C21 Market Pulse | July 2024 | Australia by CENTURY 21 Australasia

WELCOME

P u B l ISHER

Century 21 Australia Pty Ltd

CONTRIB u TORS

Chris Gray REI Super

Century 21 Armstrong-Smith

EDITORIA l ENQ u IRIES

Century 21 Australia (02) 8295 0600

ADVERTISING ENQ u IRIES

Century 21 Australia (02) 8295 0600

DISC l AIMER

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.

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W H y WO ul D I NEVER B uy M y OWN HOME?

W HAT WILL HAPPEN TO PROPERTY AFTER FREEDOM DAY?

BY CHRIS GRAY, CEO, YOUR EMPIRE

I currently own around $25m in residential property but I don’t live in my own home. I haven’t lived in my own home for over 25 years and I’m not sure if I’ll ever live in my own home. Why is that I hear you say? I rent. I’m proud to rent and I think I’ll be a renter for the rest of my life.

There’s always been a stigma about renting and an assumption that only ‘poor people’ rent. But that’s not so true these days. There’s many of us that choose to rent and here’s some of the reasons why.

1. My money works harder elsewhere – I typically buy $1-2m units as investments in Sydney’s blue-chip suburbs and typically get 3-4% rent.

2. I can rent a more expensive home for cheaper – I typically rent $5-10m homes for around 1-2% rent. Expensive properties rent for a lower percentage than median priced properties as there’s a small market that can afford them and so the price falls.

3. $2,000 a week sounds like a lot of money to pay out in rent, but if that gets me into a $5m home and then I buy 5 x $1m properties instead that rent for $750/wk each, I get $3,750/ wk coming back in. Both ways I own $5m of real estate but by

renting I get an extra $1,750/wk which equals $91,000/yr.

4. If all the properties I own are investment properties, it means that all my mortgage interest, strata fees and other expenses are all tax deductible whereas interest on a home loan isn’t.

5. When you sell a home, you don’t need to pay capital gains tax which is a major saving compared to selling an investment. However, if I never sell my investment properties, I never pay the capital gains tax anyway. My mother has lived in the same house for 50 years and so would you rather it be capital gains free on death or tax-deductible interest for the 50 years of your life?

6. Every time we move, we move to a better property in a better suburb and so if a landlord kicks us out, it’s a positive feeling.

7. Whenever we move, we go off on holiday and let the removalists pack, move and

unpack. The cleaner then comes in and makes the beds and organises everything in the kitchen. The $91,000 we save every year is more than enough to pay for a removalist, cleaner and a holiday.

8. They say you can’t do what you want with a rental but is that really true? What landlord would complain if we said we wanted to repaint and recarpet at our cost or if we wanted to change the light fittings or door handles. If we’re saving $91,000 a year, who cares if we spend $5,000 - $10,000 on improvements.

9. Rent money is only dead money if you don’t invest the equivalent elsewhere.

10. Having a portfolio of a number of median priced properties in different suburbs is not only diversified, it’s generally more steady and solid as there’s always a number of buyers

and renters that are interested in the properties as they are affordable. Having one very big expensive property is much riskier as it can take months or even years to find a renter or buyer if you’re chasing a certain price. Banks are much more cautious on lending as much money on a single property, which confirms their attitude to risk.

The reason this works so well is the arbitrage of rental yield between median priced properties that are in high demand and expensive properties that are in low demand.

Sure, there are also some tax deductions, but tax is always a bonus, not the reason we rent or invest.

Choosing to rent rather than own your own home is called Rentvesting – invest where you get the highest return and then live where you get the most emotional satisfaction.

ABOUT THE CONTRIBUTOR

Chris Gray is CEO of Your Empire, a buyers’ 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 Facebook: @ChrisGraySydney

A u STRA l IAN HOMEOWNERS GAIN $59K WEA lTH BOOST FROM RISING HO u SING VA lu ES IN F y 24

BY CORELOGIC

Australian dwelling values increased a further 0.7% in June, taking growth to 8.0% across FY2023-24. This is the equivalent of a $59,000 increase to the median dwelling value in Australia, which is now $794,000. The annual rise was in stark contrast to the FY2022-23 when CoreLogic’s national index was down -2.0%.

In that year, annual growth was weighed down by a -7.5% drop in values in the nine months following May 2022, when the cash rate target started to rise.

Despite the strong annual gain, the trend growth rate has eased since the highs of mid-2023 when the quarterly rate of change peaked at 3.3%. The most recent June quarter saw dwelling values rise by 1.8% which is roughly in line with the March quarter (1.9%) and December quarter last year (1.8%).

CoreLogic’s research director Tim Lawless said the national index has found a groove, rising between 0.5% to 0.8% month on month since February. “The persistent growth comes despite an array of downsid e

risks including high rates, cost of living pressures, affordability challenges and tight credit policy. The housing market resilience comes back to tight supply levels which are keeping upwards pressure on values.”

Beneath the national headline numbers the market is running at different speeds, but most regions are trending higher in value.

Melbourne and regional Victoria were the exceptions, with values down -0.2% and -0.3% respectively over the month. Hobart has also shown weaker conditions, although values were relatively flat in June (+0.1%). Hobart joined Melbourne and regional Victoria recording a subtle decline in values over the June quarter (-0.3%) to be slightly

lower over the financial year (-0.1%).

Regional Victoria was the only other broad region to record a fall in values over the year, down half a percent.

Strong conditions have remained a feature of the mid-sized capitals, especially Perth where values surged another 2.0% in June to be 23.6% higher over the year. Adelaide values increased 1.7% in June to be 15.4% higher over the financial year and Brisbane values were 1.2% higher over the month and 15.8% higher over the year.

Regional markets have shown a similar trend to the capitals, with Regional WA leading the pace of capital gains with a 1.5% rise in

Continued over page

Continued from previous June and 16.6% increase over the financial year. Regional SA and Regional Qld have also recorded strong growth conditions while regional Victorian dwelling values fell by half a percent over the year and regional Tasmania recorded a mild 0.7% rise.

The growth trends are reflected in advertised stock levels, with the strongest markets continuing to show a severe shortage of homes available for sale. Over the four weeks ending June, the number of homes advertised for sale in

Perth were 23% lower than at same time last year and 47% lower than the previous five year average. Adelaide (-43%) and Brisbane (-34%) are also recording real estate listings that are significantly below average for this time of year.

On the other hand, Melbourne listings have risen to be 14% above the five year average and Hobart listings have been elevated for several years, tracking 46% above average.

Demand side factors have also been influential, especially with interstate migration rates tracking well above

average in WA, Queensland and previously SA.

Strong housing demand, despite downside factors, is also evident in the estimated volume of home sales. Nationally, the annual number of homes sold was 8.6% higher than a year ago and 4.8% above the previous five year average. The largest jump in annual sales relative to the historic five-year average has been in Perth, where the number of homes sold last year was 29% above average levels.

Click here to read the full article

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S u PERANN u ATION

2024-2025:

WHAT yO u NEED TO KNOW

BY REI SUPER

As we start the new financial year, significant changes will be made to Australian superannuation. These updates are set to impact how Australians save for retirement. This article will guide you through the key updates and how they might affect your retirement planning.

SUPERANNUATION GUARANTEE INCREASE

For most people, superannuation contributions come from their employer. Your employer pays a percentage of your income into your super account, which is called a Superannuation Guarantee (SG).

From 1 July 2024, the SG rate will increase from 11% to 11.5%. This change means employers must contribute an additional 0.5% to their employees' superannuation funds. This is part of the government's strategy to gradually increase the SG to 12% by July 2025, aiming to boost retirement savings for Australian workers.

Learn more about how super works.

ADJUSTMENTS TO CONTRIBUTION CAPS

Adjustments to the super contribution caps for both concessional (pre-tax) and

Table 1: Concessional and non-concessional contribution caps

non-concessional (after-tax) will be made starting 1 July 2024. These changes are designed to allow individuals to make extra contributions to superannuation accounts. Review these adjustments to see if you can further boost your super savings for retirement.

The concessional and non-concessional contribution caps are summarised above. Refer to Table 1 on page 9.

* Concessional contributions include:

Employer contributions (including contributions made under a salary sacrifice arrangement)

Personal contributions claimed as a tax deduction.

#Non-concessional contributions include personal contributions for which you do not claim an income tax deduction.

BRING FORWARD RULE

As the non-concessional contributions limit is increasing to $120,000 from 1 July 2024, the bring-forward rule will also change. The rule allows you to make up to 3 years’ non-concessional contributions in a single financial year (eligibility conditions apply). Refer to Table 2 on page 10.

Continued over page

Bring

To find out more about the bring forward rule and eligibility criteria, call us on 1300 13 44 33 to book an appointment to speak with one of our superannuation experts, or complete our online form

GOVERNMENT’S SUPER CO-CONTRIBUTION SCHEME

Another update is the adjustment to the government’s super co-contribution scheme. This scheme is designed to help eligible low to middle-income earners boost their super savings. Refer to Table 3 on pg 10.

HOW TO PREPARE FOR THESE CHANGES

Review Your Super Contributions

With the increase in the SG rate, now is an excellent time to review your contributions. Check you are getting paid the new SG rate of 11.5% and consider whether you can use the higher concessional contribution caps to boost your super balance, or take advantage of the Government’s co-contribution scheme.

If you’re an REI Super member, you can download our app to review your most recent super payments and balance, or simply login to your online account here now.

We also recommend checking your pay slips to see that you’re being paid super at the new SG rate of

11.5% after July. (Your employers may pay super each quarter, rather than each pay cycle, so you may not see an increase in your contribution until after the end of September 2024).

Understand the Impact on Your Retirement Planning

These changes to superannuation could have significant implications for your retirement planning. Understand how these changes might affect your retirement outcomes by keeping yourself informed.

By staying informed and proactive, you could position yourself to make the most of these changes. With the right strategy, you could turn these updates into opportunities to enhance your retirement readiness.

Seeking professional advice on the complexity of superannuation

rules can be invaluable. The right advice at the right time can make a big difference.

GOT A SUPER OR RETIREMENT QUESTION?

Get expert answers at no extra cost. Whether it’s choosing the right investment options, finding the best way to make additional contributions, insurance advice, fund performance or retirement options, REI Super members have access to it all. Good advice is easy to find. Call us today on 1300 13 44 33.

If you are eligible and make personal contributions during the financial year, the government will pay a super co-contribution. Visit the ATO website to find out if you are eligible or call us on 1300 13 44 33 to learn more.

The information contained in this article does not constitute financial product advice. REI Super does not give any warranty to the accuracy, completeness or currency of the information provided. Although REI Super makes every reasonable effort to maintain current and accurate information, you should be aware that there is still the possibility of inadvertent errors and technical inaccuracies. REI Superannuation Fund Pty Ltd ABN 68 056 044 770, AFSL 240569, RSE L0000314 Trustee of REI Super (ABN 76 641 658 449), SPIN REI0001AU, RSE R1000412. MySuper unique identifier 76641658449129. July 2024.

Table 2: Bring forward rule

Table 3: Government's Super Co-contribution Scheme

E MPOWERING A u STRA l IANS FOR REA l ESTATE S u CCESS: AN INFORMATION NIGHT WITH C21 ARMSTRONG-SMITH

The amazing team at Century 21 Armstrong-Smith recently came together at their Property Panel Q&A evening, which hosted over 100 attendees from the eastern suburbs and beyond. The aim was to bring the community together and provide confidence to home buyers and investors amidst the current housing and interest rate crises.

Apart from being an informative session the event benefited the community with almost $5000 being raised for local charity, Ways and Youth Family, with a competitive auction!

Century 21 ArmstrongSmith Co-directors Nicholas Armstrong-Smith (Licensee) and Shona Armstrong-Smith (Head of Property Management) held a panel discussion with Charles Tarbey (Chairman of Century 21 Australia) and Clive Matheison (Partner, Cato & Olive) to analyse and debate the property market, recent budget changes, interest rates and investment strategies. Matheison brought a unique perspective on the role the media plays in the real estate market, formerly acting as Business Editor/Editor at The Australian, Senior Adviser and

Cabinet Director to multiple ex NSW premiers and Chief of Staff to Prime Minister Malcom Turnbull.

Nicholas Armstrong-Smith noted that “The media can both exacerbate and alleviate the housing affordability problem. By sensationalising market trends, it can influence buyer behaviour, potentially destabilising prices. Conversely, responsible reporting can educate the public, promote transparency and encourage effective solutions by highlighting policy impacts and innovative housing models.”

The great Australian dream is remarkably resilient. Auction clearance rates in Sydney have maintained a percentage in the high 60’s across most of the year, despite rising prices and the unrealised promise of mortgage

rate cuts. For 59% of Sydneysiders, that dream is home ownership, while 30.4% call a rental property home. The dream, whether it's owning your own home or building a portfolio of properties, remains strong.

Century 21 Armstrong-Smith is a progressive, independent agency catering to Sydney's Eastern Suburbs property market and surrounding suburbs, with a close-knit team of local professionals who are experts in tailoring individualised property campaigns

C21 Market Pulse | July 2024 | Australia