M A R C H
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
CONTRIBUTORS Charles Tarbey Tim Lawless
Sasha Karen Chris Gray
Bradley Beer
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES Century 21 Australia
WELCOME TO
THE MARCH 2018 ISSUE OF
C21 MARKET PULSE
(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
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CHAIRMAN STATEMENT
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02-03
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INVESTING IN PROPERTY Your Empire CEO, Chris Gray.
Century 21 Chairman, Charles Tarbey.
04
RESIDENTIAL VS COMMERCIAL DEPRECIATION
National housing values 0.8% lower since
Experts you should have on your property
Corelogic Head of Research, Tim Lawless.
BMT Tax Depreciation, Bradley Beer.
08-09
investment team.
September peak.
TWO OFFICES IN TWO MONTHS
06-07
Should you invest in a house or unit?
Is now a good time to sell?
CORELOGIC NEWS - MARKET TRENDS
N
05
CREATE AN INVESTMENT WINNER
10-11
Landlords urged not to skimp on maintenance.
New Century 21 office expands after just two months of opening.
Terri Scheer Landlord Insurance.
(REB) Magazine.
GARDENING IN AUTUMN
Sasha Karen, Editor of Real Estate Business
Autumn gardening tips.
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CHAIRMAN STATEMENT
IS NOW A GOOD TIME TO SELL?
BY CHARLES TARBEY CHAIRMAN CENTURY 21 AUSTRALASIA
Selling a home can be a stressful process, from choosing an agent to negotiating offers and everything in between. However, before all this begins, one of the most contentious questions for many surrounds choosing the best time to sell. The reality is that there is no
For those looking at selling in the
who may have entered the market in
as the process is dependent on
of important considerations:
sold themselves. A good agent will
definitive ‘right time’ to sell property so many different factors and
coming months, here are a number
individual circumstances.
INCREASED COMPETITION
The current market appears to be
Firstly, the level of competition for
cooling and week on week, stock
levels continue to increase in many parts of the country. CoreLogic
recorded a 0.1 per cent decline in
national dwelling values in February 2018, however as of the first week of March, we saw 8.39 per cent more stock compared to the same time this year.
The conversations I am having with agents on the ground suggest that
this trend is affecting the different markets.
a vendor’s property is important
to consider if looking to sell in the current market.
Both sellers and agents need to
carefully determine their pricing strategies as there may be more
properties to compete with in certain markets.
An expert real estate agent may be able to advise on the most suitable pricing strategy for your property
based on their knowledge of the area and market. However, I encourage vendors to be cautious of agents
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recent years when many properties have a strong appreciation of the local market conditions and will
be able to advise on an appropriate pricing.
Prospective vendors should also
note that a benefit of an increasingly competitive market is the enhanced ability to sell then buy in the same
market. Those wishing to do so may not find it as difficult compared to the past few years, and may also be placed in a better position to negotiate a good price.
BUYER ACTIVITY Some prospective vendors may be listening to negative comments
about the real estate market and
may be sitting on the fence about
the decision to sell. It is important to note here that buyer activity is
still very strong in many markets.
This remains the case even in light
Of note, data from the December
REGIONAL AREAS In recent months, Century 21 noted the growth potential of regional
areas and the likelihood of the halo effect continuing to spread out
of tougher regulations on foreign
in many markets, thousands of off the plan sales are reaching
settlement stage and are due to
complete over the next 12 months. In the Reserve Bank of Australia’s
“Too much supply can drive down prices and make a listing harder to sell.”
of years in the eastern capital cities. Vendors will need to pay close
attention to this in the coming
months, particularly when coupled
with already rising levels of supply. Too much supply can drive down prices and make a listing harder to sell.
Finally, choosing the right agent to
manage your transaction is essential and it may be worthwhile to steer away from social media when
looking to do so.
It is important to consider the
difference between ‘activity’ and a strong social media presence
Lowe once again highlighted the
come on stream over the next couple
annual increase in unit values was
‘action’, as agents who display
policy meeting, Governor Philip
apartments that is scheduled to
up 14.6 per cent, while the largest
AGENT CHOICE
minutes of the March monetary
considerable additional supply of
annual increase in house values,
(12.8 per cent).
S U P P LY interest remains quite strong
Geelong region recorded the largest
seen across the Illawarra region
investors.
Despite the fact that buyer
2017 quarter reported that the
and appearance of success online from capital cities. It appears this
prediction is ringing true and will likely continue.
Regional dwelling values saw a
0.9 per cent increase over the past
three months to February according to CoreLogic, whilst most capital
cities have seen moderate declines. Values were higher in the regional
areas of all states except for Western Australia.
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may not necessarily be the most successful agent in reality.
Referring to the credentials and
actual results of a prospective agent should play a significant in your
decision making processes around which agent to select should you
believe that now is the right time to list your property.
CORE LOGIC NEWS - MARKET TRENDS
NATIONAL HOUSING VALUES 0.8% LOWER SINCE SEPTEMBER PEAK According to the CoreLogic Home Value Index results for February, dwelling values edged lower across most capital cities over the month, with broad based falls weighing down dwelling values nationally for the fifth consecutive month. The 0.1 per cent decline in national dwelling values in February 2018 was more moderate than the 0.3 per cent declines recorded over
each of the previous two months, however, it marked the first
time national values had fallen
for five consecutive months since
March 2016. There continues to be a divergence between capital city and
BY TIM LAWLESS, CORELOGIC HEAD OF RESEARCH
cent) and Adelaide (steady), with
clearance rates. Sydney, Melbourne
across Darwin (-0.9 per cent) and
moderate falls in values throughout
the largest monthly decline recorded Sydney (-0.6 per cent). Values were lower in Melbourne (-0.1 per cent),
Brisbane (-0.1 per cent), Perth (-0.2 per cent), and Canberra (-0.3 per cent).
regional values.
CoreLogic head of research, Tim
Lawless, said, “The overall softening in the market becomes more evident over the past three months.”
“The overall softening in the market becomes more evident when looking at the change in values over the past three months.”
Over the three months to February 2018, Adelaide (0.1 per cent) and Hobart (3.2 per cent) were the
only capital cities in which values rose. Sydney, which has been the
strongest market for value growth over recent years, saw the largest
fall in values over the three month
period, down -2.4 per cent. Sydney was followed by Darwin, which
has been persistently weak over
recent years, and saw values fall
by a further -2.0 per cent over the
capital city index falling by -0.3 per a 0.4 per cent increase in combined
February than they did in January.
when looking at the change in values
regional markets, with the combined cent over the month, compared to
and Perth all recorded more
The rate of decline eased over the second half of February although
values have fallen in most capital
Month-on-month falls were
cities during February, the CoreLogic
the month, values fell across every
of decline eased late in the month,
generally mild but broad based. Over
daily index indicates that the rate
capital city except Hobart (+0.7 per
in line with improving auction
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quarter.
TWO OFFICES IN TWO MONTHS
NEW CENTURY 21 OFFICE EXPANDS AFTER JUST TWO MONTHS OF OPENING A CENTURY 21 office based in Melbourne has expanded into a second location, having only been open for just two months. In Victoria, the CENTURY 21
Wyndham City office, directed by
Sanj Pahil and Dinu Sangroha, has
BY SASHA KAREN, EDITOR OF REAL ESTATE BUSINESS
great results and we are confident they will continue to accomplish
wonderful things for their clients as their business expands.”
Mr Pahil said that their team had previously been operating as an independent, but they felt the
CENTURY 21 brand would provide stronger offerings for their clients.
seen such burgeoning success in
“We decided to make the switch as
directors decided to expand into
that such a sizable, global brand
areas to establish CENTURY 21
said.
its surrounding suburbs that the
we were drawn by the enviable edge
Hume City, Craigieburn and nearby
would give our clients,” Mr Pahil
Hume City, which is due to open in the next few months.
Mr Sangroha added that CENTURY 21’s platforms and support would
Charles Tarbey, CENTURY 21
assist towards further success while
Mr Pahil and Mr Sangroha to the
solutions.
chairman and owner, welcomed
CENTURY 21 network and said that
their commitment to their work ethic was commendable.
Pictured above: Sanj Pahil, Principal/Director
also being able to create tailor-made
Pictured above: Dinu Sangroha, Director/Auctioneer
“We feel confident that we have
all the necessary tools to manage successful property transactions
“Opening one office can be a
in burgeoning markets, where first
on two office openings in such a
and land development opportunities
mammoth effort alone, so to embark
home buyers are incredibly active
short space of time is very impressive
are appealing,” Mr Sangroha said.
and a testament to the team’s work
The story New CENTURY 21 office expands after just two months of opening first appeared on Real Estate Business (REB). Article Link: https://www.realestatebusiness.com.au/ breaking-news/16988-new-century-21-officeexpands-after-just-2-months-of-opening
ethic,” Mr Tarbey said.
“The team has set the bar high for
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INVESTING IN PROPERTY
SHOULD YOU INVEST IN A HOUSE OR A UNIT? 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 first-hand, and applying that knowledge to his own portfolio now worth over $15m. It’s a question that divides investors
– is it better to buy a house or a unit?
BY CHRIS GRAY, YOUR EMPIRE CEO
size, which will therefore not rise
located 5-10km from major cities,
the advantage of being much easier
lock-up garage, as these will be the
as much in value. Houses also have
to make renovations and structural alterations to – units often require permission from strata.
While houses give you the added
benefit of land that can appreciate over time, units can be a more
affordable option. Depending on
the area’s demographic, units can be a more attractive option for
with at least two bedrooms and a
easiest to tenant. When considering properties to add to your portfolio,
it’s important to diversify with a mix of both houses and units across a
variety of locations to help protect
you from too much of a shift in the market.
Tips for investing in units:
tenants, especially in suburbs where
C O N S U LT A N I N D E P E N D E N T VA L U E R
be solid investments, the option
For instance, in some of the more
Securing an independent valuation
on a variety of factors, including
house might cost around $1.5 million
property. Even experienced investors
to risk, and property prices in
– which will appreciate – few people
emotional purchase decision. An
investing in.
rental price of around 5 per cent
with a fair, unbiased assessment
term, and you might only end up
worth doing your own independent
per week) as only a limited amount
prices are heading. This is especially
While both have the potential to
house prices are particularly high.
that will best suit you does depend
expensive Australian suburbs, a
is essential before investing in any
your investment strategy, adversity
to buy. While that can give you land
can fall into the trap of making an
the suburbs you are considering
will be able to afford an optimum
independent valuer will provide you
($1,500 per week) beyond the short-
of a property’s true value. It’s also
securing rent of 2.5 per cent ($750
research to get an idea where market
of people can rent it at that price.
crucial when investing in off-the-
The saying ‘land appreciates and buildings depreciate’ gives many
investors the impression they should favour houses over units. The value of a $500,000 house, for instance, might be split between $200,000
When it comes to choosing between
value of the building. In comparison,
you should always opt for those that
for the land and $300,000 for the
a house or unit as an investment,
a $500,000 unit has a smaller land
are within the median area price,
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plan units as the market could
change during construction and
prices could decrease, causing you to pay more for the property than it is worth.
BE AWARE OF ONGOING EXPENSES Units often come with many
recurring costs that can add up in the long run. Before investing in
a unit, purchase a strata report to understand the monthly fees you will need to pay, and request to
see building insurance records and
activity over the past few years. Be
and compare the price guide to
the selling price. When you go to
inspections, make sure you also get the size of the property (internal
and external), the anticipated rental
return and other important numbers
to ensure you’re comparing like with like.
particularly careful when investing
CONSIDER USING A BUYER’S AGENT
as a lift, a gym, swimming pool or
Viewing a succession of properties
in units with fancy amenities such
24-hour concierge. While attractive, these mean strata fees will be higher.
ABOUT THE CONTRIBUTOR
can be time consuming and stressful to say the least, especially when you are juggling everything else on your plate. A buyer’s agent will take on
COMPARE UNITS When starting your unit search,
keep track of the properties you have viewed. Seeing 10 open houses a day can be overwhelming and confusing when you’re looking back at the
details a few weeks later. To gain
most of the stress – from managing the property hunt, to handling
negotiations, right through to the
purchase itself. Using a buyer’s agent is a great way to leverage your time and quickly find the investment property that’s right for you.
an understanding of the market,
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.
construct a simple spreadsheet
https://www.yourempire.com.au/
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RESIDENTIAL VS COMMERCIAL DEPRECIATION
THE DEPRECIATION RULES MAY CHANGE BUT THE GOAL IS THE SAME Those considering purchasing an investment property will often ask whether a commercial or a residential property will provide them with more deductions in the form of depreciation. There are many important factors an investor needs to be aware of when making their choice between these two investment options.
TYPES OF DEPRECIATION, HOW THE RULES CHANGE Depreciation deductions apply to
investment properties in two ways. Deductions can be claimed for
the depreciation of the building
structure known as a capital works deduction, and for the plant and
equipment assets* contained within the property.
In a commercial investment
property, the commencement date
BY BRADLEY BEER, BMT TAX DEPRECIATION
the Australian Taxation Office
which does this is carpets, which
available capital works deductions,
restaurants and pubs than in retail
(ATO) allows investors to claim the (structural items such as the bricks, building and roof) is the 20th of July 1982. While in residential
will depreciate at a higher rate in office buildings or a residential dwelling.
properties, capital works can only
be claimed for properties in which construction commenced after the
15th of September 1987. Depending
on the age and type of building, you
IN COMMERCIAL PROPERTIES, TENANTS CAN ALSO CLAIM
can claim either 2.5 per cent or 4
In commercial properties, the ATO
historical construction cost for the
be able to claim some depreciation
per cent annually of the property’s capital works allowance.
The deductions for plant and
equipment assets contained in
both residential and commercial properties will depend on the
individual effective lives of each
asset as set by the ATO. In the case
makes allowances for the tenants to for assets. Commercial tenants are
able to claim depreciation on any fitout they add from the starting date
of their lease. This can include assets such as desks, blinds, shelving,
carpet, vinyl, firefighting equipment and security systems.
of residential properties, it also
If a commercial tenant removes
second hand properties*. However,
and disposes of the item, they may
depends on the purchase date of
the ATO does deem that some assets used in one commercial industry
may depreciate at a higher rate than they would in a residential property or even a different commercial
industry. One example of an asset
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items at the end of their tenancy
also be able to claim the remaining depreciation for assets removed
and scrapped when they vacate the property. If the owner of the asset
decides to on-sell items installed or keep them for future use, this does
not apply. In cases where items are
that may apply to their building. A
discuss this with their Accountant as
inspection, take measurements and
on-sold the tenant should always
this may have other tax implications. It should also be noted that
commercial building owners are
also entitled to claim depreciation of assets installed and left behind by a previous tenant once a tenancy has
ceased, so it is important to contact a Quantity Surveyor to ensure
Quantity Surveyor will arrange a site estimate the structural costs as well as assess what plant and equipment items the building contains. They
will then provide a tax depreciation schedule outlining all of the
depreciation deductions available
for the property owner’s annual tax assessment.
that each party makes their claim correctly.
RULES ABOUT CLAIMING AND OCCUPANCY OF THE PROPERTY Legislation from the ATO states that a residential property owner cannot claim depreciation for a building
they themselves solely occupy. They
*Under new legislation outlined in the
building that is income producing.
Tax Integrity) Bill 2017 passed by
can only claim depreciation on a
In a commercial property however, there are ways that the owner can
occupy the investment property and still be able to claim depreciation. For example, if the property is
purchased by a company or a trust,
the owner may still be able to occupy the premises as a tenant and claim property depreciation.
It is also worth mentioning that the ownership structure can have an
impact on what marginal tax rate
when making a depreciation claim.
Treasury Laws Amendment (Housing Parliament on 15th November 2017,
investors who exchange contracts on a second-hand 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
C O N S U LT W I T H A DEPRECIATION EXPERT No matter what type of property an investor chooses to buy, it
is recommended they contact a
specialist Quantity Surveyor for
further advice on the depreciation
Paper document at www.bmtqs.com. au/2017-budget-whitepaper
ABOUT THE CONTRIBUTOR To obtain a free estimate of the deductions available for any
investment property, contact the expert team at BMT Tax
Depreciation on 1300 728 726.
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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/
CREATE AN INVESTMENT WINNER
CREATE A WINNING STRATEGY FOR YOUR INVESTMENT PROPERTY Some landlords believe that the cost of landlord insurance outweighs the peace of mind, protection and financial security benefits. This is not true. Landlords need to think how they
BY TERRI SCHEER INSURANCE
flooding. Cooking is left unattended and your property burns to the ground.
As a landlord you can be left out of
pocket with no regular rental income and significant repair bills. This is
where landlord insurance can help.
LOSS OF RENTAL INCOME Loss of rent is the most common
issue landlords experience. This can occur if a tenant defaults on their
rental payments. If a property has
been damaged, loss of rent can occur while repairs are made.
What can go wrong? Financial
would cope financially – such as
reward is not without its risks. For
TENANT DAMAGE
their investment property stopped
with owning a rental property
This can be accidental or malicious.
making mortgage repayments – if
landlords, the main risks associated
generating rental income.
include:
Terri Scheer Insurance has seen
LEGAL LIABILITY
kicked-in doors and intentional
If a tenant suffers bodily injury
However, even the most fastidious
Landlord insurance costs as little
as one dollar per day to safeguard your investment property income from unruly tenants, unpaid rent
and other costly risks. It can be a winning strategy.
Imagine this scenario: You’ve worked
instances of holes punched in walls,
on the property and the landlord is found responsible, there may
be significant legal expenses and compensation payments.
hard to build your family’s financial security and prosperity. You
purchase an investment property
with a view to capital growth and
the benefit of steady rental income. But then the unexpected occurs. Your tenant runs into financial
difficulty and stops paying the rent. A broken water pipe causes major
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damage to carpets and floors.
tenant can spill red wine on a carpet.
CLAIMS
%
Loss of rent
32%
Tenant damage – includes accidental, malicious, deliberate and pet
30%
Reletting cost exceeds bond
12%
Water damage
8%
Theft
5%
Storm damage
3%
Other
10%
PERCENTAGE OF TERRI SCHEER INSURANCE CLAIMS PAID TO LANDLORDS
Jan – Dec 2016, Landlord Preferred Policy
NOTE: Claims can include more than one type of loss.
With landlord insurance from
More than 8000 property
property owners can seek protection
offer Terri Scheer Insurance cover
Terri Scheer Insurance, investment
from these risks to help secure their wealth.
Who is Terri Scheer Insurance? Terri Scheer Insurance is Australia’s
management offices across Australia as part of their all-inclusive service
to landlords. This makes us the most referred landlord insurer in the country.
leading landlord insurance specialist
Additionally, Terri Scheer Insurance
of the Suncorp Group, Terri Scheer
hundreds of thousands of dollars or
and was established in 1990. Part
insures nearly 200,000 investment properties.
has paid single claims as high as
substantially more than the annual premium.
ABOUT THE CONTRIBUTOR
That’s a major vote of confidence
The information contained in this article is
from Australia’s rental property owners.
intended to be of a general nature only. Terri
While most other insurers include
for any loss incurred as a result of reliance upon
Scheer does not accept any legal responsibility it. Insurance issued by Vero Insurance. Read the
landlord insurance as an add-
Product Disclosure Statement before buying this
on product, it is the Terri Scheer
insurance and consider whether it is right for
Insurance specialty. Our sole focus is
you. Contact Terri Scheer on 1800 804 016 or
to support landlords to protect their
visit our website at www.terrischeer.com.au for a copy.
investments and safeguard their wealth.
https://www.terrischeer.com.au/
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GARDENING IN AUTUMN
AUTUMN GARDENING TIPS Autumn can be a great time to get out in your garden. By making valuable preparations before winter sets in, it may help to ensure it survives the chillier months.
Cultivating a vegetable patch is also
a great way to get your kids involved in the garden. It teaches them
the benefits of growing your own
vegetables and they’ll love getting
their hands dirty building something from scratch.
Covering your soil with mulch will stop it from eroding, keep it moist and prevent weeds from growing. This means less work for you! If you are inclined, you may even
plants actually thrive over the cooler
colder.
trees and can prevent long branches
4. COVER UP WITH MULCH
be planting in your garden, many
for hearty meals as the weather gets
new growth, can help to shape
are often bare.
to be the prime time of year to
provide you with fresh ingredients
autumn. Pruning plants encourages
throughout winter when branches
Although autumn may not seem
celery and leeks in autumn, can
another important gardening task in
help your garden to look neater
1. MAKE A VEGETABLE PATCH
veggies. Planting cabbage, broccoli,
Pruning shrubs, bushes and trees is
from breaking. Pruning can also
HERE ARE FOUR TIPS TO CONSIDER FOR YOUR GARDEN OVER AUTUMN:
months, including some great winter
3. GET ON TOP OF YOUR PRUNING
2. PLANT COLOUR FOR AUTUMN, AND PLAN FOR SPRING Autumn is also a great time to plant
colourful blooms such as pansies and paper daisies, so that when winter
rolls around, they are in full bloom and your garden has a warming
splash of colour. You can also plan
for spring in autumn. April to May is the perfect time to plant spring flowering bulbs such as tulips, daffodils, and freesias.
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consider making your own compost, using food scraps from the kitchen to add extra nutrients to your soil. Compost is an inexpensive way to
make sure your soil stays healthy all year round.
LOOKING FOR STANDOUT SERVICE? WE HAVE YOU COVERED. Century 21 may be the world’s largest real estate franchise, but our focus is on being the very best. With state-of-the-art technologies and leading industry resources at our fingertips, we have you covered this Autumn. Call us today: 1300 24 21 21
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