2022SeptemberPULSEMARKETC21
WELCOME TO THE September2022 ISSUE OF C21 m ArKet pULSe
Chris Gray Tim BradleyRealestate.com.auLawlessBeer
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pr O pert Y m A r K et U p DAte 03 Home Value Index: Housing downturn accelerates as falling values become more widespread CoreLogic Head of Research, Tim Lawless b UYING pr O pert Y 04 5 ways to narrow your property search realestate.com.au GA r D e N t I p S 06 Three easy steps for spring-ready outdoor living INV e S tme N t pr O pert Y 09 House versus unit: which is the better investment? Your Empire CEO, Chris Gray tAX D epre CIAt ION 12 5 hidden tax deductions in an investment property BMT Tax Depreciation CEO, Bradley Beer C21 MARKET PULSE 01 CENTURY 21 C ONTENTS S EPTEM b ER 2022UnsplashonAlexanderBaileyimage:Cover
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Whether you’re buying your very first home or selling an investment property, our real estate experts offer the service and advice that Australians trust.
Contact your local C21 property expert for trusted service and advice.
BE GOODYOU’RECONFIDENTINHANDS
“The largest falls in regional home values are emanating from the commutable lifestyle hubs where housing values had surged prior to the recent rate hikes,” Mr Lawless said. “Over the past three months, values are down -8.0% across the RichmondTweed, -4.8% across the Southern Highlands-Shoalhaven market and -4.5% across Queensland’s Sunshine Coast.“
CoreLogic’s national Home Value Index (HVI) recorded a fourth consecutive month of decline in August, with the downturn accelerating and becoming more geographically broad-based. Down -1.6% over the month, the national index recorded the largest month-on-month decline since 1983.
After recording significantly stronger appreciation through the upswing, the fall in regional dwelling values is catching up with the capital cities Regional home values were down -1.5% in August compared with a -1.6% fall in values across the combined capitals. Between March 2020 and January 2022 regional dwelling values surged more than 40% compared with a 25.5% rise for the combined capitals.
The annual trend in housing values is rapidly levelling out. After moving through a peak annual growth rate of 21.3% in November last year, the annual growth rate across the combined capitals has eased back to just 2.2%. Values across Sydney (-2.5%) and Melbourne (-2.1%) are now below the level recorded this time last year.
H O me VALU e IND e X: HOUSING DOWN t U r N ACC e L er Ate S AS FALLING VALUES be CO me m O re
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WID e S pre AD
Every capital city apart from Darwin is now in a housing downturn, with a similar scenario playing out across the rest-of-state regions, where only regional South Australia recorded an increase in housing values for the Sydneymonth.continued to the lead the downswing, with values falling -2.3% over the month, however weaker conditions in Brisbane accelerated sharply through August, with values falling CoreLogic’s-1.8%.research director, Tim Lawless, said Brisbane’s shift into decline had been acute after almost two years of sustained growth due to record high internal migration and relative affordability.
C21 MARKET PULSE 03 CENTURY 21 P ROPERTY MARKET UPDATE
“It was only two months ago that the Brisbane housing market peaked after recording a 42.7% boom in values.
Over the past two months, the market has reversed sharply with values down
-1.8% in August after a -0.8% drop in July,” Mr Lawless said.
BY TIM LAWLESS, HEAD OF RESEARCH, CORELOGIC
Across the 41 regional SA4 subregions analysed, only seven areas recorded a rise in housing values in August including the northern suburbs of Adelaide (0.9%), Perth’s North East and Mandurah (0.6% / 0.5%) and the Coffs Harbour-Grafton region (0.6%).
Start by saving comparable properties to a collection in the realestate.com.au app when they’re first listed and take note of what they eventually sell for, compared to the initial advertised sale price. If you’re lucky, you may even spot some properties with prices that have dropped or have passed in at auction, which gives you the perfect opportunity to start the negotiations.
4. COMPRISE WHERE YOU CAN "Being clear about the dealbreakers is essential, otherwise a buyer could find themselves regretting a purchase." Bakos warned. "Being prepared to compromise on the non-essentials is vital though, otherwise a buyer could find themselves spinning their wheels for months (or even years), leading to lost opportunity and likely timing themselves out of the market they could have afforded.’”
BY REALESTATE.COM.AU
Forming a relationship with great agents can also help you get the inside track on upcoming properties.
Here are five ways to get your weekends back and move into your first home faster.
Ever rocked up to an open for inspection only to be told the property is under contract or was sold the day before? To minimise the frustration, phone the listed agents before you hit the road. Confirm the property is still for sale and the open for inspection is going ahead at the times advertised.
3. STUDY THE MARKET
1. MAP IT AND APP IT
according to buyer’s advocate Cate Bakos from Cate Bakos Property.
b UYING PROPERTY 5
Doing your research saves time, money and disappointment,
2. PHONE AHEAD
“The market in Perth is moving fast – Our sellers are receiving offers within the first week or two of their launch to market. Quite often we’re needing to cancel advertised home opens due to our listings being placed under offer.”
While you’re at it, press the agent around likely sale price to make sure it’s realistic for your situation, Josh Brockhurst, Licensee at Century 21 Team Brockhurst, said some agents are happy to give you the low down on the property and how the local market is trending to avoid wasting your time.
Tired of spending your Saturdays traipsing from one property inspection to the next? According to experts many first-home buyers are over-inspecting and under-researching.
The age old saying, ‘location, location, location’ is a classic for a reason. Because, while living close to amenities is great, busy major roads can be a headache and hurt resale values. The answer is simply to use the map function on the realestate.com.au listing and assess if the property is close to your favourite locals while avoiding those noisy rat runs.
“Knowledge is power! It makes for less wasted time, as well as a sharper idea of what to pursue and what the price tag is.”
Making a clear list of “must haves” and “nice to haves” is a great WAYS tO
C21 MARKET PULSE 04 CENTURY 21
Once you know it hits your criteria use the realestate.com.au app to save the property and add to your planned inspections. The new ‘planned inspections’ view clearly allows you to see your open for inspections on any given day –helping to sense check if there are any clashes.
NA rr OW YOU r pr O pert Y S e A r CH
exercise for would-be buyers to clarify the non-negotiables.
“If you can’t find at least five properties that match both your search criteria and budget within the last three months, it’s likely that your search for that budget isn’t yet Brockhurst’sfeasible.”
But for first-home buyers, learning that real estate a numbers game is crucial, according to Cate Bakos.
For more buying tips realestate.com.au/advice/buyingvisit
It’s easy to become emotionally attached to property. Imagining yourself waking up in a beautiful home in the perfect neighbourhood... the sales pitch writes itself.
“Like any shopping adventure, going in without a budget usually means confusion, wasted time and Herdisappointment."advice:"Log into realestate. com.au and focus on the SOLD tab in your selected areas.
C21 MARKET PULSE 05 CENTURY 21
5. GET MONEY SMART
Another great tip to avoid wasting time on wishful thinking is the market explorer function on the realestate.com.au app.
tip is to future-proof your purchase ‘With interest rates on the rise, it’s always advisable to plan ahead with your budget and allow yourself the “breathingspace” to be able to cope with a rate increase or two’.
One of the most popular choices for outdoor furniture is wicker. Wicker is weather-resistant and can withstand a lot of wear and tear. It also comes in a variety of styles, so you can find the perfect set for your space. Another popular option
One of the most important steps to having a spring-ready garden is decluttering and weeding. This means getting rid of any dead plants, debris or clutter that's been collecting over the winter. Weeding is also important, as it will help to remove any unwanted plants or grasses that are taking up space in your Oncegarden.you've decluttered and weed your garden, you can then move on to mulching. Mulching helps to protect the soil from being eroded, and it also helps to keep the moisture levels stable. You can buy mulch from your local garden centre, or you can make your own by using compost, leaves or bark.
C21 MARKET PULSE 06 CENTURY 21 G ARDEN TIPS
Once you've chosen your plants, it's time to start planting! Use a trowel or spade to dig a hole in the soil big enough for the plant's root ball, then place the plant in the hole and fill in with soil. Be sure to water the plant well after planting.
is patio furniture sets made from wood. These sets are often more expensive, but they are also very durable and can last for many years.
When it comes to planting new flowers and plants, there are a few things you'll want to keep in mind. First, be sure to choose plants that are compatible with the climate and soil type of your area.
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DECLUTTER AND WEED THE GARDEN
t H ree e ASY STEPS FOR S pr ING- re ADY OU t DOO r LIVING
Lookingthem.for
Spring is a time for new beginnings, and there's no better way to celebrate the season than by getting your garden ready for the warmer months ahead. This includes decluttering and organising your outdoor living space, weeding and mulching the soil, planting new flowers and plants, and making sure any outdoor furniture or equipment is in good condition.
If you're not sure which plants to choose, consult a local garden centre or nursery for advice.
If you're looking for something a little more casual, you could choose to decorate your outdoor living space with cushions, rugs and throws. This will add comfort and style to the area, and it can be changed out whenever you want a new look.
Whatever furnishings and decorations you choose, make sure they are weather-resistant and durable. This will ensure that they last through all of the seasons and that you get maximum enjoyment from
more advice on getting your outdoor living area and garden ready for a Spring or summer sale? Our C21 property experts can advice on how you on how to increase it's appeal to potential future owners as part of a full service property appraisal.
There are many different types of flowers and plants to choose from, so take your time and select the ones that best suit your taste and needs. Also, make sure to read the instructions on the plant label carefully, as some plants may require special care or maintenance.
FURNISH AND DECORATE YOUR OUTDOOR LIVING SPACE
PLANT NEW FLOWERS AND PLANTS
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a week in rent and so the price drops. Of those that can afford even $1,000 - $2,000 a week, even they don’t want to rent as the perception is that ‘poor’ people rent and the great Australian dream is to buy a house and so they do. This makes the rental yield drop even further. So often the more expensive house in Sydney and Melbourne might only rent for 1-3 per cent instead of units renting at perhaps 3 – 5 per cent over the long term.
A great advantage of buying a house is that it can be easier to add more value by doing renovations. If you have an 80m unrenovated unit and do an amazing renovation it will still be 80m as it’s not often you can bolt on some extra space unless you can add a balcony or build into a roof space. Therefore, there is often a cap as to how much value you can add. Whereas if you have a house on a large parcel of land then, subject to council approval, there could be the
If you try and buy around the median price of a city then by
MEDIAN PRICE
definition you’ve got a good chance that 80% of the locals can afford to buy it or rent it which is good as you’re always likely to have a demand. If you want to buy in a good inner-city suburb that’s close to transport, leisure, schools etc then those properties are often priced well in excess of that median price as a city’s median is an average of the CBD, the inner city and the much further out suburbs. Similar to the example above, the median price in Sydney is around $1m, but you’ve got no chance of buying a house for a $1m in the best inner-city suburbs.
H OUS e V er SUS UNI t : WHICH IS t H e better INV e Stme N t ?
RENOVATIONS
LOCATION AND PRICE POINT
BY CHRIS GRAY, CEO, YOUR EMPIRE
They say that “land appreciates, and buildings depreciate” and so for many investors that means they should always buy a house rather than a unit. Houses have a higher percentage of land especially when you compare it to a high tower unit when hundreds or even thousands of units all share the same small parcel of land below.
As houses are typically more expensive than units in the same area, then you also need to charge more rent if you are looking to get the same percentage return on your investment. As the asking price goes up, the less people can afford it and so the price then falls. Not many people can afford $2,000 - $3,000
If you want to buy a house in some of the best inner-city blue-chip suburbs then it may well cost you a minimum of $2-3m+ if you’re looking at Sydney or Melbourne and Brisbane or Perth could be setting you back $1m+. Not many investors have that kind of money and even if they did, do they really want to punt all that money into one single asset? The choice is then to either buy a unit, or to buy much further out from the CBD and then you run into the issue of there being a greater land supply the further out you go and potentially less demand from higher income earners as they typically don’t want to commute as far.
RENTAL YIELD
However, it’s not quite as simple as that. Many more factors have to be taken in to account such as which location you are buying in and what your budget is.
C21 MARKET PULSE 09 CENTURY 21 I NVESTMENT PROPERTY
C21 MARKET PULSE 10 CENTURY 21
STRATA
If you buy a house then the chances are you will own the land and so you won’t have to deal with a strata or a body corporate unless you are part of something like a golf course project. Some people hate the thought of having their nosy neighbours with nothing else better to do, get involved in their business and dictate what they can or cannot do to their investment property. This is great if you want to be a hands-on owner but there is a number of investors that do like strata especially if there are nosy neighbours there that do get involved, these owner occupiers in unit blocks can be great for keeping control of the building and for making sure that other renters follow the rules and keep the place clean. As all the bills are being shared, they can ensure you’re paying the right price for repairs and maintenance and that the strata are managing the property correctly.
My investment strategy is a long term buy and hold.
SO, WHAT IS RIGHT?
demand). I therefore stick to the blue-chip inner-city suburbs as I believe there’s no more land for development as there’s 3 storey height limits and each property is built right up against their neighbours (limited supply). There’s also lots of young professionals who earn high salaries and have a high disposable income (high demand).
I avoid CBD’s as there’s no limit to supply as developers can keep building upwards. I also avoid the outer areas as I think there is more land for redevelopment (high supply) and there’s less disposable income as the locals are more likely to be blue collar workers with families the further you go out (less
a 5-10 per cent capital growth over the long term than buy a house much further out where I might make 20-30 per cent overnight but then only make 0-5 per cent over the long term. If I was in the trades and looking to be more active and turn over a property every year or two, my answer may well be different.
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: @YourEmpire
opportunity to build out the back, add another level or even subdivide and add additional properties. Not everyone is an experienced builder and so whilst this is a potential upside to buying a house you may want to consider using professional facilitator or project manager to assist with the works.
I then buy around the median price so that the majority of the locals can afford to buy it or rent it giving me a consistent demand. So, my choice of house or unit is then decided by what the median price gets you in those inner-city areas Therefore, in Sydney I would buy a unit, in Melbourne I would buy a unit/villa/townhouse and everywhere else I would buy a So,house.there is no single strategy that is going to suit everyone. Whilst I do like doing renovations to improve a property’s value I would rather buy a unit where I can do limited improvements but then maybe get
More properties for sale anywherethanelse.
4. Solar pool heating
FIVE HIDDEN DEDUCTIONS EASILY MISSED IN AN INVESTMENT PROPERTY
According to BMT Tax Depreciation, tax deductions can be concealed behind walls, in ceilings, under floors and on rooves. The combined value of these deductions can reach tens of thousands of dollars over their lifetimes and make a significant difference to a property investor’s bottom line.
Depreciation is the natural wear and tear of a property and the assets within it over time. The Australian Taxation Office allows owners of income-producing properties to claim this as a tax deduction. Depreciation is the second biggest tax deduction available to property investors after loan interest, and can be claimed for up to forty years.
While it’s common for rural properties to have their own sewerage treatment assets and
tanks, they can go unnoticed as they are unseen. Underground sewerage treatment tanks and piping can produce a total depreciation deduction of $11,600.
BMT Tax Depreciation’s expert staff conduct physical site inspections to accurately identify both the obvious and unseen depreciable items. To learn more about hidden deductions in an investment property call BMT on 1300 728 726 or Request a Quote.
HIDD e N tAX
5
Claimingaccurately.maximised depreciation deductions is essential to boosting cash flow and ultimately optimising a property portfolio. Failing to claim these deductions can mean missing out on thousands of dollars annually.
C21 MARKET PULSE 12 CENTURY 21 T AX DEPRECIATION
Investment properties often contain tens of thousands of dollars’ worth of tax deductions that can only be detected by a trained eye.
3. Inconspicuous re-wiring and re plumbing
Almost every inch of a property is depreciable. A site inspection is required to ensure the maximum amount of depreciation is claimed,
2. Re-stumping a home Re-stumping, also known as re blocking, is re-setting (or replacing) the stumps on a house that use a stump subfloor. This is often necessary in older properties to replace damaged wood or due to soil movement. Re-stumping a house can produce a depreciation deduction in the range of $13,000.
of up to $10,000 for an averagesized house.
D e DUC t IONS IN AN INVeStmeNt prOpertY
5. Sewage treatment assets and tanks
FIRST, WHAT IS DEPRECIATION?PROPERTY
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit bmtqs.com.au for Australia-wide service.
Often tucked away on the roof, solar pool heating is commonly missed but can produce a total depreciation deduction of around $7,000.
Underfloor heating is commonly overlooked but can yield deductions
1. Underfloor heating
Inconspicuous re-wiring and replumbing may also be required for an older or damaged property. Improvements like this can fetch a total depreciation deduction of $16,000. Regardless of whether these improvements were completed by a previous owner, the current owner is still eligible to claim them.
Depreciation is the second largest tax deduction available to property investors yet 80% of people fail to take full advantage of it.
In fact, we find clients an average of almost $10,000 in first full financial year deductions!
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