The journal of the real estate institute of victoria
reiv.com.au
taxes take toll Revenue grab damaging industries
The Estate Agent
MEMBER news Regional investment incentives
august 2017 Volume 81 No.2
Melbourne’s on the move
Hospitality driving CBD retail
The Pink Machine Adam Sacco’s colourful approach
Population pressure
Winning culture Understand cultural differences to secure the sale
More will pay rent longer, later in life... and some forever
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Contents
18 ‘They laugh and say, ‘It’s easy for you with Asian clients, you can just take them out for yum cha and make the deal’, but it’s really not Kristy Wang that simple’
Cover story Selling in a multicultural market Increasingly buyers and sellers are coming from diverse cultural backgrounds, so it pays to respect their customs
Features
11 14 24 26 30
Our best auctioneers face off A revamped format over two days sees a keen battle for top honours, proving Victorians are world leaders
Getting the price right With the industry now under strict new laws, bottom line is: don’t mislead prospective buyers
Commercial & Industrial Forecast Lunch Keynote speakers explain how our population growth is shaping the market and the city
Melbourne: where the action is Hospitality breathes new life into commercial real estate
11
Office boy to gun auctioneer Peter Williams turned a fascination for saleyards into a lifetime’s calling
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Contents
5 President’s Report 7
CEO Report
9 Bulletin 12 Policy 13 State Budget 16 Profile 22 Market Update 28 Best Practice 32 Training
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33 Events Calendar 34 Member News 38 Obituary
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22 33
EA
Publisher REIV 335 Camberwell Rd, Camberwell, Victoria 3124 Editor Jasmine Walters jwalters@reiv.com.au
Advertising Sarika Bhalla sbhalla@reiv.com.au 9205 6696
The Estate Agent
Estate Agent is published by the Real Estate Institute of Victoria.
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The Estate Agent â?˜ August 2017
The views and opinions expressed in articles and columns of Estate Agent are those of the writers and do not necessarily represent those of the Real Estate Institute of Victoria
President’s Report Joseph Walton President REIV
Records tumble as property’s hot run continues in sales and volume
V
ictoria’s property market continues to perform strongly with June quarter figures showing solid price growth in the house, apartment and regional sectors. While June was the fifth consecutive quarter of growth for the state, it’s likely the metropolitan Melbourne median house price will moderate in the September quarter due to a higher proportion of sales at the bottom end of the market. Price growth in 2017 has undoubtedly been supported by the strongest ever auction market for the first half of the year, with more than 19,333 auctions held statewide and 15,125 selling – a clearance rate of 78 per cent. In Melbourne, the clearance rate for the year-to-date remains at 79 per cent – on par with the highest ever. More auction records fell in July with the month the biggest ever in terms of both volume and sales with 3370 homes going to auction and 2514 selling. While it’s been a remarkable quarter for the market, an issues-rich policy environment has kept the REIV team busy over the past few months. Notably, the Institute has made considerable progress in rectifying the problematic Section 55 legislation. The Estate Agents & Conveyancers Options Paper proposed reform of Section 55, which would see the ban on commissions removed. However, added consumer protections would be introduced including a 21-day cooling-off period for sellers to seek independent legal advice. In our submission to Government, the REIV argued that given the prevalence of modern technology the cooling-off period should be reduced to five business days. Land tax remains a considerable issue for our members and clients with the Andrews’ Government proposing substantial changes to the valuations process in its 2017-18 Budget. The
Busy on all fronts: A remarkable quarter matched by a hectic issues-rich policy environment.
Land tax remains a considerable issue for our members and clients with the Andrews’ Government proposing substantial changes change would see valuations conducted on an annual basis and centralised out of the Valuer General’s office. The REIV worked alongside the State Liberals in opposing the change, with this legislation now stalled in Parliament. The REIV has met with Opposition Ministers on the issue of land tax, proposing a percentage cap on increases. The Institute will continue to lobby Government on this issue and will meet with Opposition ministers in the lead-up to the next election. In the coming months, the Institute will be reaching out to agency directors to discuss the future direction of the
REIV and our ongoing work in the advocacy space. The benefits of being an REIV member extends well beyond the provision of forms and advice – with the largest review of property legislation now underway. It’s vitally important that members are active in the forming of policy, particularly in the current environment. At an operational level, nominations for the Board have now closed with four positions in metropolitan Melbourne available. One of these positions follows the retirement of Gavan Lethlean, who has served the Continued on page 6
The Estate Agent ❘ August 2017
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President’s Report
Continued from page 5
maximum term of nine years as a director. Gavan has been a significant contributor to the Board and broader Institute, serving on the Business Broking, Commercial & Industrial and Valuation Chapters. He has also assisted in the development and delivery of REIV training material. Another highly successful Commercial and Industrial Economic Forecast lunch was held in July with this year’s speakers of an exceptionally high calibre. NAB’s Alan Oster provided valuable insights into Australia’s economic future while Mark McCrindle discussed social change across Australia based on the latest Census data. More information on this event is available on pages 24 and 25 of this issue. Meanwhile, nominations for the REIV’s Awards for Excellence and C&I Marketing Awards are now open with this year’s awards and entry criteria significantly updated to better reflect
Time of change: C&I forecast lunch paints an evolving picture of social change and economic future.
market trends. I’d encourage members to nominate for these prestigious annual awards. Finally, I’d like to take this opportunity to announce that I will not be re-standing for one of the available positions on the REIV Board. My time serving as a director has been full of genuine challenges and rich
experiences, which I will value for a long time to come. Throughout this period, I have enjoyed working with a series of exceptional people – both at director level and within an extremely competent staff base – all of whom will continue to take the REIV forward, further cementing its place as the strongest REI nationally.
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BDH SOLUTIONS ROSS HEDDITCH
Ross Hedditch Telephone: 9380 5999 Mob: 0418 321 952 rhedditch@bdhsolutions.com.au bdhsolutions.com.au 6
The Estate Agent ❘ August 2017
REIV 1
CEO Report Gil King CEO REIV
Change, for change sake, is not the way to regulate our industry
Ill-founded: Proposed changes to Section 27 will significantly impact on many Victorian vendors.
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ohn F Kennedy once said, “Change is the law of life. And those who look only to the past or present are certain to miss the future”. As I reflect on my first six months as CEO, it is apparent the real estate profession has had to deal with significant change this year. The prospect of ongoing change is forever real. The REIV team continues to lobby Government across multiple legislative reviews, with our policy positions garnered from member feedback. While the REIV is generally supportive of many of the changes, the question is whether the balance is right. As we saw in the Residential Tenancies Act review, there was a gross imbalance in favour of tenants as opposed to changes that would benefit landlords or even address issues with the current legislation. Even worse, there was little that would maintain the status quo. Two-hundred-andtwenty-four questions were asked in the RTA review options paper and had
it not been for the efforts of REIV, the opinions of landlords would not have been put forward. Consumer Affairs Victoria (CAV) made little or no effort to engage with landlords during the review process and the supply side remains underrepresented in ongoing roundtable discussions.
There are many problems associated with the legislation and these are not just ‘teething problems’ The proposal to repeal Section 27 of the Sale of Land Act, thereby obliterating the rights of many vendors to access the deposit, is ill-founded. This would significantly impact on the flow of transactions and cripple the rights of many who need to access these funds for their next move. The banks and other financial institutions are the only winners. The REIV has been
unable to source one occasion where early access to the deposit has caused an issue and, to our belief, neither has CAV. Change for the sake of change is not good governance. The real estate profession has been working its way through the new underquoting legislation. What we are seeing now is there are many problems associated with the legislation and these are not just ‘teething problems’, they are fundamental to the ability of agents to operate effectively without fear of being crunched by CAV. The Statement of Information is a good place to start. • I have never understood the purpose of including the median house price in the SOI. While this information is readily available on multiple web pages, it simply does not exist in a meaningful sense in some suburbs/ areas – it fluctuates regularly due to low sale volumes and its measurement is inconsistent. How does it protect the consumer from underquoting? Continued on page 8 The Estate Agent ❘ August 2017
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CEO Report
Continued from page 7
• The SOI does not have a space for vacant land and we are told there is no intention that the Director of CAV will amend the form. The suggestion from CAV is for the agent to simply change the form; however other areas within the Justice Department warn that this is not appropriate. • A significant unintended consequence of the new legislation is the impact on undisclosed sales prices. In effect, this no longer exists as agents must use the most relevant comparable sales in the SOI. The new legislation threatens to impact on the relationship of trust between the agent and the vendor. More than three months into the new legislation many questions are still unanswered. However, the urgency to address these issues is not commensurate with the level of focus on our profession. CAV has placed its focus squarely on the real estate profession, almost to the exclusion of
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The Estate Agent ❘ August 2017
other regulated industries. One only has to look at the CAV Facebook page to see evidence of this. The real estate profession attracts well over a third of all postings, second only to warnings on various scams. The level of what
Future legislation should benefit all ... not just buyers and renters you might call ‘negative’ postings is much higher than any other profession or industry. CAV has been keen to publicise the start of proceedings against agents, but in doing so neglects
to point out these alleged offences happened two or more years ago. These prosecutions and enforceable undertakings are not fruit of the new legislation but perhaps the justification for it. In an environment where the terminology ‘misleading and deceptive’ is thrown around, it’s imperative publicity around these actions by CAV is not misleading in itself. The REIV is keen to work with CAV and the Victorian Government to achieve the best outcome for all, not just consumers. It is essential the right balance is reached in the regulatory space. A healthy real estate industry benefits all, including the Government which pocketed more than $10 billion from the property industry in the last year alone. Change is inevitable but future legislation should benefit all parties, not just buyers and renters. After all, when the buyers and renters become vendors and landlords, they too will need the same legislation to protect them.
Bulletin
Tenant information key focus of Retail Leases Review
The Small Business Regulation Review (Retail Sector) released a Draft Impact Statement in May, which proposed a number of changes to the Retail Leases Act 2003. These proposals focused predominantly
Retail Leases Supreme Court Decision
on the provision of information to tenants, such as the introduction of a time limit for returning bonds and bank guarantees. The Draft Impact Statement also proposed the development of a free
standard retail lease, which the Institute has opposed. In its submission to Government, the REIV has also called for a review of the Act in its entirety, particularly as this legislation is now almost 15 years old.
Clearance Certificate needed for over $750,000 The 2017 Federal Budget introduced changes to the Foreign Resident Capital Gains Withholding Tax rate and threshold, effective July 1, 2017. The threshold has been significantly reduced from $2 million to $750,000 while the rate increased from 10 per cent to 12.5 per cent. All vendors selling property over $750,000 are now required to obtain a clearance certificate from the Australian Taxation Office (ATO) to avoid losing 12.5 per cent of the purchase price. The clearance certificate must be obtained on or before settlement.
A Supreme Court decision in May has found a cold storage facility is considered a retail premises under the Retail Leases Act 2003 (Vic). The decision by Justice Croft overturns a previous outcome by VCAT and will result in the ultimate consumer test being applied to leases for business-tobusiness services to determine whether the RLA applies. Given the decision, warehousing and logistics businesses are likely to be treated as retail premises.
Commercial Building Disclosure changes The mandatory disclosure threshold for commercial buildings has been lowered from 2,000 square metres to 1,000 square metres, effective July 1, 2017. Agents who sell or lease commercial property of more than 1,000 square metres are now required to obtain a Building Energy Efficiency Certificate (BEEC) before listing the office space for
sale, lease or sublease. Agents will need to appoint a CBD Accredited Assessor to apply for a BEEC on their behalf with the Government recommending agents begin the process at least two months before the chosen listing date. BEECs are valid for up to 12 months. Visit www.cbd.gov.au for more information. The Estate Agent â?˜ August 2017
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Bulletin
Undisclosed Property Sales in the S.O.I Consumer Affairs Victoria (CAV) has provided clarification to the REIV on the use of undisclosed sales in the Statement of Information. CAV sought advice from the Victorian Government Solicitor’s Office which states that “non-disclosure obligations cannot relieve an agent of their statutory obligations to take all relevant sales data into consideration to determine the three most comparable property sales and to include the details of those properties in a Statement of Information”. This advice supersedes all previous information. PropertyData is now being updated to reflect this change with subscribers able to select an undisclosed sale as a comparable.
VCAT Tenancies Hub
VCAT has announced plans to create a residential tenancies portal, which will modernise and improve the application process for users. The Residential Tenancies Hub will allow online applications, fee payments as well as notifications and correspondence to all parties. Users will also be able to apply online for a certified copy of an order, among other things. The portal is 12-18 months away from implementation with the REIV and other key stakeholders involved in the development process.
Land Tax Overhaul
This year’s Budget announced changes to land tax with valuations set to be conducted annually and centralised out of the Valuer General’s office from 2019. The REIV and the Victorian Liberals strongly opposed the change with the legislation currently stalled in Parliament. The REIV understands that the Andrews Government intends to push this legislation through when Parliament returns in spring. In the meantime, the REIV will continue to work alongside the Liberal Party in blocking changes to the frequency of land tax valuations. 10
The Estate Agent ❘ August 2017
Renting Resources in multiple languages
Property managers can now access renting resources in more than 20 languages including Arabic, Karen and Swahili. Produced by Consumer Affairs Victoria, the resources enable more Victorians to understand their rights and responsibilities as tenants. Find out more at www.consumer. vic.gov.au/languages
VicForms Update for better service
The VicForms platform has been updated, offering member agencies an improved user experience. Popular REIV Residential Sales and Property Management forms and authorities have also been revised with enhanced branding and greater costeffectiveness for users.
FIABCI world congress in Andorra
More than 30 Australian professionals attended the FIABCI World Congress in Andorra in May, led by recently elected FIABCI Australia World President Samantha Payne from LJ Hooker Subiaco. With a Congress theme of Smart Cities – Smart Buildings, attendees heard from an impressive line-up of speakers on how new technologies are shaping the urban agenda and the role of the real estate professional. Attendees were also treated to a vibrant social program. For more information on the global activities of FIABCI, visit their website at www.fiabci.org
Auctioneering
Michael and Harry take the honours Our best auctioneers show Victoria is a world leader in sales under the hammer
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arshall White’s Michael Wood and iSell group’s Harry Li have been named Victoria’s top two auctioneers in the 2017 REIV Senior Auctioneer of the Year competition. The revamped format saw the state’s best auctioneers compete for the prestigious title over two consecutive days in May with the field of 14 narrowed to just five finalists at the end of the first day. Competing for the title alongside Li and Wood on the second day were Adrian Butera, from Compton Green, Tom Roberts, from Nelson Alexander,
and Michael Richardson, from Fletchers Glen Iris. It was the first time Butera, who won the inaugural competition in 1998, had competed for the title in more than five years. Held at the REIV Conference Hall in Camberwell, the scripted competition tested contestants on their knowledge of auctioneering best practice, new price quoting legislation and environmental overlays. Finalists were subject to complicated bidding sequences, including retracted bids from audience participants.
Best of the best: Clockwise from top left, finalists (left to right) Tom Roberts, Michael Wood, Harry Li, Adrian Butera and Michael Richardson; Michael Wood; Harry Li; Michael Wood and Harry Li; Adrian Butera.
REIV Auction Chapter Chair Adam Docking was the event’s MC while respected auctioneers Raoul Salter, John Matthews, Adrian Jones, Jeremy Tyrrell, Tonya Davidson and Matthew Young were this year’s judges. Docking says the quality of this year’s contestants was exceptionally high with a number of participants demonstrating significant improvements on last year’s performance. “After witnessing the heats and the finals of the Senior Auction Competition, it simply reinforces the fact that Victoria is the auction capital of the world,” he says. The winner of the 2017 Senior Auctioneer of the Year will be announced at the REIV Awards for Excellence, being held at Crown Palladium on October 26. In the meantime, both Li and Wood will represent Victoria at the Australasian Auctioneering Championships in Adelaide on September 5-7. The Estate Agent ❘ August 2017
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Policy
REIV: Lift in entry standards required Institute opposes Consumer Affairs push to take over VCAT disciplinary powers
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or the past 18 months, Consumer Affairs Victoria (CAV) has been reviewing key property legislation as part of its Consumer Property Law Review which considers reform of the Estate Agent Act 1980, Sale of Land Act 1962, Owners’ Corporation Act 2006 and Conveyancers Act 2006. The third – and final – options paper was released in April and closed for public consultation in mid-May. Estate Agents & Conveyancers: Options for Review primarily focuses on the licensing and conduct of agents and conveyancers, with targeted options addressing entry criteria and ongoing training. In its submission, the REIV supported higher entry standards for Agent’s Representatives, which will increase professionalism and knowledge. The options paper proposed increasing the required units of competency for Agent’s Representatives from three to seven prescribed units. Other suggested options were far less attractive and included confining or abolishing the role of Agent’s Representative. Greater educational standards for Officers in Effective Control (OIEC) were also proposed, with a potential requirement for an OIEC to hold a Diploma in Property Services (Agency Management). This would involve an additional two prescribed units of competency on top of the Certificate IV in Property Services (Real Estate). Under the proposed change, an OIEC would also be required to work as a licensed agent full-time for two years before being able to become an OIEC. The REIV supported this as the role and responsibility of an OIEC has evolved beyond the traditional skill set of an agent. To comply with updated
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The Estate Agent ❘ August 2017
Professional: Higher entry standards for Agent’s Representatives will improve professionalism and knowledge across the industry.
business practices and legislative rules, OIEC require a comprehensive understanding of business management and human resources. In its submission to Government, the REIV also outlined support for mandated Continuous Professional Development (CPD), which would ensure agents remain informed and well-equipped to meet the expectations of both buyers and sellers.
Given modern technology, the REIV felt a cooling-off period of five business days would be sufficient The options paper addressed overly restrictive prohibitions on agents and associates purchasing listings under Section 55. The proposed option would remove the ban on commissions under Section 55, however additional protections for sellers would be introduced. This included a 21-day cooling-off period for sellers to seek independent legal advice. Given modern technology, the
REIV felt a cooling-off period of five business days would be sufficient to seek independent legal advice. Greater regulation of the negotiation process for sales authorities was also put forward and is a significant concern to the REIV. Proposed options involved a threeday cooling-off period for sellers who have entered into a sale authority for residential properties and a requirement for agents to provide sellers with a fact sheet on sales authorities. The REIV has opposed both options, citing inadequate evidence of any real issues with sales authorities in the marketplace. The introduction of a cooling-off period for sales authorities is likely to have the unintended consequence of placing more pressure on vendors, particularly as competing agents may try to encourage the vendor to cancel the authority during the cooling-off period. Other proposed options of concern for the REIV included: ❚C AV to take over VCAT disciplinary
functions. The REIV does not believe CAV is the appropriate body to regulate the real estate industry, particularly given their ‘consumer’ focus which often excludes landlords and vendors. ❚C AV to undertake a full review of penalties under the Estate Agents Act. These are already governed by penalty units, which are adjusted annually. ❚A bolishing the Estate Agents Council. Given the changing real estate environment, the REIV considers it imperative the EAC not only remain but gain greater independence from CAV. ❚A mending professional conduct rules to include specific rules relating to property management. The REIV does not support creating a multiplicity of offences under the Estate Agents Act for poor behaviour. ❚P rohibit agents from accepting large cash deposits. The REIV deems this to be unnecessary as deposits of $10,000 or more are already captured by threshold transaction reports, which must be submitted to the Australian Transaction Reports and Analysis Centre (AUSTRAC).
Options papers considering reform of owners’ corporations and the sale of land closed in December and April respectively. For more information on the review of the Estate Agents Act 1980 or to view the REIV’s response, visit reiv.com.au/policy-issues.
State Budget
Transport spreads the net Infrastructure investment to improve attractiveness of outer suburbs and regional towns
T
he Andrews’ Government outlined significant road and rail infrastructure initiatives in its third Budget, including a $4 billion investment in regional Victoria. Infrastructure commitments include $1.9 billion for road improvements with $700 million over four years to upgrade the M80 Ring Road and $300 million to build the Mordialloc Bypass. A further $100 million has been allocated for planning the North East Link while $96.6 million will fund the next stage of upgrades to the Yan Yean Road. Close to $880 million will be invested in public transport across metropolitan Melbourne with eight additional train services on the Werribee line, more inner city trams as well as new bus services in a number of outer suburbs. The Victorian Government allocated $1.45 billion for regional rail services; however this project is entirely reliant on federal funding. Included were upgrades to regional rail services to Gippsland, Ballarat and Bendigo as well as a new V/Line service to Torquay. In its May Budget, the Federal Government fell short of the full commitment – allocating $1 billion in infrastructure spending. The Federal Government has since set aside an additional $600 million for the project. Infrastructure investment across the state will improve accessibility and desirability of many outer Melbourne suburbs as well as towns within commuting distance of the CBD. While strong price growth has been recorded in Greater Geelong, improved rail services will boost buyer interest in a number of affordable regional areas such as Gippsland. The State Budget also committed $1.3 billion for education, including $685 million for new and upgraded schools. The Andrews’ Government also outlined changes to land tax, with valuations set to be centralised in the Valuer General’s office and
Paving the way: Better infrastructure and transport links will drive growth further from the city.
conducted on an annual basis. In other Budget initiatives, both the State and Federal Government tackled housing affordability. The State Government removed stamp duty for first home buyers purchasing a home under $600,000 with scaled duty reductions up to $750,000. This is at a cost of $851 million, while doubling
Improved rail services will boost buyer interest in a number of affordable regional areas such as Gippsland
of the First Home Owners Grant in regional Victoria is expected to amount to $50 million. Under the Federal Budget, first home buyers will be able to salary-sacrifice up to $30,000 ($15,000 in a single year) into their superannuation account to save for a home deposit. Meanwhile, retired couples are encouraged to downsize from the family home with non-concessional super contributions of up to $300,000 from the sale of their principal place of residence. To be eligible, sellers will need to be at least 65 and have owned their PPR for 10 years or more.
2017 BUDGETS AT A GLANCE STATE BUDGET ❚ $700 million to upgrade M80 Ring Road ❚ $ 300 million for the Mordialloc Bypass ❚ $ 1.45 billion for revival of regional rail services ❚ $2.9 billion for health ❚ $ 1.3 billion for education, including new and upgraded schools ❚ $ 851 million to abolish stamp duty for first home buyers under $600,000 ❚ $ 50 million for doubling of First Home Owner Grant in regional Victoria
FEDERAL BUDGET ❚ Salary-sacrifice of up to $30,000 for first home buyers ❚ Non-concessional super contributions of up to $300,000 for retirees ❚ $ 472 million for regional Victoria to adapt to economic change ❚ $1 billion for infrastructure spend in Victoria ❚ 7.5 per cent increase in university fees with higher repayments on Government loans
The Estate Agent ❘ August 2017
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Pricing
Bottom line in pricing a property: don’t mislead prospective buyers Members’ frequently asked questions regarding best practice pricing – and complying with the new legislation By Peter Lowenstern, REIV Corporate Solicitor Estimated Selling Price – Recording & Reviewing
Do agents need to record their estimated selling price in the sale authority? Yes. Agents need to enter their estimated selling price, or selling price range, in the sale authority, before their vendor signs it. What makes an indicative selling price unreasonable? Agents need to consider if it’s necessary to change the indicative selling price if: • The vendor informs them that they have altered their price; • The vendor rejects an offer because the price is too low; • Recent comparable sales indicate the need to revise the estimated selling price which the vendor has adopted as their selling price; • They receive an offer that indicates the estimated selling price or the indicative selling price in the Statement of Information may be too low. Are agents required to keep the indicative selling price up to date? Yes, the indicative selling price needs to be updated throughout the sale campaign. If an agent knows or if it’s reasonable that the agent could be expected to know that their estimate is no longer reasonable they will need to revise it, and promptly. Reasons to update the indicative selling price include recent comparable sales, refusal of an offer because the price is too low or new vendor advice. The vendor doesn’t want to revise the indicative selling price, do agents have to? Yes. The law requires agents to revise it if they know, or it’s reasonable they could be expected to know, that their estimate 14
The Estate Agent ❘ August 2017
is no longer reasonable. Agents face the possibility of a very substantial fine if they disregard their obligations. Should agents keep a record of the vendor’s instructions about their selling price? Yes, throughout the sale campaign. The REIV has prepared a form, ‘Vendor Authorisation & Price Representation’, to help members do this. It’s available for members to download from the Price Quoting page on the REIV website. If a vendor’s instructions about their selling price changes, agents
‘The law requires agents to revise it (indicative selling price) if they know ... or could be expected to know ... their estimate is no longer reasonable’ should have them sign off their new price, using the REIV form. This form is not a legally required document; it is an REIV tool to assist members.
Statement of Information
Where do agents obtain a median selling price for inclusion in the Statement of Information? There is no legal requirement to obtain it from a particular source. However, when providing a median, agents need to be confident that it is reasonable and has been obtained from a reputable source. The median price can either be a quarterly or annual figure but can not be more than six months old. What if there is no median selling price available for the suburb or locality? If data providers do not list a median price that meets legal requirements then the
REIV recommends agents follow the below advice: 1. The agency has some sales records for the suburb. • If agents have residential sales data for the locality for the statutory period and for the type of residential property in question, they can use it to calculate their own median selling price; • In the “Median Sale Price” box on the Statement of Information insert an asterisk followed by the calculated median sale price; then • Insert the locality, the period of time and complete the source, which may be your agency and provide an explanatory statement – “This advice does not form part of this Statement of Information: * Important advice about the median sale price: The median sale price is provided to comply with Section 47AF (2)(b) of the Estate Agents Act 1980. The median selling price for residential property sold in the same suburb or locality in which the property offered for sale is located has been calculated on the sale prices of [insert number of sales] residential properties sold during the period specified by the section. Because of the small number of sales, the median selling price is unlikely to be meaningful statistically and should be considered accordingly.” 2. T here are no residential sales that meet the legal time requirements. • Insert an asterisk in the Median Price placeholder and provide an explanatory statement – “This advice does not form part of this Statement of Information: * Important advice about the median sale price: when this Statement of Information was prepared, publicly available information providing median sale prices of residential property in the suburb or locality where the property offered for sale is situated, and our sales records (if any), do not provide a median sale price that meets the requirements of Section 47AF (2) (b) of the Estate Agents Act 1980.”
Pricing
written instructions from their vendor. The REIV has prepared a form for members to use which can be downloaded from the price quoting page on the REIV website (member login required). If the vendor’s instructions change, record their new instructions in writing on the REIV form.
‘Do not mislead or deceive prospective buyers about the price at which the vendor is prepared to sell’ The vendor wants more than the agent’s estimated selling price, what should the agent do? The indicative selling price listed on the Statement of Information must not be less than a figure the vendor has advised they will accept as a selling price. The vendor is willing to accept less than the agent’s estimated selling price, what price should the agent include in the SOI? If the vendor has advised an agent of a price they are willing to accept, the Statement of Information should list that price – either as a single figure or as a price range of not greater than 10 per cent. The vendor has not given a price, what should the agent do so far as the SOI is concerned? If the vendor has not advised the agent of a price they are willing to accept, the agent should list their estimated selling price as the indicative selling price on the Statement of Information. Do agents need to keep a copy of the Statement of Information? Yes. And if they revise it, keep a copy of the revised SOI as well. When does a Statement of Information need to be provided to a prospective buyer? If a prospective buyer requests a Statement of Information, agents must provide it within two business days. Agents must also have it on display at opens and private inspections, as well as with any advertisement for the sale of the property. The vendor verbally rejects an offer higher than the estimated price; does the agent need to update the SOI? If the vendor has rejected an offer on the basis of price, then the agent must update the indicative selling price on the Statement of Information to a price not less than the rejected offer. If agents fail to update the indicative selling price, they will be in breach of the Australian Consumer Law.
The price is right: The indicative selling price needs to be updated throughout the sale campaign.
Offer
What is an ‘offer’? The REIV takes the traditional, orthodox legal view of an ‘offer’: a firm promise of definite or ascertainable terms capable of being accepted as they stand, made to a specified person with the intention of creating legal relations which, if accepted by the specified person according to its terms, and exchanged creates a contract. However, Consumer Affairs Victoria does not accept this view of an ‘offer’. It considers an ‘offer’ includes a mere inquiry or an invitation to negotiate. CAV’s view is consistent with the requirement of regulation 16 of the Estate Agents (Professional Conduct) Regulations 2008 – “Unless otherwise instructed in writing by a principal (i.e. an estate agent’s client), an estate agent must communicate to the principal all offers to purchase … made to the estate agent, whether those offers were made verbally or in writing, as soon as possible after the offer has been made.” What is a ‘written offer’? Because the Interpretation of Legislation Act 1984 says “writing” means any way of reproducing words, figures or symbols in a visible form, it has a very wide meaning. It can include a hand-written note, letter, facsimile, email or SMS. Should agents obtain written instructions from vendors about how to deal with offers? Yes. It is very important for agents to have
Does the Australian Consumer Law (ACL) impact on price representations? Yes. The ACL requires agents not to mislead or deceive anyone about the price payable for real estate. If agents know, or are aware, that their price representation is less than the price their vendor will accept, they must change it. Price representations must always indicate the sale price the vendor wants to achieve. This may require agents to prepare a new Statement of Information as well as altering the pricing in their advertisements.
Comparable Sales
Can an undisclosed sale be used as a comparable sale on the SOI? Consumer Affairs Victoria has recently informed the REIV that non-disclosure instructions can not relieve an agent of their statutory obligations to take all relevant sales data into consideration to determine the three most comparable property sales – and to include the details of those properties in the Statement of Information. CAV’s advice is based on an opinion they have received from the Victorian Government Solicitor’s Office (VGSO). There are fewer than three comparable sales, how should agents complete the SOI? If there are fewer than three comparable sales, agents should delete Part A under the Comparable Property Sales section on the Statement of Information, leaving the Part B statement. When agents discuss the price of residential property what do they need to keep in mind? These are the main things: • Do not mislead or deceive prospective buyers about the price at which the vendor is prepared to sell; and • If agents mention a price or price range, just refer to the figures. Do not say things like “our vendor will consider offers starting from …” or “our vendor is looking for offers over ...” or “our vendor is will consider offers in the high …” The Estate Agent ❘ August 2017
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Profile
The pink machine runs hot for Adam Sunbury has become a hot spot for house sales and agent Adam Sacco is the spark
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dam Sacco was born to be in real estate. His enthusiasm for his business and the industry is infectious. From the decision to go with bright pink corporate colours to producing promotional films of Sunbury’s local businesses, it’s not hard to see why this young entrepreneur was named Australia’s number one agent in 2015 by Rate My Agent. Born and bred in Sunbury, he has no intention of leaving. His parents and grandparents live in Sunbury, moving to the area in 1972 when the population was about 2,700. Today, it’s grown to about 38,000 and projections are by 2020 it will be 60,000, increasing to 80,000 by 2032. “It’s a massive growth corridor,”
Sacco says. “But for first and second home buyers, Sunbury still offers great affordability. And it ticks all the boxes for schools, services, shops, public transport and the like. The last stop on the metro rail line, it is a 35-minute train ride to the CBD and about the same by car along the Calder Freeway.” Sacco had never considered a career in real estate but business acumen is in his genes. His Maltese grandfather had one of the first Golden Fleece service stations in Victoria, his father is an accountant and one of his brothers founded and runs the successful Sacco Coffee company. The bright Year 11 student was at a cousin’s wedding at a waterfront restaurant in Southbank and was fascinated watching the chefs.
‘We went pink from the start. My competition used mainly blue, green and yellow and I wanted to stand out’ – Adam Sacco
Brenton Spiteri
Pink machine: Tiffany and Adam Sacco with Toby Smithies, Cardia Albace, Richard Henry and Melanie Kolodziej.
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The Estate Agent ❘ August 2017
“Out of the blue, I went up to the head chef and asked how do I become a chef. He said, ‘You start Tuesday’.” By 17, he was a qualified chef, working at many of Melbourne’s highend restaurants including Crown, but still commuting from Sunbury. “I absolutely loved it and had a great time but by 21, I was burnt out and needed a change. I wanted to be a number for a while.” Sacco “chewed the fat” for a few years in logistics until his wife Tiffany became pregnant with their first child. “I knew I had to have a job that would sustain our family once Tiffany stopped working. I had to move into real work mode.” True to form, Sacco walked into Sunbury’s Ray White agency and told the manager he wanted to be a real estate agent. The manager said, “Mate, you’ve got a gig!” and Sacco started immediately. That was nearly seven years ago. Sacco knew that with plenty of competition, he had to make the most of his entrepreneurial skills to succeed. Sacco and a pregnant Tiffany loaded up their new pram with 2,000 brochures and letter-dropped houses. By that night, Sacco had his first listing – 24 Hume St. “I was so excited. I put it on the market and overcooked this house by listing it at $280,000. It was probably worth $230,000. But two days later it sold.” After working in a franchise for a few years, Sacco knew he wanted to run his own independent business. So, financed by a colleague, Leading Real Estate opened in Sunbury. Due to changed circumstances, Sacco bought the entire business six months later and moved around the corner. “It was a big risk at the time but it was the right move,” he recalls. “I also knew business is about establishing a strong and recognisable brand. We went pink from the start. My competition used mainly blue, green and yellow and I wanted us to stand out. Most of our appraisals come from women, they’re the main decision-makers. Pink is elegant and classy, and naturally appeals to women.” And he hasn’t looked back. The Brook St agency now has three sales staff, three staff in property management and
Profile
one in administration. While Sacco has watched his agency grow, so too has Sunbury with the median house price increasing from $376,000 to $413,000 in a relatively short time. Sacco says the biggest problem is a lack of supply. “Last November, I achieved one of the biggest records in Sunbury by selling 23 houses in 24 days,” he says. “People see Sunbury as a safe investment. “But it’s all about supply and demand and at present, it is a sellers’ market. I recently put a house on the market at 10am and once it was up on the website, my phone was ringing off the hook. It was a three-bedroom home with one bathroom and no laundry. “The open inspection at 5pm the following day attracted 26 groups of people with nine groups expressing interest. With permission from the seller, I conducted a Dutch auction and achieved $407,000 with a 30-day settlement.” Sacco has embraced new technology, using drone images and 3D virtual tours before his competitors. “Social media is massive,” he says. “It takes marketing to a new level. On Facebook, I have a public profile. I’m an open book and don’t mind people seeing who I am. My clients are letting me into their home and giving
me their keys, which is a massive responsibility, so I return that trust.” The Leading Real Estate website is vibrant and interactive and often features video interviews with other Sunbury business owners – a new initiative of Sacco’s. When the first video with a neighbouring café owner was loaded on to his Facebook page it “took off” and has since notched up nearly 4,000 views.
recorded $52 million in sales. In Sunbury, he has been ranked the leading agent for four successive years and last year, was 14th on Rate my Agent. While 14th nationally is a great achievement, Sacco attributes the drop to introducing more life balance. “I made a decision to improve my work-life balance and it feels great. We are a family here. I have a great team and we all bring out the best in each other. “Tiffany (his wife) runs the property management department and has built our rent roll from nothing to 230. We don’t get involved in each other’s work and we have a policy of not bringing work home as much as possible.” Sacco believes to succeed in the industry you have to build a solid reputation and be honest with clients. “I give them the facts after analysing the property and price it accordingly. I don’t bull…t anyone. Eight out of 10 clients come from recommendation. I work for the vendor but buyers have recommended our agency too.” Expansion is something Sacco seriously considered before making the decision to “focus on one absolutely booming business”. “Our motto is ‘delivering results every time’ and not ever being complacent. I’m also a Sunbury local and you can’t build that reputation overnight.”
‘I give them the facts after analysing the property and price it accordingly. I don’t bull...t anyone. Eight out of 10 clients come from recommendation’ – Adam Sacco “It’s about thinking outside the box,” he says. “I don’t even mention real estate. It’s about promoting awareness of what Sunbury has to offer but also putting our brand out there.” Sacco is not afraid to get his “hands dirty” and admits to working relentless hours. That’s how he managed to be ranked first in Australia on Rate My Agent’s website, which boasts 35,000 agencies. That achievement is based on service and sales – in 2015, he
In the pink: Adam Sacco uses his entrepreneurial skills to stand out (think pink) and give his clients his best shot. He says it’s about thinking outside the box and standing out from your competitors.
The Estate Agent ❘ August 2017
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Cover Story
A great help if you can talk the talk
Understanding cultural differences and observing tell-tale body language and customs can build trust and respect
Urban Angles
Building respect: Kristy Wang, Ryan Di Natale and Eddie van Pamelen say understanding cultural differences can pay dividends when listing and selling.
K
risty Wang has heard all the jokes before from others in the real estate industry who view her Chinese heritage as an advantage when it comes to selling in a multicultural marketplace. “They laugh and say, ‘It’s easy for you with Asian clients, you can just take them out for yum cha and make the deal’, but it’s really not that simple,” Wang says. The Fletchers senior property consultant has worked in real estate for five years, witnessing the population growth and cultural diversity in the Glen Waverley area. Dealing with buyers and sellers of many cultural backgrounds, including Korean, Malaysian, Chinese, Sri Lankan, Greek and Italian, can be challenging for Wang but her honest and genuine
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The Estate Agent ❘ August 2017
style is what helps her succeed. That and the fact she can also speak Mandarin and Cantonese. “Yes, these languages help, for sure, because as soon as the clients realise I can speak their language, they feel an instant connection,” she says.
‘I’m always myself – easy-going, genuine and honest, because people can read you’ – Kristy Wang “I understand where they come from, the questions they ask, their culture and their way of thinking. I don’t need them to explain the deeper reasons behind their decisions and for me that’s an advantage.” Like any good relationship, a
foundation of trust needs to be established if it is to succeed and for Wang that means being herself. “I don’t want to fake it. I don’t want to sugar-coat anything. With every client, no matter if they are Australian or from another culture, I’m always myself – easy-going, genuine and honest, because people can read you.” With around 70 per cent of her clients coming from diverse cultures, Wang says her Chinese background helps her relate to other migrants who understand how difficult it can be to establish yourself in a new country. “Many of these migrants are hardworking which is the same as how I’ve been brought up. I feel grateful to my parents who always taught me to have the right attitude – the harder you work, the luckier you get – that is my
Cover Story
core value. As soon as I can demonstrate my core value to these multicultural groups I can find a connection with them. That’s my advantage.” Wang says it also helps to be culturally sensitive in a multicultural market. “If my colleagues or I go to an appraisal for a property, we would wear our shoes if the client is wearing their shoes but for a Chinese client, we automatically remove our shoes without even asking. “It’s about being aware and respecting the culture difference but also not over-reacting to these cultural differences. Asian vendors are very open in that they respect others and don’t feel others have to follow their rules; they understand and try to learn as well. So you can be alert and sensitive but it’s unnecessary to overreact. “I notice their actions and I copy them. Some people don’t like to shake hands, some don’t like to look you in the eye, but you can’t fake it or overact, be natural but show respect.” Wang knows how important family and community are to her multicultural clients and says the closeknit communities in her area talk so reputation is everything. “It’s a small world out there – if they’ve heard my name, their neighbours talking, their colleagues talking, or their family members or friends, they listen to other people’s
experiences. Word of mouth is everything especially among Asian groups who have a very strong community here.” And so Wang ensures she builds relationships with her clients and their families. One way of doing this is through China’s version of Facebook – WeChat. “The minute they add you on Chinese WeChat, you realise you’ve been approved and accepted in their social circle which is a good thing.
‘A lot of new migrants in the eastern suburbs are not the key decision-maker, it’s often the grandparents or the husband or wife who is overseas’’ – Kristy Wang
“It allows you to connect with the children or the relatives and then they share your contact with their group and you see they have uncles, aunties and friends. I try to look at who speaks the most, who asks the most questions and then I realise, ‘OK, so this one must be the decision-maker’. “A lot of new migrants in the eastern suburbs are not the key decision-maker, it’s often their grandparents or the husband or wife who is overseas. So you need to make sure you identify
who the main decision-maker is before you waste your time.” Negotiation tactics also vary between cultures and Wang says she has learnt how buyers interpret sales prices differently. “If a client asks me about a price, I might say I estimate the price at $1-$1.1million, it’s going to auction but who knows, the owner may take offers. But if I’m giving this same information to a Chinese or Asian client they will look me in the eye and say, ‘You mean $1.15million or $1.2million’. They always add a bit extra because that’s how they interpret it. I was born in China so I know if someone gives you information, you’re always taught to think deeper and wonder whether there is any meaning behind it.” Ryan Di Natale, Officer in Effective Control at E J Love and Co in Thomastown, agrees the negotiation style of different cultures varies. Starting his career in real estate in 1995, Di Natale worked his way up to director by adapting to the changes in clientele over the years. “About five to six years ago understanding what certain cultures required from you was challenging but not now. I know with our Asian clientele they are not really negotiators. They always start at a really competitive price and then might go beyond.” Continued on page 20
The Estate Agent ❘ August 2017
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Cover Story
Micut
Changing communities: Many Melbourne suburbs are becoming more culturally diverse through overseas migration, particularly from Asia.
Continued from page 19
Di Natale says Indian clientele bid differently, always starting with what can sometimes seem like an unreasonably low figure. “You might quote a price of $500,000 and they’ll start at $400,000 but it’s about understanding the way they bid on things and how they negotiate. They may put in a low offer and you might discount them but I’ve learnt they want to see you work hard so they put that in and can be willing to move. Patience is really what’s required.” Di Natale has seen a change in the ethnicity of communities from Thornbury to Epping and says this is reflected in the shopping strips. “A decade ago there were mostly people of Macedonian and Greek descent and now that has changed to Arabic, Chinese, Vietnamese, Indian. There is a massive cross-section and you can see that reflected in businesses around High St and Station St – there’s a lot more Indian shops, Arabic bakeries and Chinese shops.” Di Natale says the market was not as multicultural when he started his career with about 80 per cent of his clients now from other cultural backgrounds. But while many foreign buyers have origins in other countries, most are Australian citizens. Di Natale says when it comes to real estate, cultural background doesn’t matter; everyone 20
The Estate Agent ❘ August 2017
wants to deal with someone who is upfront, honest and gets results. “The best way to make people comfortable is to tell them exactly what you are going to do.” He says while at times selling in a multicultural marketplace has been challenging, it’s also been extremely rewarding.
‘We sit down with our ... sales staff and ensure they are adequately trained on how to deal with different cultures’
– Ryan Di Natale
“If you do a good job they are very loyal and will always come back to you, even if it’s three or four years down the track. You can forge very good relationships.” Di Natale is helping other young agents learn the skills to be successful in a multicultural market. “We sit down with our newly employed sales staff and ensure they are adequately trained on how to deal with different cultures. My wife is Muslim so I have knowledge on headscarves and burqas. If you’re dealing with a family you can’t shake the wife’s hand, and if you do try, it’s potentially very uncomfortable so you have to know what suits them and what they are comfortable with.”
And having a second language in the industry is a massive plus these days, he says. “We are most definitely now looking for second-language skills when employing new staff. A second language out in the outer northern areas is very important but we also look for people that are comfortable with the interaction and don’t get flustered. “What people fail to understand is when someone doesn’t have an overly good grasp of the language, it doesn’t mean they aren’t intelligent. We make sure when our staff are conversing with people from other cultures they talk in the same way as they would to someone who is fluent in the language, because if you talk slowly or loudly you can come across as a bit arrogant. Just because someone doesn’t speak the language doesn’t mean they weren’t a doctor in Iraq. “If you want to progress in the market you certainly have to become culturally sensitive, which is what we try to do.” Eddie van Pamelen, a buyer’s agent and Officer in Effective Control of Property Saint, says agencies are employing more bilingual staff to help cater to the multicultural market. “Chinese buyers in particular have made quite an impact in recent years as homebuyers (in Balwyn, Box Hill and Glen Waverley) and foreign investors of new and off-the-plan properties. There
Cover Story
is more advertising in Chinese news publications and property websites,” he says. And when it comes to Chinese buyers, numbers are very important in more ways than one. “The Chinese buyers I have worked with taught me about numerology. Number four is avoided as it sounds very similar to the word ‘death’. It’s an unlucky number for them so house numbers with a four in it aren’t of interest. “The number eight is lucky and represents fortune and also resembles the figure of infinity. In some private sales or ‘sold before auction’ sales you will see prices such as $1,100,800, $1,100,080, $939,888, $888,888.” Chinese buyers like the transparency of auctions and are comfortable participating in them, regardless of the outcome.
Do the maths: Street numbers can have a big influence on sales outcomes with Asian buyers.
Van Pamelen has also learnt feng sui principles such as avoiding houses on T intersections, or if the stairs are directly behind the front door wealth could flow directly out of the home. One of the biggest challenges of being a buyer’s agent in a multicultural market place for van Pamelen is
market value, particularly in the $1.8-$2.1 million range. “You can determine a selling estimate with all your experience and research and allow for competition only to then get blown away by homebuyers that want to knock down and rebuild. “The new underquoting laws are a step in the right direction but ‘subjective value’ buyers in special interest markets make very tough competition.” Just like Wang and Di Natale, for van Pamelen building trust with clients is vital. “It’s important to take a genuine interest in them and their property needs. We live in the world’s most liveable city and it’s very multicultural. Connecting with clients around common interests such as sport, food, family or property is what I find most enjoyable.”
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The Estate Agent ❘ August 2017
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28/7/17 3:58 pm
Market Update
Melbourne prices keep up the pace Fifth quarter of growth as middle and outer suburbs lead the charge with record number of auctions and sales
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etropolitan Melbourne’s median house price has increased for the fifth consecutive quarter, up 2.9 per cent in June to $822,000. While growth was more moderate this quarter, Melbourne’s property market continues to perform strongly with a record number of auctions (17,891) and sales (14,189) in the first half of the year. The city’s middle and outer suburbs were the main growth drivers in the June quarter with both regions up by more than three per cent. Outer Melbourne’s median house price rose 3.7 per cent over the quarter to $642,000 while house prices in the city’s middle ring suburbs increased 3.2 per cent to a record high $991,500. Values within 10km of the CBD moderated in the three months to June 30, down 2.1 per cent to a median of $1,468,000. The moderation follows
strong price growth of almost six per cent in the March quarter. Top growth suburbs were widespread across Melbourne and represented both ends of the market – from Broadmeadows and Roxburgh Park in the north to Malvern East and Toorak in the south-east. Croydon in the outer east experienced the city’s largest quarterly growth, up 20.4 per cent to a median of $810,000 – an increase of $137,500 on March figures. Significant price growth was also recorded in Doncaster East with the median house price increasing 19.1 per cent in the June quarter to $1,441,000.
In the three months to June 30, Melbourne was home to 124 million-dollar suburbs – up from 90 for the same period last year This was up from $1,210,000 in the previous quarter. Meanwhile, half of the top 20 growth suburbs this quarter are priced below the citywide median. These included Deer Park, up 16.9 per cent to a median of $590,555; Melton West, up 14.1 per cent to $397,000; Mernda, up 13.3 per cent to a median of $521,250; and Frankston North, up 12.8 per cent to $470,000. In the three months to June 30, Melbourne was home to 124 milliondollar suburbs – up from 90 for the
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The Estate Agent ❘ August 2017
same period last year. Seven new suburbs recorded median house prices of at least $1 million in the June quarter, including Essendon West ($1,305,000) and Flemington ($1,167,500) in the north-west and Lysterfield ($1,105,000) and Oakleigh South ($1,085,000) in the south-east. Melbourne’s most expensive suburbs were almost exclusively located in the city’s south-east and east with Toorak topping the list with a median house price of $4,750,000 – an increase of 11.8 per cent on March quarter figures. Toorak was $2 million more expensive than any other suburb with Malvern and Brighton recording the second and third highest medians at $2,750,000 and $2,600,000 respectively. Other suburbs making the most expensive list include Kew ($2,290,000), Balwyn ($2,255,500), Hampton ($2,120,000) and Albert Park ($2,120,000). Meanwhile, the city’s most affordable
Market Update
Regional prices at record high
Looking good: Melbourne’s property market continues to perform strongly with a record number of auctions (17,891) and sales (14,189) in the first half of the year.
suburbs in the June quarter were predominately in the outer west and south-east. Despite recording seven per cent quarterly growth, Melton South is Melbourne’s most affordable suburb with a median house price of $342,500. This was followed by Melton West and Wyndham Vale with median house prices of $397,000 and $450,000 respectively. Both suburbs experienced double-digit price growth in the June quarter. Other suburbs appearing on the most affordable list include Sunbury ($452,500), Pakenham ($460,000) and Werribee ($462,000). Melbourne’s unit and apartment market continues to grow steadily with the citywide median price increasing 4.3 per cent in the June quarter to $606,500.
Inner and middle suburbs recorded the strongest price growth, both up by more than six per cent to medians of $630,500 and $681,000 respectively. Toorak and Brighton recorded the highest median apartment prices this quarter – at $1,380,000 and $1,370,000 respectively. This was followed by Bentleigh East ($1,069,500), Glen Waverley ($952,000), Mount Waverley ($950,000) and Hampton ($920,000). At the other end of the market, Melbourne’s most affordable apartments are located in Frankston. The coastal suburb recorded a median apartment price of $358,500 in June. This was followed by Dandenong and Footscray with median prices of $370,000 and $385,000 respectively.
Following strong price growth in March, house prices in regional Victoria rose a further two per cent in the June quarter to a record high $385,000. In the three months to June 30, Maryborough recorded the highest rise with the median house price increasing 13.1 per cent to $220,500. This was up from $195,000 in March. Double-digit price growth was also seen in Maldon, up 10.9 per cent to a median $435,000, and the Ballarat suburb of Soldiers Hill, where house prices rose 10.7 per cent to a median of $407,000. Other regional towns having solid price increases include Irymple, up 8.7 per cent to a median of $290,250; Lake Wendouree, up 8.6 per cent to $722,000; Ballarat North, up 7.2 per cent to $352,500; and Brown Hill, up 6.8 per cent to $390,000. Meanwhile, suburbs within Greater Geelong dominated top growth areas with Hamlyn Heights experiencing the largest annual price growth, up 24.2 per cent to a median of $485,000. This was followed by East Geelong and Geelong West, both up by more than 20 per cent to median house prices of $576,000 and $617,000. Significant annual price growth was also recorded in Heathcote, up 20 per cent to a median house price of $300,000; Belmont, up 19.7 per cent to $480,500; Norlane, up 17.3 per cent to $258,000; and Castlemaine, up 16.7 per cent to a median house price of $455,000. Barwon Heads remains the most expensive town in regional Victoria with a median price of $946,000. High median house prices were also recorded in Geelong and Torquay, at $718,750 and $715,000 respectively. Unit prices in regional Victoria increased 3.7 per cent in the June quarter.
The Estate Agent ❘ August 2017
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Commercial
Population growth is changing our traditional way of life The pressure of numbers means many Australians will be paying rent for longer, later in life ... and in many cases forever
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opulation growth is driving demand for property and changing the aspirations of new generations of Australians, says social researcher Mark McCrindle. Speaking at the Commercial & Industrial Chapter’s economic forecast lunch last month, McCrindle says Melbourne’s population is growing faster than any other capital city, increasing 12.1 per cent in the past five years. “Densification is obviously the response to this population and city growth with Melbourne now growing by more than 100,000 per annum.” McCrindle says while the traditional family home remains the dream nationally with three quarters of Australians living in detached dwellings, that situation is changing in the capital cities. A third of all Melbourne households now live in the apartment and townhouse sector with rising living and housing costs impacting on the ability of new generations to enter the property market. “We’ve got a growing population and sprawling city with an emerging generation looking for new options when it comes to housing. “It’s a generation renting for longer
China concern: Alan Oster says China is important to Australia and its debt level is worrying.
in life, and later in life, and for many, for all their life.” While the population is growing, the latest Census data shows it is also changing with greater cultural diversity. McCrindle says the majority
‘It’s a generation renting for longer in life, and later in life, and for many, for all their life’ – Mark McCrindle
Changing Demographics
Melbourne suburbs by age
❚ National population:
❚ Average national employment
24.6 million ❚ National growth over past five years: 8.8 per cent ❚ Growth in Melbourne over past five years: 12.1 per cent ❚ Growth in Sydney over past five years: 9.8 per cent
tenure: 3 years ❚ Ageing population: One in five Australians aged over 60 ❚ Average age in Victoria: 37 ❚ Average age in Melbourne: 36
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The Estate Agent ❘ August 2017
of the nation’s population growth is coming from net overseas migration, with one in four Australians now born overseas. “Cultural diversity is impacting half of all households with Melbourne City and Carlton among the top five suburbs nationally with the highest proportion of residents that have arrived since the 2011 Census.” More than 85 per cent of all new permanent arrivals settle in capital cities, the majority in Melbourne and Sydney. Australia has also experienced a geographical shift in migration patterns over the past three decades, moving away from European migration with a higher proportion of new residents arriving from Asia. “The typical Victorian, who was born overseas, for the first time, traces their ancestry no longer to England but to India and in New South Wales, the number one country of birth is China.” McCrindle says change has defined the past decade with agents needing to be more responsive than ever before. “We’ve just lived through a decade of absolute digital disruption which has transformed almost every area of our business and communications. “Our nation is changing and our markets are changing, so with that our
Oldest suburbs ❚ Portsea – average age 67 ❚ Sorrento – average age 65 ❚ Rosebud – average age 59
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the Average age in Australia
Youngest suburbs ❚ Carlton – average age 24 ❚ Clayton – average age 25 ❚ Parkville – average age 26
Commercial
communication needs changing as well.” The rise of social media and peer groups has seen YouTube, Google and Facebook become the most utilised websites in Australia, however, the average time spent on the top 30 websites is just three minutes and 55 seconds. “We need to find ways to communicate content and getting cutthrough in times of shorter attention spans, in an era of fragmentation attention; we’ve got to be responsive to a changing audience.” McCrindle says agents should utilise the power of visuals and symbols to connect with clients and emerging generations. “We don’t want more information, we want tailored information. We want the expert to take us down a pathway and customise the solution for us. We don’t want more choice, we want guided choice.” Held at Crown Promenade, the lunch attracted more than 250 attendees with NAB’s Chief Economist Alan Oster providing an overview of the national and global economies. Despite political uncertainty around Donald Trump, Oster says NAB’s global leading indicator suggests the US is tracking solidly with forecast growth of about .5 per cent a quarter over the next year. Oster says the other economy of importance to Australia is China, with growth in that market currently
Dwellings under construction vs annual population change Houses
Apartments
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450 400 350 300 250 200 150 100 50 0
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being driven by the services sector rather than secondary industries. “I don’t think China is going to fall over anytime soon but the thing that worries me in the medium term is the debt – which is about 300 per cent debt to GDP ratio,” says Oster.
‘We don’t want more information. We want tailored information ... we want guided choice’ – Mark McCrindle
“That’s like Australia, it’s not that different but what is unusual is for a country that is developing to have that level of debt and their debt levels have got higher very quickly.”
Numbers challenge: Mark McCrindle says our population growth is changing our housing options.
Oster says the Chinese market is sustainable for the next three-four years but unlikely in the long term. When China starts to slow, the east coast of Australia is likely to benefit from increased services rather than commodity exports. Globally, Australia is the number one exporter of LNG in the world – increasing from five per cent to 25 per cent of the world’s exports. “The price internationally is going sideways and most of the big LNG platforms are losing money – breakeven is about $80 and the current price is $50.” Oster says the increasing cost of gas in the local market is due to the three main producers not pumping at 100 per cent to cater for exports. Business confidence and conditions in Australia are higher than the long-run average with services the key driver. Consumer services and property are the key economic drivers but property conditions vary significantly depending on state, with both Victoria and NSW markets stronger than ever expected. Oster says supply and demand, interest rates and employment are the three things affecting the residential property market with supply of houses not meeting demand in Sydney and Melbourne. “Interest rates we don’t think are going up anytime soon but unemployment around 8-8.5 per cent is where you see stress and there are about 60 postcodes that the bank is worried about.” He says the apartment market is of concern with significant oversupply, particularly in Brisbane and the Melbourne CBD, up 2.5 times on the long-run average. “Do we worry about house prices? Not unless we have a recession but what we worry about is particularly what is happening to certain postcodes.” In the commercial sector, Oster says offices and industrial are getting stronger and are likely to continue to improve over the next few years. However, the retail sector is weakening. “Melbourne is seeing very strong capital values in the office market with returns expected to remain strong and strengthen. Rents are also strong but are likely to edge down.” The Estate Agent ❘ August 2017
25
Commercial
Melbourne: where all the action is Hospitality breathes new life into commercial real estate
O
ne of the largest commercial real estate companies in the world, Cushman and Wakefield, is now making its mark in Melbourne. Situated in the heart of the Melbourne CBD on the corner of Bourke and Elizabeth streets, experienced commercial agent Michael DiCarlo joined the agency in February as Director of Retail Leasing. No stranger to the world of commercial real estate, DiCarlo previously worked for global company Savills for nine years and considers himself fortunate to have been part of a fascinating evolution in the CBD. “Fourteen years ago, it was all about fashion and footwear,” he says. “Now the major changes are the number of restaurants, cafes and food outlets which dominate the leasing sector. “The large international outlets like H&M, Zara and Uniqlo have also made a strong impact retailing apparel,
26
The Estate Agent ❘ August 2017
although Myers and David Jones are still good anchors for the mall.” In 2015, Cushman and Wakefield merged with DTZ. At the time, both were world-wide recognised brands, however Cushman and Wakefield was not as well known in Australia as its merger partner. The merger has seen the company become a global leader in commercial real estate services with a vision to help “clients transform the way people work, shop and live”. The newly merged company expanded their commercial real estate (CRE) transactional business in the Sydney market last year and Melbourne earlier this year. In six months, the Melbourne CRE staff has increased from
‘One hundred years ago, Smith St was the richest retail street outside the CBD’ – Michael DiCarlo
In the thick of it: Michael DiCarlo enjoys the cut and thrust of city business, but also enjoys home leisure and a bit of golf.
10 to 40. DiCarlo says DTZ was better known for its Global Occupiers Services – looking after the property accounts of major companies such as NAB, Australia Post, Suncorp and Westpac. Now the newly merged Cushman and Wakefield is expanding into commercial and industrial leasing and sales and DiCarlo is looking forward to the challenge. Two decades ago, DiCarlo was in his early 20s and working in hospitality when he decided to “get serious” about his career. “I was waiting tables and not sure what I wanted to do,” he recalls. His “first real job” was at K+P Smyth Real Estate in Smith St, Collingwood; confident his skills in hospitality could be put to good use in real estate. “Each day was an eye-opener back then. The police had pushed the drug dealers out of the city and every day, outside our front door, there was a drug bust. Smith St was finding its way and it didn’t help that half the street was vacant. “One hundred years ago, Smith St was the richest retail street outside the CBD.”
Commercial
But the face of Smith St started to change, especially after the major Coles development was built. The popular street was transformed with food outlets, specialty shops and galleries. DiCarlo was kept busy with both residential and commercial work, gaining the confidence to move on. “Melbourne remains one of the most vibrant cities in the world,” he says. “The boom in food outlets has coincided with the population growth in the CBD, particularly along the northern boundary of Franklin and A’beckett streets where there are a lot of apartments going up. This has brought more people into the city.” DiCarlo says CBD rents have generally stabilised although land values have increased. “The only exception is the top
Cafe central: Melbourne’s commercial real estate focuses heavily on cafes and food outlets.
end of Collins St with its high-end fashion tenants – rents have gone up dramatically there. This has come on the back of wealthy Asian visitors spending on luxury brands. “In general, rents south of the Bourke St Mall have decreased and north of the mall have increased.”
INSTALL
‘Rents have gone up dramatically there (Collins St). This has come on the back of wealthy Asian visitors spending on luxury brands’ – Michael DiCarlo
Swanston St initially suffered last year, says DiCarlo, after the potentially damaging announcement of disruptions due to the tunnel construction. But he says parts of Swanston St have undergone a resurgence, particularly between Bourke and Lonsdale streets which has become an extension of Chinatown. “The street is actually one of the highest traffic areas in the CBD.” While DiCarlo relishes working in the city, he enjoys escaping to his Strathmore home where he lives with his wife and two young children. With the luxury of having most weekends free, he enjoys family time and the occasional round of golf. He also embraces his Italian family traditions of making homemade tomato sauce and bottling olives and chillies in brine. And when they get the chance, eating out … in the city, of course. “We love dining out at some of the great pubs and cafes run by clients who have also become friends.”
ActiveInstalls WINDOW DISPLAY SPECIALISTS
20 YE • LED back lit display panels INDU ARS S (not LCD) EXPE TRY RIENC E • Standard cable displays • Wall mounted brochure holders
The Estate Agent ❘ August 2017
27
Best Practice
Don’t end up in hot water Letting and managing residences with swimming pools and spas. By Peter Lowenstern, REIV Corporate Solicitor all is in order. Agents should obtain this information before agreeing to undertake the letting and management of a property. Once again, the potential risks to an agency in ignoring this fundamental matter do not bear thinking about. Managing risks If the pre-engagement inspection or information gathering exercise (or both) is satisfactory and an agency is taking on the letting and managing of the property, it is vital the authority details the management responsibilities, if any, for the pool or spa.
Cool pool: Agents need to be aware of stringent safety precautions if they are letting or managing properties with pools or spas.
A
gents asked to take on the letting and managing of a residence with a backyard swimming pool or spa need to be aware of several things to comply with what is currently considered good estate agency practice. Is the pool or spa legal? Before agreeing to manage the property, ascertain if the pool or spa is ‘legal’. This is the responsibility of the property owner, whether or not they installed the pool or spa. How do agents do this? Ask to see the building permit and the certificate of final inspection issued for the pool or spa. A pool or spa is not considered ‘legal’ without them. Agencies should not let or manage a property with a pool or spa if there is no permit or certificate, or the owner can not produce them. The potential risks for agencies in ignoring this basic prerequisite do not bear thinking about 28
The Estate Agent ❘ August 2017
– as inquests into child drownings in backyard pools bear out. Inspect the pool or spa and its surroundings This is fundamental and should be done before agreeing to take on a letting and managing role. It is important agents read the building permit and certificate of final inspection, before carrying out an inspection. The building permit may contain conditions to be met in the course of, and after, construction. Agents need to be in a position to know if these conditions have been and, if appropriate, are still being met. If agents ascertain conditions have not been, or are not being, met or cannot readily tell if that is the case, they need to advise the potential client. This may mean the property owner needs to do certain things to comply or, in some circumstances, obtain a report from an appropriate person that
Here are some pointers to keep in mind: ❚ If the management responsibilities do not include the pool or spa, ensure the authority makes this plain and do not then fall into the trap of accepting de-facto responsibility by doing things in relation to the pool or spa, just to help out the landlord; ❚ If the management responsibilities include the pool or spa ensure the authority: Specifies inspection intervals; Specifies inspections, maintenance, repairs and replacements are to be carried out by an appropriate contractor and states who is to be considered as ‘appropriate’; Authorises the agent to engage the contractor on behalf of the landlord; Authorises the agent to expend, without recourse to the landlord, a nominated sum, plus GST, that is considered appropriate for pool or spa safety barrier maintenance, repairs and replacements; Permits the agent to terminate the appointment, or the management responsibilities for the pool, spa and safety barriers, at short notice if they reasonably consider the landlord has failed to provide
Best Practice
BUILDING REGULATIONS SUNSET REVIEW
Know the rules: Agents need to ensure safety barriers are compliant before taking on the letting of a property.
appropriate instructions or funds to ‘manage’ the pool, spa and safety barriers in line with the terms of the authority. The residential tenancy agreement should, at the very least, require the tenant to ensure they do not compromise the requirements, if any, of the building permit or certificate of final inspection, especially so far as safety barriers are concerned. If there are requirements, a copy of the permit or certificate, in which they appear, should be attached to the tenancy agreement.
The sunset review of Victoria’s building regulations put forward two recommendations relating to backyard swimming pool and spa safety barriers. The first requires all swimming pools and spas to have a four-sided isolation barrier that complies with the most recent Australian standard, retrospective application where possible. At present three barrier standards apply, dependent on the year the pool was built. The second requires the owner to maintain the pool/spa safety barrier (a requirement previously of the occupier), while the occupier would be required to take all reasonable steps (such as notify the owner) to ensure the barrier was operating effectively. The problem with this proposal is many pools built pre-2010 can not accommodate a four-sided barrier due to its proximity to the house. It will also be a significant expense for many property owners. More importantly, there is no evidence to suggest four-sided isolation barriers will reduce toddler drownings in backyard pools. According to coroner
reports more than 20 Victorian toddlers have drowned in backyard swimming pools and spas since 2000. An even greater number of toddlers have suffered near-fatal incidents. These recommendations ignore the advice of numerous industry experts – including Life Saving Victoria, SPASA, the REIV and Kidsafe – which have urged Government to introduce mandatory barrier inspections for all residential properties with a pool or spa. The REIV has also called for safety certificates at the point of sale or lease. Legislated in Western Australia since 1992, mandatory barrier inspections have reduced toddler and infant drownings in that state by more than 80 per cent. More recently both Queensland and NSW have also introduced mandatory barrier inspections. Given other relevant legislation – the Sale of Land Act 1962 and the Residential Tenancies Act 1997 – is also being reviewed, the REIV has urged the Andrews Government to abandon retrospective standards in favour of mandatory barrier inspections.
Estate agents managing rooming houses By Consumer Affairs Victoria The new licensing scheme for rooming house operators, which came into effect in April, does not require a person acting as a rooming house manager to be licensed. However, rooming house managers are assessed as part of the operator’s licence application and must meet the same ‘fit and proper person’ requirements. If a real estate agency manages a rooming house, anyone from the agency who takes part in the management of the rooming house is considered a ‘relevant person’ under the Rooming House Operators Act 2016. As there is a fee for each relevant person nominated in a licence application, agents should: ❚ Limit the number of people who take part in the management of the rooming house (if possible to a single person); ❚ Immediately notify the operator
of any change to the agency staff involved in managing the rooming house, to ensure they remain compliant. Existing rooming house operators must apply to the Business Licensing Authority for a licence by August 24, 2017. Agents who currently manage a rooming house are advised to check that the rooming house operator is aware of the licence application deadline. What the BLA requires to check ‘relevant persons’
All relevant persons (including agency staff) must provide certified copies of 100 points of identification documents and a signed consent form authorising the BLA to conduct the required checks, enabling the BLA to assess whether the applicant is a ‘fit and proper person’ to hold a licence. Operators who decide to apply for a licence will request this identification information from estate agency staff involved in managing their rooming house. For more information, visit the Consumer Affairs Victoria website consumer.vic.gov. au/roominghouseoperators If you have any other questions about the licensing process, please email bla@justice.vic.gov.au The Estate Agent ❘ August 2017
29
Agents
Peter, the office boy who became a gun auctioneer From livestock to homes (and 500 rabbit traps), a veteran agent turned a fascination for stockyard sales into a lifetime calling
P
eter Williams was only about 10 when he used to “auction” the chooks in the backyard of his Western District home. Sometimes his siblings’ bicycles would also go under the hammer in his auction games. Williams’ interest in auctions was sparked when he’d run up to the local Balmoral stockyards after school to watch the auctioneers sell off the sheep. It was a captivating scene for a wideeyed young lad. He was nearly 14 when the local Elders manager dropped in to the school looking for an “office boy”. When the manager asked if there were any boys interested in working in the office, Williams put his hand up and on January 5, 1955, commenced what would become a lifelong career. “I learnt how the back-end of an office worked,” he recalls. “It was invaluable for my future as a real estate agent.” At 18, Williams became a stock agent … the youngest outside stock representative for Elders across Australia. He was at home standing on the fences in the saleyards auctioning the sheep. But the young man always had a burning desire to work for a smaller, private company and an introduction to a former Past President of the REIV, Peter Aubin, saw Williams join his agency in Dandenong. In those days, Dandenong was the edge of Melbourne and hosted three markets a week, including big livestock sales. “I continued as a stock agent and became the office manager before Peter encouraged me to move into real estate,” Williams says. The problem was the prerequisite 30
The Estate Agent ❘ August 2017
Golden rule: Peter Williams has a simple philosophy – “keep your nose clean and be absolutely honest”.
entry for the estate agency course at the former Caulfield Technical College was “leaving certificate” or Year 11 as it is now. Williams had left school after Year 8. But he was blessed with a good command of the English language and his teacher decided to reassess his ability at the end of the course. Williams passed with flying colours and, at 23, became a partner in the business, trading as Aubin Williams Pty Ltd with a focus solely on real estate. “It was a real challenge,” he says. “Totally different. Farmers were much easier to deal with but I love a challenge. And it’s a people business. If you don’t like people, it’s not for you.” In those days, Dandenong was starting to boom. Blocks of land were
‘Farmers were much easier to deal with but I love a challenge ... it’s a people business. If you don’t like people, it’s not for you’ – Peter Williams
selling at Narre Warren for around $1,200. New subdivisions were opening overnight and new homes were popping up almost as quickly. One of Williams’ first house sales was for a “massive” $11,000. It was also an era of migration and Dandenong attracted many new migrants. The area was buzzing with an eclectic mix of residents. “I had a full sales team, all of whom had been in real estate much longer than me,” Williams says. “We got an electronic calculator and book-keeping machine and thought we were just it. When you bought a fax machine, you were ‘Mr Big’.” After 15 years and encouraged by Aubin, Williams opened his own business in Gladstone Rd, Dandenong North – Peter Williams Real Estate – where he remained for another 23 years. “I’ve always believed you should be proud to stand behind your own name and I’ve built my business on that foundation,” Williams adds. A father of four children and married to a country girl, he immersed himself in the Dandenong community. He became President of both the Dandenong RESI and REIV branches, also serving as long-time branch secretary. As well as being a member of the inaugural committee of RESI Search, a title search company pre-dating the Section 32 days, Williams was on the Board of the REIV’s Multiple Listing Bureau, which introduced a revolutionary change for the industry. It meant REIV agents could provide a service for their clients across Greater Melbourne. “It was a privilege selling houses to successive generations of families.
Agents
‘Projecting your voice from your diaphragm, like a singer, so you save your throat, especially when you are doing five hours straight’ – Peter Williams I’d have kids come to me to sell their houses because their grandmas had been customers and recommended me.” One of Williams’ “biggest thrills” in Dandenong was serving as President of the Dandenong Football Club for three years. In two years, he led the club from cellar-dwellers to premiers when the seniors won the 1991 VFA premiership. “The community went wild and the council raised the club’s flag on the Dandenong Town Hall.” Like many people, with their children all grown up, Williams made a “lifestyle” change 17 years ago and sold his business, moving to the picturesque town of Drouin in west Gippsland. Initially, he commuted to Dandenong to work as a member of another agency’s sales team. “But I was the worst subordinate,” Williams says. “I didn’t work well as part of a team and the call to open my own business again was strong.” So Peter Williams Real Estate opened in the main street of Drouin. Today Williams has three sales representatives,
two property managers and a receptionist. His general manager, Elise Davidson, has been with him since day one. The agency sells residential properties, farms, lifestyle properties as well as commercial and industrial properties. Williams isn’t as “full-on” as he once was; he tried to retire once … it lasted two weeks. The last decade has seen unprecedented growth in the district. “The railway station car parks at Drouin, Warragul, Longwarry and Bunyip are full on week days with people commuting to Melbourne for work,” Williams says. “It takes 40 minutes to get to the eastern suburbs.” While he’s passionate about his business, Williams admits he gets the “biggest adrenalin rush” from running clearing sales, which he first started in his early career. His skills are renowned in this niche market which sees him in demand throughout Victoria, often taking his grandchildren along for the experience. The sales are many and varied. He once auctioned 500 rabbit traps as
well as the contents of jewellery shops, timber mills and old homesteads. Williams proudly says he can still sell 500 individual lots “on the trot” – that’s about 100 lots an hour. “I still believe Peter Aubin was the best property auctioneer I’ve seen and a man called Roy Bassett was a wonderful livestock and chattels auctioneer. I learnt so much from both of them. They taught me the skill in projecting your voice from your diaphragm, like a singer, so you save your throat, especially when you are doing five hours straight.” Williams loves buying items at clearing sales and has a genuine interest in collecting Australiana. But he has never broken his own rule of not buying at his own auctions. A keen bike rider who has completed three Great Victorian Bike Rides, Williams enjoys the country life. He regularly conducts auctions for various charities, raising hundreds of thousands of dollars for organisations such as the Dandenong Hospital, Latrobe Regional Hospital, Palliative Care, the Scouts and local sporting clubs. He has no hesitation in recommending real estate as a career, offering this one piece of advice: “Keep your nose clean and be absolutely honest at all times.”
Calling the shots: Peter Williams is happiest when working the bids.
The Estate Agent ❘ August 2017
31
Training
Refresher course on trust accounts Due to member demand, the REIV is introducing a new one-day Trust Account Refresher course to its CPD portfolio. Ideal for directors, branch managers and Officers in Effective Control, the course covers agency
trust account requirements, producing financial reports and identification of discrepancies. Attendees will also learn how to manage and control trust accounts in accordance with best practice procedures and legislation.
august
Agents are required to have their trust accounts audited annually by an approved auditor. Audits must be lodged within three months of the end of the financial year. The Trust Account Refresher course is currently scheduled for October 18. Please contact the REIV’s Training Department for more information.
Business Broking 21st – 23rd
9am–5pm
Business Broking Fundamentals
2nd
9am–5pm
Commercial Property Management Fundamentals (Frankston)
9th
9am–5pm
Commercial Property Management Fundamentals
16th
Morning
Pricing Commercial Property for Sale or for Lease
23rd
9am–5pm
Commercial Property Management Fundamentals - Part II - Lease Administration
Commercial
october Auction 20th
9am–5pm
Introduction to Auctioneering
13th
Morning
Essential Safety Measures For Commercial Property Management (Frankston)
13th
Afternoon
The Agent’s Role in Commercial Lease Documentation – Identifying Common Errors and Mistakes (Frankston)
18th
9am–5pm
Commercial Property Sales Fundamentals
25th
9am–5pm
Commercial Property Management Fundamentals - Part II - Lease Administration
Commercial
Owners Corporation 22nd
9am–5pm
Advanced Owners Corporation Management
Property Management 4th
9am–5pm
Intermediate Residential
14th – 16th
9am–5pm
Job Ready - Residential Property Management
18th
9am–5pm
Preparing for and Presenting at VCAT
24th
Morning
Residential Property Management – Tips & Insights
Owners Corporation 31st
9am–5pm
Intermediate Owners Corporation Management
Property Management
september Commercial 6th
9am–5pm
Listing and Leasing Commercial Property
13th
9am–5pm
Commercial Property Sales Fundamentals
20th
9am–5pm
Commercial Property Management Fundamental
9am–5pm
Commercial Property Management Fundamentals - Part II - Lease Administration (Frankston)
22nd
Owners Corporation 7th
9am–5pm
Introduction to Owners Corporation Management
Property Management 22nd
9am–5pm
Intermediate Residential
Property Sales
19th
9am–5pm
Difficult Ds of Residential
20th
9am–5pm
Advanced Residential
november Auction 1st
9am–5pm
Advanced Auctioneering
15th
9am–5pm
Commercial Property Management Fundamentals
22nd
9am–5pm
Commercial Property Sales Documentation and Processes
Commercial
Owners Corporation 28th
9am–5pm
4th
Afternoon
Residential Sales Documentation - Getting it Right
Property Management
11th – 13th
9am–5pm
Job Ready - Residential Property Sales
13th – 15th
32
The Estate Agent ❘ August 2017
9am–5pm
Advanced Owners Corporation Management
Job Ready - Residential
Events
Highlight: The REIV Awards for Excellence are an industry standout.
Awards cast wider net Broader categories to recognise range of special skills
Categories for this year’s REIV Awards for Excellence have been refreshed to recognise a broader range of industry specialisations. A Property Valuer of the Year Award has been added and the Principal subcategory for Residential Salesperson of the Year and Residential Property Manager
august 9th
Commercial & Industrial Novice Auctioneers Competition - Heats
15th
Novice Auctioneers Competition – Heats
16th
Commercial & Industrial Novice Auctioneers Competition – Final
22nd
Novice Auctioneers Competition – Semi-final
25th
Young Agents Chapter – Future Leaders Forum
29th
Novice Auctioneers Competition – Final REIV Interschools Auctioneering Program – Inaugural Event
SEPTEMBER
of the Year has been extended. Previously only open to agency principals, this subcategory has been renamed to Executive and now includes senior salespeople/ property managers who oversee a team of five or more. The 2017 Commercial & Industrial Marketing Awards contain 17 revamped award categories, catering to a wider range of commercial and industrial property types and marketing budgets. Additional categories have been introduced to recognise the Best Overall Marketing Campaign by a small, medium or large commercial agency. The REIV Awards for Excellence are a highlight on the industry’s event calendar with TV and radio personality Jo Stanley this year’s Master of Ceremonies. All award submissions, including C&I Marketing Awards, can be made online with entries closing this month.
OCTOBER 18th
Bendigo Division Meeting
26th
Awards for Excellence
November 1st
Buyer’s Agent Chapter Breakfast
14th
Southern Division Meeting
16th
Commercial & Industrial Chapter Breakfast
21st
Property Management Chapter Breakfast Event
DECEmber
5th – 7th
Australasian Auctioneering Championships (South Australia)
5th
Property Management Chapter Christmas Drinks
14th
Commercial & Industrial Marketing Awards
8th
Business Brokers Christmas Lunch
15th
Business Brokers Chapter Lunch
20th
Buyers Agents Chapter Breakfast Owner’s Corporation Chapter Seminar
21st
Mornington Peninsula Division Breakfast
27th
Valuation Chapter Seminar
reiv.com.au –
your first source for REIV events in 2017 The Estate Agent ❘ August 2017
33
Member News
Ballarat and Bendigo get a helping hand State Government focuses on regional cities to encourage jobs, businesses and homebuyers to make the move
W
ith a median house price of $385,000 regional Victoria is best known for its affordability, offering buyers the chance to enter the market for less than half the Melbourne median. In its 2017-18 State Budget, the Government offered greater incentives for homebuyers to consider relocating to regional Victoria with a $4 billion investment. For first homebuyers, the First Home
Owners Grant (FHOG) in regional Victoria has doubled to $20,000 for newly built homes below $750,000. Stamp duty has also been removed for first homebuyers buying below $600,000 while scaled duty reductions apply for homes priced between $600,000 and $750,000. The Budget also announced plans to relocate 600 public sector jobs to Ballarat over the next two to four years.
Businesses are also being encouraged to relocate to the regions, with the payroll tax rate being reduced by 25 per cent for companies
Ballarat Division Committee Back row: Lockie Waddell, Maryke Kendall, Sean McGaffin; front row: Angela Flowers, Trish Markham, Christine Segaert (chair).
Bendigo Division Committee Back row: Tom Maher, John Keating, Jacinta McIvor and Craig Webster; front row: Noel Dyett, Darryn Mawby, Andrew Murphy (chair) and Matt Bowles.
34
The Estate Agent ❘ August 2017
An estimated $4 million will be spent developing the city’s Civic Hall as the location of the proposed ‘GovHub’, home to multiple departments. A further 150 jobs are likely to be moved to the LaTrobe Valley with the Andrews Government also putting pressure on the Commonwealth to move federal jobs to the area. The State Government has earmarked an additional $1 million towards developing a business case to consolidate public sector jobs into one administrative office in Bendigo. Businesses are also being encouraged to relocate to the regions, with the payroll tax rate being reduced by 25 per cent for companies operating substantially in regional Victoria. House prices in regional areas are also likely to benefit from improved road and rail infrastructure with the Budget investing $530.6 million in roads and $1.12 billion in public transport. This includes $311.1 million for 39 new VLocity carriages, upgraded bus services and the Gippsland rail upgrade. The Federal Government has funded a further $1.45 billion for the regional rail revival project which will see upgrades to the Bendigo, Ballarat and Warrnambool lines. A rail service to the Surf Coast will also begin. Schools in rural and regional schools are also being upgraded with the State Budget committing $76 million to education. While Greater Geelong has already experienced significant price growth in recent years, a comparison of the regional cities of Bendigo and Ballarat is on the opposite page.
Member News
City of ballarat TOP PERFORMING SUBURBS IN THE YEAR TO JUNE 30
Weekly median rent
Suburb
Median June 2017
Annual Change
Nerrina
$585,000
23.2%
Black Hill
$350,000
19.7%
Soldiers Hill
$407,000
18.0%
Brown Hill
$390,000
13.9%
Buninyong
$435,000
11.4%
Ballarat Central
$385,000
10.8%
Mount Pleasant
$308,000
10.8%
$393,750
10.6%
Golden Point (Ballarat)
$300,000
10.1%
Delacombe
$350,000
9.4%
Newington
Population
101,686
From Melbourne
117km
Median house price
$335,000
Weekly Median Rent (June 2017)
Ballarat 1-bedroom unit
$165
2-bedroom unit
$250
3-bedroom unit
$290
2-bedroom house
$250
3-bedroom house
$290
4-bedroom house
$360
1910 Median unit price
Established as a representative group (REI)
10-year performance House prices up 52 per cent on June 2007 when median house price was $220,000
$245,000
Famous people who Robert Menzies, Alfred Deakin, John Curtin (PMs); Steve Bracks, Henry Bolte, Duncan Gillies, came from ballarat Thomas Hollway (Premiers); Steve Moneghetti, Russell Mark, Michelle Payne, Bob Davis, Tony Lockett (Sportspeople).
City of Greater Bendigo TOP PERFORMING SUBURBS IN THE YEAR TO JUNE 30 Suburb
Weekly median rent
Median June 2017
Annual Change
Maiden Gully
$525,000
20.3%
Heathcote
$300,000
20.0%
White Hills
$314,250
14.3%
Huntly
$390,000
9.9%
Spring Gully
$363,000
6.0%
Quarry Hill
$401,250
5.6%
Strathfieldsaye
$450,000
3.4%
Bendigo
$382,500
1.3%
Strathdale
$400,000
1.3%
Eaglehawk
$287,000
1.1%
Population
110,477
Famous people who came from Bendigo
From Melbourne
152km
Median house price
$327,000
Weekly Median Rent (June 2017)
Bendigo 1-bedroom unit
$180
2-bedroom unit
$245
3-bedroom unit
$300
2-bedroom house
$250
3-bedroom house
$290
4-bedroom house
$343
1941 Median unit price
$257,500
Established as a representative group (REI)
10-year performance House prices up 39 per cent on June 2007 when median house price was $236,000
John Brumby (Premier); Faith Leech, Nathan Brown, Joel Selwood (Sportspeople); Colleen Hewett (Entertainment); Sidney Myer (Myer stores). The Estate Agent â?˜ August 2017
35
Taxes
Taxes taking their toll – Davis Shadow Minister for Planning says many industries are feeling the pinch from the Government’s revenue grab
D
aniel Andrews has broken his promise to taxpayers that he wouldn’t increase taxes or introduce any new taxes, says Shadow Minister for Planning David Davis. Speaking at an REIV Southern Division lunch in late June, Davis says since Andrews came to power he has introduced 14 new taxes which affect the property and construction industries. This included significant increases to key property taxes, such as land tax, which Davis says is up more than 28 per cent on last financial year. The latest Budget shows property taxes in Victoria now account for 45 per cent of the state’s revenue. “These kinds of taxes flow through to shops, factories and retail and have a significant impact on the viability of many of our industries. It’s important we have a strong real estate sector and we need to ensure we don’t put too much pressure on that sector.” Davis says new taxes for the property industry also have an impact on housing affordability. “The slowness of land release is a challenge for the Government with the lack of availability of vacant land in the outer suburbs likely to drive up the cost of land in these areas if the Government doesn’t keep up.”
Attack on taxes: Opposition planning spokesman planning David Davis says taxes are hurting.
Strong population growth is also impacting on the property market; Victoria’s population has increased 2.4 per cent in the past 12 months. Davis says Victoria’s population growth is being driven by overseas and interstate migration; and natural births, with Melton in the city’s west recording one of the strongest increases, up just shy of five per cent.
‘The slowness of land release is a challenge for the Government’ – David Davis
“Seventy per cent of the growth that is currently occurring is in the city’s middle suburbs and not on the city fringe. This was achieved in recent years but only because of growth in Docklands. Population growth will slow in inner Melbourne due to a lack of availability of housing in these areas.” Davis says the Andrews Government is now looking at forced density in established suburbs with the city’s south and east the key targets. “Neighbourhood zones have been stripped away with the mandatory maximum building height increased to 9m and the dwelling limit removed (previously capped at two dwellings). “These changes will see a surge of developers looking for large blocks in established suburbs.” Davis says the Opposition is in favour of sensible development, particularly infill sites which are suitable for residential expansion. Davis says regional centres, such as Ballarat and Bendigo, also have a role to play in catering for future growth. “Melbourne can’t easily grow at this pace without huge infrastructure change. We need to focus on growing the regions and there’s a lot we can do with the public sector to support growth in those areas.”
Property & Construction Taxes introduced under Daniel Andrews 1. The infrastructure contribution on new estates increased 2. Planning fees charged by councils significantly increased by between 100 and 1000 per cent 3. Axing of the long-standing Victorian off-the-plan stamp duty exemption, effectively a new tax 4. Axing the stamp duty concession on investment property transfers between spouses 5. The Growth Areas Infrastructure Contribution increased and brought forward 6. New community infrastructure charges as an increased infrastructure contribution on new estates 7. Land tax surcharge on foreigners introduced in 2015 and further increased in 2016 36
The Estate Agent ❘ August 2017
8. Stamp duty surcharge on foreigners introduced in 2015 and further increased in 2016 9. $220 million levy imposed on the Victorian Managed Insurance Authority over four years. The building component on VMIA’s business is 12 per cent, a $50.2 million hit on the property sector over four years 10. Introduction of a vacant property tax 11. Introduction of a social housing requirement for large new projects 12. Value capture collections added to certain key projects 13. Expansion of inclusionary zoning mechanisms 14. Fire Services Levy increases above the CPI
Member News
member milestones More than 80 members have marked membership milestones in the June quarter, demonstrating an ongoing commitment to their profession and the industry. Just over 50 individuals are celebrating a decade with the Institute, 13 have achieved 20 years as an REIV member and a further 12 agents have been members for 30 years. Noel
50 years
David Gardener Jim Barham Leslie Whorlow
Craig Tweed – 40 years Tweed Sutherland First National, Bendigo
40 years
Noel Jones Barry Ruler Craig Tweed Richard Carter
10 years Jones, Barry Ruler, Craig Tweed and former REIV President Richard Carter have reached the significant milestone of 40 years as an REIV member. Meanwhile, three individuals have accomplished the remarkable feat of 50 years as a member of the Institute. They are David Gardener, Jim Barham and Leslie Whorlow.
30 years
20 years
Trevor Petrie Terry Monaghan Mario Lionetti Geoff White Peter Lawrence Sandro Mazzei Paul Gervasi Reginald Burns Edmund Ermanis Anthony Romano Patrick Barnes Neil Laws
Scott McElroy David Moxon Michael Spring Nicholas Skapoulas Vicki Abery Paul Thomson Lewis Stone Con Katacouzinos Paul Johnston Vanessa Maher Peter Ahles Paul Caine Stephen Tickell
Brent Flannagan Michelle Flannagan Ashley Bramich Brian Duckworth Sherryn Fry Jack Haber Sue Thompson Jack Teneketzis Paul Englisch Bianca Keleher Bradley Ryan Mark Bond Ty Luff Frank Romeo Alex Teneketzis John Levingston David Picking Terry Hill Graeme Stanford Simon Shrimpton Courtney Thursfield Kirsty Mayes Melissa Smith Jamin Silluzio Peter Tsavdaridis Ned Nikolic
Rohan Calder Andrew Shen Stuart Hollingsworth Rob Sarosi Michael Nguyen Nicholas Lynch Quentin McEwing Margaret Macaronis Justine Buhrmann Patrick O’Callaghan David Wood Helen Lyon Neville Richards Franca Katsaris Sam Babalis Christopher Howlett Charles Boyd Daniel Rees Scott Orchard James Wilson Brendan Annesley Penny Cooper Rodney Stephen Katie Pickering Gary Lucas
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The Estate Agent ❘ August 2017
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Obituary
Kris applied scientific approach to the craft An engineering background and a head for figures gave Kris Callaghan the discipline to set real estate benchmarks
T
he real estate and valuation professions are mourning the loss of highly esteemed former REIV and REIA President Kris Callaghan, who sadly passed away in April. Real estate was in Kris’s blood but it wasn’t his first career choice, only entering the industry after an earlier career in engineering. Highly educated, Kris graduated from Melbourne University in 1950 with a double degree in science and metallurgical engineering before working at Lake George Mines in NSW. On his return to Melbourne, Kris held several engineering roles including supervising refining scrap steel and providing advice on electric arc welding in sub-zero conditions. In 1956, Kris was encouraged to follow in the footsteps of his grandfathers, joining B.H Renowden in Queen St despite having little knowledge of the real estate industry. Kris would go on to own the agency, renaming the business K Callaghan Pty Ltd in 1967 and then later Callaghan Steele Pty Ltd in 1971. Kris’s tertiary education and natural aptitude for maths served him well in his real estate and valuation studies, which he began at RMIT in 1957. His involvement with the Real Estate and Stock Institute of Victoria (RESI) began almost as soon as his real estate career, with Kris serving initially as a branch delegate to the Real Estate Council. In 1966 Kris was elected to the Institute’s Executive Council and 38
The Estate Agent ❘ August 2017
Edward John Kristian (Kris) Callaghan November 30, 1928 – April 4, 2017 ‘Kris brought an impressive ability to the science of valuation. He was able to resolve complex problems and to give clear advice’ – John Dowling remained a member of the council until his retirement in 1990 – a record term of 24 years. A natural leader, Kris served as REIV President in 1970-71 during the merger with the Victorian Real Estate Agents Association (REAA). He was responsible for the recognition of REAA membership as well as Past Presidents. Kris was later elected REIA President in 1986-1988 and also served as President of the Australian Chapter of FIABCI. Kevin Sheehan, REIV life member and Past President, says Kris’s contribution
to the industry is unparalleled. “Kris opened the door for Australian practitioners when he acted as host for FIABCI’s World Congress in Melbourne. He went on to lead numerous Australian delegations where professional advancement, networking and business opportunities abounded,” he says. Kris’s leadership at the helm of REIA is remembered for its cohesion and commitment to high professional standards. His former colleagues and students say Kris brought a background of experience and knowledge to the industry, which was seen as unique at the time. Fellow REIV life member and Past President John Dowling says Kris set a new standard of valuation practice, which became an important reference point for valuers in their provision of accurate and reliable advice. “Kris brought an impressive intellectual ability to the science of valuation. He was able to resolve complex problems and to give clear advice, in the conduct of valuations, which resulted in the consisted and strong demand for his services,” says Dowling. His significant contribution to the Victorian industry was recognised in 1990 when he was appointed a life member of the REIV. Kris’s efforts at a national level were later recognised, awarded a life member of the REIA in 1994. Having retired from his business practice in mid-1995, Kris continued as Chair of the REI Super Board, a position he held for 12 years to 2000. Through his involvement with FIABCI, Kris became interested in travel. He also had a love of water sports with holidays spent at his beach house in Lorne. Kris is survived by his wife Kath, daughters Christine and Jill and his son John.
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