C21 Market Pulse | November 2022 | Australia

TO THE November 2022 ISSUE OF C21 m ArKeT PULSe

PU b LISH er

Century 21 Australia Pty Ltd

C o NT r I b UTor S

Tim Lawless Chris Gray Realestate.com.au

e DITor IAL e NQUI r I e S

Century 21 Australia (02) 8295 0600

AD ver TISING e NQUI r I e S Century 21 Australia (02) 8295 0600

DISCLAI mer

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CoreLoGIC Home vALUe

INDeX: SIX

moNTHS oF FALLS For AUSTr ALIA’S reSIDeNTIAL PROPERTY MARKET

BY TIM LAWLESS, HEAD OF RESEARCH, CORELOGIC

The geographic scope of Australia’s housing downturn broadened through October with every capital city and rest-of-state region (apart from regional South Australia) recording a drop in housing values last month.

CoreLogic’s national Home Value Index (HVI) moved through a sixth month of consistent declines, as values fell a further -1.2% in October.

Across the capital cities the monthon-month decline ranged from a -2.0% fall in Brisbane to Perth where dwelling values nudged -0.2% lower. Across the rest-of-state regions, monthly falls of more than -1% were recorded in Regional NSW (-1.7%), Regional Victoria (-1.4%) and Regional Queensland (-1.3%).

Although more regions are recording a fall in housing values, the rate of declines remain diverse. The pace of falls has eased over the past two months across Sydney and past three months in Melbourne but has gathered momentum in Brisbane where home values are now falling the most rapidly of any capital city or rest-of-state region. The changing dynamic across the largest cities has

seen the rate of decline across the combined capitals index ease from a -1.6% drop in August to -1.4% in September and -1.1% in October. CoreLogic’s Research Director, Tim Lawless said it is probably still too early to claim the worst of the decline phase is over.

“Despite the easing in the pace of decline, with Australian borrowers facing the double whammy of further interest rate hikes along with persistently high and rising inflation, there is a genuine risk we could see the rate of decline re-accelerate as interest rates rise further and household balance sheets become more thinly stretched,” he said.

“To-date, the housing downturn has remained orderly, at least in the context of the significant upswing in values. This is supported by a below-average flow of new listings that is keeping overall inventory levels contained. There’s also tight

labour market conditions, an accrual of borrower savings and a larger than normal cohort of fixed interest rate borrowers, who have so far been insulated from the rapid rise in interest rates.”

Housing values across most of the broad regions remain well above pre-COVID levels, implying most home owners remain in a positive valuation position relative to their purchase price.

At the combined capital city level, housing values have fallen -6.5% following a 25.5% rise through the upswing. Sydney home values are down -10.2% since peaking in January (after a 27.7% rise) and Melbourne values down -6.4% since February (after rising 17.3%).

Click here to read the full article

6 WAYS To ADD vALU e To YOUR HOME

Thinking of selling up?

Here’s how to make your home more sellable.

Making your property feel bigger, brighter and more appealing to prospective buyers is often as easy as a lick of paint, doing a bit of landscaping, or giving the floors and polish.

Ready to get started? Here are 6 easy ways to add value to your home.

1. PAINT

A fresh coat of paint can do wonders, making your home seem newer, cleaner, and more contemporary.

If you’re willing to spend the time and energy painting your home yourself, you’ll only need to pay for the paint, roller and brushes, drop cloths and other painting accessories.

Alternatively, if your budget is a little more flexible, pay for the professionals to do it.

TIP: Always pick neutral colours that’ll stand the test of time or – at the very least – remove dated colours.

2. IMPROvE THE GARDEN AND OUTDOOR LIvING AREAS

Cut back overgrown trees, hedges, bushes and foliage, clear up dead

BY REALESTATE.COM.AU

leaves, get rid of weeds and dead plants, clean any paved areas, and add fresh mulch if needed.

If you have a deck, give it a good scrub, and apply a coat of oil to get it looking spick, span and sellable.

The same goes for any outdoor furniture, features like barbecues or fire pits, and outdoor dining areas.

3. ADD STORAGE

Most buyers look for homes with ample storage. This means a good amount of cupboard, cabinet and wardrobe space, shelving, racks, and wall and door hooks are essential.

Add wall shelving to rooms like the kitchen, laundry and living area, and hooks to pretty much any room in the home.

If you have freestanding wardrobes in the bedrooms, consider changing them to built-ins – these are a big pull for buyers.

4. IMPROvE THE FACADE AND LANDSCAPING

Your home’s facade is the first thing prospective buyers will see, and we all know first impressions count.

Give the exterior of your home a serious revamp by having it repainted, or simply paint the

front door and spruce-up the front garden, paving and fencing if budgets are tight.

5. GIvE THE FLOORS SOME LOvE

Whether you’ve got floorboards, carpet, tiles or something else entirely, any kind of flooring does well with a nice spruce-up to entice buyers.

Have your carpet professionally steam-cleaned to remove stains and get it back to its original glory or remove them altogether and go for hardwood floors – the price is often less than you think.

6.

UPDATE THE bLINDS AND CURTAINS

Contemporary window treatments can make your whole home feel different and add value to your property.

Remove thick, bulky curtains, and replace them with light, airy ones or even shutters or vertical blinds.

Not only will these give your home a fresher, more modern vibe, but they’ll also let in more natural light – making your home appear airier, brighter, and bigger.

For more selling tips visit realestate.com.au/advice

o WNING HALF

A P ro P er TY IS be TT er THAN o WNING 100% OF NOTHING

In light of tougher and tougher borrowing conditions for home buyers and investors, many property buyers need to be more creative and entrepreneurial if they want to enter market.

Interest rates have risen 2.75% which means that many mortgage repayments cost twice as much as they did a year ago. Lenders still add assess an individual’s serviceability on a couple of percent higher and often only take 75% of the rental income into account. Most Australians can now only borrow a fraction of what they could a few years ago.

So how can you buy a home or investment property if the bank won’t lend you enough money? Your Empire surveyed a number of their clients and found they typically fall into 3 camps: (1) They have a deposit and can get a mortgage (2) They’ve got a deposit but can’t get a mortgage or (3) They can get

a mortgage, but they haven’t got a deposit.

BY CHRIS GRAY, CEO, YOUR EMPIRE

buy and (2) when you have the cash to pay any shortfall.

If you can’t currently get a mortgage it could be a while until you either earn a lot more money, interest rates drop or serviceability rules are relaxed.

If you haven’t got a deposit it could be quite a few years until you save one up given that you will probably need $50k - $150k+, based on 5-10% deposit and 5% stamp duty/ legals for a $500k - $1m property.

Some may think that it’s not too bad as the property market is unlikely to do much over the next few years and so they’re not missing out on much. Seasoned property owners that have invested over the decades know that it’s much easier to buy a property now that ticks 10/10 of the boxes than it is when the market is rising and you’re competing against many other buyers with deeper pockets than you.

My personal golden rule of buying over the last 25 years is to buy when (1) when you have the cash to

So how can you invest in the market when you don’t have a deposit or can’t get a mortgage? The answer is collaborating or getting into a joint venture with another person that has what you’re missing and needs what you have.

From our survey, we found that some keen buyers earn $100-300k as a household income and could easily service a $1m mortgage, however every time they almost save a deposit, they go and blow it on an overseas holiday.

We’ve also found some keen savers that don’t earn that much money but have squirrelled away a $50k - $150k deposit. There’s also those that have generous parents that have given them an early inheritance but given they’re still studying, don’t qualify for a mortgage.

By working together, these two types of buyer could buy a property together, whether it’s a home or an investment. The high-income

earner could get the mortgage, pay any negative gearing and claim any tax deduction at a high rate. The deposit holder putting their deposit in and not having the stress of being tied to a mortgage.

The term of the deal could be anything, but I would suggest somewhere around 5, 7 or 10 years so the property has time to grow. Either party could buy the other one out at any time if their circumstances change and they do save a deposit or get a higher paying job. Both parties could receive say 6-7% return on any money they put into the deal which is much more than they could get compared to cash in the bank and they would get an extra 1-2% if they had pulled the deposit out of existing equity. The interest would be capitalised and taken out of the capital gain on sale, with the remaining gain split 50/50. So, can this work? Yes, it can as I did one myself back in 2008 in the

last GFC. I did it with a complete stranger who lived the other side of the world and we both made money. The exact details are described in my book ‘Go For Your Life. How to turn your weekdays into weekends through property investing’ (download excerpt here).

I’m generally not a fan of doing joint ventures as you’re always reliant on a third party and their circumstances could change over time. However, I’d much rather do a joint venture and own 50% of a property than 100% of nothing as then you’ve got no chance of buying a home or making money from an investment. There will be a few additional costs to set up a joint venture, but they are insignificant when the property has grown, and you look back many years later. If you are going to do a joint venture, you need to ensure you have some guidance from those experienced in these matters and you need to plan for the worst-case scenario. Having cash buffers and

a good legal agreement in place is essential, as is getting advice from suitably qualified independent professional advisers.

Your Empire is working with their clients to match them together and welcome others that are keen to enter the market.

A b OUT THE CONTRI b UTOR

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

W HAT Y o U N ee D To KN o W be F ore

b UYING A H ome To re N ovAT e

Fixer-uppers are tempting prospects. Such properties often let you buy into a desirable neighbourhood below typical market value. That’s because you’re not buying a typical house.

Before purchasing a home to renovate, you must think carefully. Ask yourself: Will this house be worth the work I put in? To find your answer, follow these three steps.

1. ADD UP THE COST

First, consider everything that needs to be done to the home. Always assume that more work will be required, rather than less. Add up all the estimated costs for materials and labour. If you plan on doing some of the work yourself, factor in your own labour costs as well.

Seeking the services of a professional building inspector helps a lot during this step. Their

expertise and objective advice can ensure you’re not missing any issues, and therefore costs, hidden behind the walls or under the roof.

2. CALCULATE THE FINAL vALUE

Regardless of whether you plan to sell the house or live in it, you need to estimate what the finished value will be. Search for comparable listings that have sold in your area to get a rough idea of what you could expect. Alternatively, ask a Century 21 Real Estate agent for their opinion.

3. FIND THE DIFFERENCE

Finally, subtract the total estimated costs from the estimated final value. Subtract an extra 5-10% for unforeseen issues. The number you get should be the absolute upper limit of what you offer. Anything more, and what appears to be a great deal can easily turn into a money pit.

If that final number looks good to you, then that fixer-upper may be just what you’ve been looking for. Time to start planning your renovation.

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