C21 Market Pulse | June 2018 by CENTURY 21 Australasia

J U N E

M A R K E T

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P U L S E

C21

PUBLISHER Century 21 Australia Pty Ltd

CONTRIBUTORS Charles Tarbey Tim Lawless Eliot Hastie Chris Gray Bradley Beer Terri Scheer Insurance

EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600

ADVERTISING ENQUIRIES

WELCOME TO

THE JUNE 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 N E

CHAIRMAN STATEMENT

02-03

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INVESTING IN COMMERCIAL

Top Tips for Selecting a Real Estate Agent.

The pros and cons of commercial

Century 21 Chairman, Charles Tarbey

property investment.

08-09

BMT Tax Depreciation, Bradley Beer.

NATIONAL DWELLING VALUE UPDATE

04 YIELD A BETTER RETURN

Values Post First Annual Decline Since 2012.

10-11

Key ways to yield a better return

CoreLogic Head of Research, Tim Lawless

on investment.

NEW LOOK FOR NEW OFFICE

First Rebranded Century 21 Office Opens

Terri Scheer Landlord Insurance.

AUCTION STRATEGY

in Australia.

Three tips for purchasing at auction.

Real Estate Business Journalist, Eliot Hastie

WHERE SHOULD YOU BUY?

06-07

Should you buy in your suburb or elsewhere? Your Empire CEO, Chris Gray.

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C H A I R M A N STAT E ME N T

TOP TIPS FOR SELECTING A REAL ESTATE AGENT B Y C H A R L E S T A R B E Y,

CHAIRMAN CENTURY 21 AUSTRALASIA

The right agent can be the difference between a lacklustre result and a fabulous one. The right agent can mean a hassle free sale compared to a stressful sale. Put quite frankly, selecting the right agent can often be the best decision one makes when selling their property. TAs expected, the housing market

time to sell. Those that are planning

continues to weaken moving

on selling this winter are probably

deeper into Winter with dwelling

trying to find the right agent to sell

values falling 0.1 per cent in May.

their property.

This decline was largely fuelled by softening conditions in Sydney and Melbourne where the majority of Australia’s housing value resides. Hobart and regional areas continue

Having known and worked with thousands of agents over four decades in real estate, here are three top tips to help you find a top real estate agent:

Many people select an agent because they are willing to reduce their commission or they have a low commission rate to begin with. My view is that if an agent can’t negotiate with you to preserve their commission rate, it’s unlikely that they will be the best negotiator

to buck the trend with Hobart up 3.7 per cent for the quarter and

COMMISSION RATES

when it comes to getting the best

regional areas up 1 per cent. Also,

PERFORMANCE VS ACTIVITY

Brisbane recorded a 0.2 per cent

Often, people will select a real

I would carefully assess an

estate agent because they see lots

agent’s negotiation, people and

of ‘For Sale’ signs from the agent in

presentation skills during any

their local area.

listing presentation as this will be a

increase in values in May and Adelaide a strong 0.5 per cent increase. With such a mixed bag of conditions, it is understandable that many Australians may be confused as to whether or not now is a good

Instead of reviewing ‘For Sale’ signs look for the agent with the highest

price for your property.

window into how your property sale is managed.

number of ‘SOLD’ signs. Focus on

Also, agents that have the lowest

performance not activity.

commission rate in a given market

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may have so because they are struggling to list and sell property. Keep in mind the old saying – price is what you pay and value is what you get.

successful sales, sale prices etc.

picture as to which are the in any given

Unlike days past, vendors now have

help you

Vendors should look to research agents and pay close attention to data such as: days on market, commission rates, number of

right agent for your

paints a very clear

RESEARCH, RESEARCH, RESEARCH

online and at their fingertips.

chances of finding the

This information often

top agents

a raft of agent related information

do into local agents, the better your

market. This in turn will narrow down your shortlist.

“Unlike days past, vendors now have a raft of agent related information online and at their ﬁngertips.”

While research can be time consuming and complex at times, keep in mind how delighted you may be if you achieve a sale price

Agent section is

beyond your wildest

critical to a successful

dreams.

property sale. I strongly believe that the more research you

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needs.

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N AT I O N A L DW E L L I N G VA L U E U P DAT E

VALUES POST FIRST ANNUAL DECLINE SINCE 2012

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

The May CoreLogic home value index results confirmed that national dwelling values dipped by 0.1% over the month, fuelled by weaker conditions in Melbourne and Sydney while regional dwelling values continued to tick higher.

Commenting on the May results,

decline in Melbourne dwelling

CoreLogic head of research

values over a three month period

Tim Lawless said, “The negative

since February 2012. Melbourne’s

headline growth rate is a symptom

housing market was previously

of weakening housing conditions

looking more resilient to value

across the capital cities, led by

falls relative to Sydney. Recently

Melbourne and Sydney where

however, auction clearance rates

previously, capital gains were

have been deteriorating, inventory

nation-leading. Sydney and

levels are rising and transaction

Melbourne comprise approximately

activity is tracking 12.9% lower than

60% of Australia’s housing market

one year ago.

by value, and 40% by number, so

Dwelling values slipped lower

Australian dwelling values slipped

the performance of these two cities

0.1% lower in May, taking the annual

has a larger effect on the headline

change (-0.4%) into negative

market performance.”

territory for the first time since

Dwelling values continue to rise

values recorded a month-on-

across the regional markets. “The

month fall in Sydney (- 0.2%),

combined regional markets have

Perth (-0.1%), Darwin (-0.2%) and

helped to offset a broader decline,

Canberra (-0.1%), however, Sydney

with dwelling values consistently

was the only capital city other than

rising, albeit at a much lower pace

Melbourne to record a decline in

relative to the growth seen in

dwelling values over the past three

Sydney and Melbourne over the

months, with a 0.9% fall.

October 2012. In a sign the housing market downturn is becoming more entrenched, May marked the eighth consecutive month-on-month fall since the national market peaked in September last year, taking the cumulative fall in dwelling values to 1.1% through to the end of May 2018. Similar to the current softening in housing market conditions, the previous downturn, which ran briefly from late 2015 to early 2016, was also driven by tighter credit

over the month across five of Australia’s eight capital cities. Apart from Melbourne, dwelling

previous growth phase.

Hobart’s impressive run of capital

“Dwelling values outside of the

gains continued and is showing

capital cities nudged 0.2% higher

little signs of slowing down with

over the month to reach a new

dwelling values jumping 0.8% over

record high in May.”

the month to be 3.7% higher over

conditions. It lasted for only five

Drilling down across the individual

months nationally, with national

capitals shows Melbourne has taken

dwelling values falling by 97 basis

over from Sydney as the weakest

points before surging higher again

housing market, recording a 0.5%

on the back of two 25 basis point

fall in values over the month to be

cuts to the cash rate which led to a

1.2% lower over the three months

rebound in housing credit growth.

ending May. This is the largest

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the rolling quarter and 12.7% higher year-on-year.

NEW LOOK FOR NEW OFFICE

FIRST REBRANDED CENTURY 21 OFFICE OPENS IN AUSTRALIA Australia has become one of the first countries in the world to open a newly branded Century 21, or C21 as it is now, to the delight of the local community. Century 21 The Hills District

BY ELIOT HASTIE, JOURNALIST AT R E A L E S TAT E B U S I N E S S

customer experiences, the new look will help to future-proof the business in a lot of ways. We can’t wait to see what other offices in the network achieve when they make the switch over the coming months,” Baldacchino said. The global rebrand will see offices across Australasia update signage

more to come with the move. “The repositioning of the brand will be supported by a significant cross-channel marketing campaign that will be detailed at Century 21’s upcoming convention on Hamilton Island,” Mr Tarbey said. Mr Tarbey said that a smooth rollout was his top priority and he hoped

opened its doors in April and

consumers were as excited as he

adopted the new C21 branding

was about the changes.

scheme that is currently being

“While we are delighted by the

rolled out in 80 countries

positive reaction to the first

across the world.

rebranded office in Australia, corporate office remains

Co-principal Martin Baldacchino said that

focused on ensuring a

the new branding and

smooth rollout of the new

office space had been

branding and on delivering

well received in the

a powerful marketing campaign aimed at getting

community.

consumers as excited about

“Customers have

the new C21 as our offices

commented on how

are,” the chairman said.

upmarket and elegant the office looks and we believe this has played a role in our team attracting such strong foot traffic and interest from the get-go.” Mr Baldacchino said that the new look would help the business as it

and refresh marketing collateral, along with creating new websites.

moves into the future.

Chairman and owner of Century 21

“Along with hard work and a

the repositioning was more than

steely focus on delivering positive

Australasia Charles Tarbey said that just a logo change and that there is

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The story First rebranded Century 21 office opens in Australia first appeared on Real Estate Business (REB). Article Link: https://www.realestatebusiness.com.au/ breaking-news/17330-first-rebrandedcentury-21-office-opens-in-australia

WHERE SHOULD YOU BUY?

SHOULD YOU BUY IN YOUR SUBURB OR ELSEWHERE? B Y C H R I S G R A Y, C E O, YO U R E M P I R E Chris Gray began his property investing journey when he was 22 years old. With only $35,000, he spent the next nine years learning about investing firsthand, and applying that knowledge to his own portfolio now worth over $15m. When thinking about investing in a property, or purchasing one for

blinker out other possibilities, which

estate’s future value. Therefore, it’s

might prove advantageous if you’re

worth doing your research to learn

willing to make a few concessions.

everything about a suburb that

If you investigate the suburb that

could impact on your investment.

you’re looking at buying in with

For many people, proximity to

plenty of due diligence, being

places of work, leisure and public

sure to take note of the supply and

transport are key factors. There

demand, the chances are you’ll

are also emotional drivers – the

make an investment decision that

proximity of a suburb to their

you’re happy with, and not a costly

social network and the proximity

mistake.

of schools for parents who have school-age kids are just some examples. It might not be appealing

WHAT TO LOOK FOR IN ANY SUBURB

right now, but future transport, infrastructure and population

yourself, you may already have

Buying a property is a major

a suburb in mind. It’s important

financial commitment and

not to be too fixed in your ideas

the location you choose will

on location – you don’t want to

significantly impact your real

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growth can greatly change the value of a suburb. It’s all about gaining a return on your investment down the track.

THE CASE FOR BUYING IN YOUR CURRENT SUBURB

growth area. This carries the least

Whether you’re looking for a

return. To assist you in finding the

unit or a house to live in or as an investment, the biggest advantage of investing in the suburb where you currently live is that you’re familiar with the area. If you put yourself in your prospective tenant’s shoes, you have the benefit of local knowledge – where the best streets are, what types of public transport options are available, and whether there are any new infrastructural developments that are contributing to your suburb’s economic growth. It’s also easy to go and inspect the prospective property at different times of the day and to understand whether it will be a good liveable experience. When it comes to ongoing management, you’ll be around the corner if there’s any maintenance issues or you need to change property managers. The biggest downside of investing in your current suburb, however, is that you may not be in a growth area. No matter how well you buy, if the area doesn’t grow, nor will your wealth. There might be plenty of supply of property, but if not many people are moving into the area, these areas can stagnate for a decade. By asking yourself these questions, it will force you to think critically about the suburb you have in mind, putting distance between yourself and an emotional purchase decision.

amount of risk, as your number one priority becomes financial best location, independent reports from companies like CoreLogic, SQM Research and Residex are resourceful. The downside of not knowing the area, however, is that you may not know if the location would appeal to a range of potential tenants. If the suburb that you’re looking at buying in is located on the opposite side of the country, it makes it extremely hard to go and do research – particularly if you believe in the idea that you need to inspect at least 50-100 properties before you even start to get an idea as to value and opportunity. If the location has promising capital growth, then

If you open your mind to investing elsewhere, you have the ability to buy in the highest possible

The process of finding the right location for your next home or investment property is a financial as well as a long-term decision – and there’s no right or wrong answer. It’s also an emotional decision. Be emotional if you need to, but still keep a balanced financial perspective when there’s a lot of money at stake. However, if you keep in mind these key things – the amount of supply of a particular property in the area, the demand from buyers and tenants for that same type of property, proximity to amenities, public transport and leisure facilities – choosing which suburb to invest in might be easier than you think.

there’s likely going to be a lot more people searching for a property there too, making it even harder for you to find the right property. You may need to invest in a local buyers’ agent, someone who has the expert knowledge and experience to find you the perfect investment. It’s also going to be much more of an emotional rollercoaster when you invest in another area, especially if it’s interstate. What if buying in a growth area will only get you an 80m unit, whereas in your local area you could get a 4 bedroom house for the same

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

money? Just because it’s bigger, or

a week and often spends $5m+ a year

has more land content, it doesn’t

renovating on others’ behalf, providing a

guarantee that you’ll make more money if there’s no growth in that area. An 80m unit may not be

REASONS TO THINK ABOUT INVESTING ELSEWHERE

IN THE END IT’S YOUR MONEY, YOUR CALL

unique insight into market conditions and buyer and seller sentiment. Chris hosts “Your Property Empire’ each Friday on Sky News Business channel, where he

what you’re used to, but if it’s an

interviews various heads of property research

area where there’s no more supply

companies and major industry figures. Chris

of property and there’s massive demand from high-income young locals, prices are likely to rise.

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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INVESTING IN COMMERCIAL

THE PROS AND CONS OF COMMERCIAL PROPERTY INVESTMENT

BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N

When people think about investing in property, residential real estate is often what comes to mind. But commercial property investment is always worth considering, whether you’re looking to diversify your portfolio, create an alternative avenue of cash flow or simply want to take advantage of the benefits of this type of asset.

We outline some of the key considerations when investing in commercial property as well as the advantages and disadvantages of this type of investment.

For obligation free advice on your investment property situation, contact the expert team at BMT on 1300 728 726.

C O M M E R C I A L I N V E S T M E N T C O N S I D E R AT I O N S •

There are three commercial property sectors – retail, office and industrial. Each sector has its own risks, rewards, trends and considerations and these must carefully be weighed up before deciding which will be the best choice. Furthermore, there are a multitude of different industries you can be involved in within these sectors, from retail to aged care or warehousing, for example. Each industry will offer different yields and returns for the owner, depending on the performance of that industry. Investors should carefully consider this performance as well as future forecasts when deciding what industry they’d like to be involved in.

•

If you’re going to invest in commercial property, you need to understand how this particular market works, how it differs from the residential market and what its drivers are. In addition to population growth, which is the main driver in the residential market, commercial property is also driven by a number of wider economic factors.

• The economy and interest rates – this will impact on consumer spending, demand for services and business performance as well as the landlord’s ability to pay back a loan. •

Changing consumer habits, often going hand in hand with evolving technologies, have an impact on the commercial property market. Take for instance the rise in online shopping in the past decade which has created demand for more industrial warehouse properties.

•

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•

• The economy and interest rates – this will impact on consumer s pending, demand for services and business performance as well as the landlord’s ability to pay back a loan. •

Demographical trends and patterns can affect commercial property and demand. For instance, with the rise of baby boomers making a sea change, there is now more demand for healthcare services in areas traditionally considered holiday locations. As further examples, our aging population has driven the demand for more aged care facilities while the growing need for childcare services has created more competition and demand for this type of property in Australia.

•

Financial considerations – obtaining finance for a commercial property differs from getting a residential mortgage and can often be more complex. For instance, pricing may not be set in stone and the terms can sometimes be negotiated. Individuals should consider whether a commercial finance structure will suit them and their investment goals.

• It’s different in nature to residential investing and these differences should be understood by investors. For instance in commercial property, tenants are able to make alterations, such as a new fit out in a hairdressing salon. It also differs in terms of who pays what bills.

ADVANTAGES There is the potential for greater

It allows investors to take advantage

It can be more complex to obtain

return on investment. In residential

of booming industries and changing

finance for a commercial property.

investing, yields are often in the

societal trends. Although there may

For instance, certain types of

3-5 per cent range while it’s not

be greater risk, the rewards can also

commercial property may be

uncommon to get yields of 6-12 per

be superior.

considered higher risk to the lender

cent for a commercial property.

DISADVANTAGES

or prove more difficult for them to value. This can mean that financing may be tricker than for residential

Leases tend be longer – three, five

While commercial leases typically

or ten year leases are quite common

last longer than residential leases, it

in commercial property. Ideally,

usually takes longer to find a tenant

this means the owner won’t have

when the property becomes vacant.

Due to financing requirements, the

to deal with the costs associated

Investors need to consider whether

investor may need a larger deposit

with bringing in new tenants so

they’ll be able to cover the costs

to secure approval for a mortgage.

frequently.

of holding the property while it is

property in some instances.

untenanted. It may be a way to get into the property market sooner if a would-

Commercial real estate is often

be investor is struggling to save up

more sensitive to economic

for a traditional home deposit. For

conditions.

instance, they may choose to get their foot on the property ladder by purchasing a commercial car park that costs less than a house but still offers solid returns and allows them

ABOUT THE CONTRIBUTOR The commercial property market can be volatile and is often less predictable than residential markets.

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.

to build some equity.

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

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YIELD A BETTER RETURN

KEY WAYS TO YIELD A BETTER RETURN ON INVESTMENT BY TERRI SCHEER LANDLORD INSURANCE Making improvements to a rental property is a balancing act. To get the best returns on your property it needs to be tailored to your target market, but this requires the right kind of budget, allocated wisely.

MEETING TENANTSâ&#x20AC;&#x2122; EXPECTATIONS

START WITH THE BASICS

Your property manager will also be

set of needs, there are basic

able to advise you on the type of

improvements that you can make to

tenants who are most likely to be

your property that will appeal to any

attracted to your property and their

future tenant. These should be at

specific expectations. Families, for

the top of your to-do list.

While tenants will have a diverse

example, might only be looking at properties with a fully fenced yard, while elderly renters could be

When buying a residential investment property or when a

looking for safety measures such as rails on steps and wheelchair

tenant puts in notice, itâ&#x20AC;&#x2122;s time

access.

to take stock and consider what

Once you have all the information

improvements to the property could

and a clear picture of your target

attract a higher rental return.

market, set a suitable budget that

The first step is to speak with

will ensure a greater rental return

your property manager, who will know what tenants in the area are looking for and what features they expect for the rent they pay. In certain rental brackets, tenants may expect additional inclusions such

without over-capitalising on the value of the property itself. Then allocate the budget carefully, prioritising only the most important improvements for your target market.

1. General maintenance Ensure electricals and plumbing are in order, the property is neat and tidy, and any problems such as broken roof tiles or sticking windows are fixed. Replace all old or non-functioning appliances and make sure there are robust security locks on all doors and windows. An overhaul like this can add an increase to your weekly rent alone.

2. Modernise With the proliferation of mobile

as a dishwasher. If these are not

phones, laptops and other

provided, they may look elsewhere.

electronic appliances, it is important to have plenty of power points and

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internet connectivity options for

•

Offering a garden maintenance

tenants. If your property is already

service and factoring the fee

on the NBN (or soon will be) be

into the rent.

sure prospective tenants are aware of this.

•

Adding an alarm system: even a local alarm can make a rental property more appealing and is

3. Storage

cheaper than a back-to-base alarm with call out fees.

Ample storage is especially important in apartments. Aside

•

Replacing out-dated light

from built-in wardrobes in all

fittings with smart, low

bedrooms, consider adding

budget modern fittings can

additional storage in the kitchen

be a surprisingly affordable and

and bathroom and a linen cupboard

effective way to lift the look and

if possible. If tenants see plenty

feel of your property. Installing

of built-in storage, they can see

LED or other low power usage

they won’t have to move large

fittings will also appeal to

wardrobes or buy additional storage

tenants, as doing so will reduce

cupboards.

their power bills.

WHERE TO ALLOCATE YOUR REMAINING BUDGET

Above all, timing is important. You

Anything you spend from your

order to avoid leaving the property

budget beyond the above items is discretionary depending on the condition of the property and what will appeal most to your target market. Important improvements to consider might be: •

•

want to aim to achieve as much as possible within a short timeframe in vacant for longer than absolutely necessary. With careful planning and key targeted improvements, you will not only gain a higher rental return but also attract more potential tenants to view and potentially apply for the

A fresh paint job throughout,

property.

using a neutral colour scheme.

This could afford a greater pool of

Replacing worn or stained

tenants, to find the most reliable

carpets with new carpet or hard

Terri Scheer Insurance Pty Ltd is the promoter of Trustbond. Trustbond is issued by AAI Limited and distributed by Traitperception Australia Pty Ltd (Traity).

and most likely to stay long term.

flooring. •

Adding a tool shed in a suburban property or bike

ABOUT THE CONTRIBUTOR

storage in an inner-city property.

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

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A UC T I O N ST R AT E G Y

THREE TIPS FOR PURCHASING AT AUCTION Auctions can be intimidating, especially if youâ&#x20AC;&#x2122;re a first home buyer or have never attempted to purchase at auction previously. But it can be a fun experience and has the potential to result in a great purchase. Here are three tips for buying a home at auction:

1. FAMILIARISE YOURSELF WITH THE PROCESS

2. SET A LIMIT

3. BE INFORMED

If you have time, attend auctions of similar properties to what you are looking for and in the same suburb. Listen and watch the process and become familiar with how it works. This will allow you to form a better understanding of the local market and to get comfortable with the auction process.

It is easy to get caught up in the pace of an auction and the desire to win. Overcome this temptation by setting a budget before you start. Know your upper limit and be strict with yourself on stopping at that limit. However, also consider having a small contingency set aside in case the difference between winning your dream home and not getting it is a matter of $1000 $2000. Over the lifetime of your loan and property ownership, a small amount of extra money may be worth spending if you truly feel the property is worth purchasing.

Ensure you have done your due diligence on the property itself. Make sure you have a building and pest inspection in hand and all your finances prepared. If possible, have your solicitor to look over the contracts in place prior to auction. Make sure that you know what conditions are in place, as some auctions require a deposit to be paid on the day.

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DONâ&#x20AC;&#x2122;T SETTLE FOR AVERAGE

Big dreams are realised after small goals are achieved consistently. At C21 we believe in continually pushing ourselves and others to defy mediocrity and deliver extraordinary experiences.

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