frames or rugs can add a
spaces. But before you start moving
burst of colour as well as interesting
couches, tables and other furniture,
focal points in a room. Alternatively,
take some time to plan where you
you can find inexpensive prints
will shift the furniture to.
from home ware stores that can add colour and style to plain walls.
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WE DON’T DO LIP SERVICE Actions prove who someone is, words just prove who they want to be. Don’t fall for lip service, speak to a Century 21 agent today.
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