FEBRUARY 2019 ISSUE 16.03
The non-major dynamic HSBC meets with its partner brokers to talk customer experience /16
The new credit reporting landscape Solicitor Joseph Trimarchi on the link between CCR and the ATO /20
TONY HAYEK The CEO of Blue Wealth Property advises brokers on how to work through distractions to find new opportunities /14
The power of prime Mortgage House explains its hybrid tech proposition /22
ALSO IN THIS ISSUE… Caught on camera Specialist Finance Group holds its annual conference and awards /24 Housing market data Reflecting on the success of Tasmania’s property market in 2018 /26 In the hot seat Capify MD John de Bree on leveraging knowledge to overcome change /30
NEWS
IN THIS SECTION
Lenders Teachers Mutual boosts ethical banking credentials /04
Associations MFAA’s ‘Your Broker’ campaign extended /06
Technology Prospa measures success in new study /10
Regulators Frydenberg names expert panel for APRA review /12
Market RBA holds rate while banks confirm rise /08
www.brokernews.com.au FEBRUARY 2O19 EDITORIAL Editor Melanie Mingas News Editor Rebecca Pike Production Editor Roslyn Meredith
DATES TO WATCH
Upcoming can’t-miss events
1 8 F E B R U A R Y - 1 8 M A R C H
2 2 F E B R U A R Y
2 6 F E B R U A R Y – 1 M A R C H
Blue Wealth Property seminars
Mental Health in the Workplace
Starting the year with a renewed focus on broker development, Blue Wealth’s calendar of events begins with Masterclass Mechanics sessions in Sydney on 18 and 26 February, followed by a class in Adelaide on 21 February and a final class in Sydney on 18 March.
Leaders from all industries and sectors are invited to attend this one-day training course designed to provide participants with the knowledge and skills to build confidence when tackling the rising issue of mental health in the workplace. Organised by Informa, the event will take place in Melbourne.
Women in Banking and Financial Services Leadership Summit Taking place at Sheraton on The Park in central Sydney, the eighth edition of this summit will feature sessions on confidence, handling uncertainty and leading with authenticity. Sessions will alternate with networking opportunities throughout the four-day event.
SALES & MARKETING Sales Manager Simon Kerslake Marketing Manager Danica Mendoza
CORPORATE
Journalist Brett Henebery
Chief Executive Officer Mike Shipley
ART & PRODUCTION
Chief Operating Officer George Walmsley
Designer Martin Cosme Production Manager Alicia Chin Traffic Coordinator Freya Demegilio
Managing Director Justin Kennedy Publisher Simon Kerslake Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
EDITORIAL ENQUIRIES
Melanie Mingas +61 2 8437 4720 Melanie.Mingas@keymedia.com
SUBSCRIPTION ENQUIRIES
4 – 5 MARCH Responsible Lending and Borrowing Summit Informa’s third responsible lending summit will welcome ABA director Christine Cupitt, Ombudsman Philip Field and ANZ customer advocate Jo McKinstray to an open forum reflecting on the lessons learned from the royal commission and exploring opportunities to improve the industry for the future.
5 MARCH – 7 MARCH
9 M A R C H – 1 3 A P R I L
Credit Trends
National Property and Economic Market Update
Taking place at the Grand Hyatt in Melbourne on 5 March and The Mint in Sydney on 7 March, this conference is geared towards brokers, investors, insurers, economists and credit specialists, who will analyse recent trends and headlines to provide an outlook for the credit landscape in the year ahead.
Advising on how to invest in uncertain times, this annual event returns to Brisbane on 9 March, followed by Sydney on 23 March and Melbourne on 13 April. Produced by Metropole Properties, sessions will be presented by Michael Yardney and Ken Raiss, and economist Andrew Wilson.
tel: +61 2 8311 5831 fax: +61 2 9439 4599 subscriptions@keymedia.com.au
ADVERTISING ENQUIRIES
Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Bengaluru, Seoul
2 M A Y – 6 J U N E
2 7 – 2 8 M A Y
5 J U N E
MFAA National Roadshow and State Excellence Awards
Customer Experience Management
Broker Business Exchange
The association’s annual roadshow and awards kicks off in Sydney before taking in Adelaide, Perth, Brisbane and Melbourne, concluding with the national awards in Melbourne on 25 July. The roadshow will feature workshop and conference sessions and networking opportunities. Nominations for the awards are now open.
The 12th edition of this summit takes place at Sofitel Sydney Wentworth, coaching delegates on the importance of customer experience and how it can be nurtured for better business results. Confirmed speakers come from Kiwibank, ABC, the ATO and Liberty Financial.
BBX returns to the Westin Sydney this June and, in light of Commissioner Hayne’s final report, Key Media has waived the registration fee for this day-long education and networking event. The event will comprise conference and workshop sessions and an exhibition by leading industry names.
2
www.brokernews.com.au
This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss. Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008. The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.
www.brokernews.com.au
3
NEWS
LENDERS NON-BANK URGES BIG FOUR EXODUS managing director Kim Cannon has encouraged brokers to stop sending business to the big four, in response to the royal commission. He said, “The big banks saved themselves by brazenly throwing mortgage brokers under the bus. The only reasonable response from mortgage brokers is to protect themselves by diversifying their businesses so they aren’t so reliant on the banks.” The day after Hayne’s final report, shares in the big four rallied by an average of 5%.
HOME LOAN TRENDS 2012–18 Source: CoreLogic, CommSec
Home prices, August 2012=100 180
FIRSTMAC
BANK BOSSES WALK IN WAKE OF REPORT CEO Andrew Thorburn and chairman Ken Henry have left the bank following allegations made in the royal commission’s final report. Hayne wrote, “I am not as confident as I would wish to be that the lessons of the past have been learned. More particularly, I was not persuaded that NAB is willing to accept the necessary responsibility for deciding, for itself, what is the right thing to do, and then having its staff act accordingly.” NAB
“It is important to note that 66% of the loans provided by Aussie in 2018 were with lenders outside of the big four” James Symond CEO, Aussie
4
www.brokernews.com.au
160
Greater Sydney
140
Greater Melbourne Greater Brisbane
120
Greater Adelaide 100
80 Aug 2012
Aug 2013
Aug 2014
Aug 2015
Aug 2016
TEACHERS MUTUAL BOOSTS ETHICAL BANKING CREDENTIALS Meeting demand for ethical banking, three mutuals receive responsible investment certification that could generate investments in excess of $3.5bn within two years Mutual Bank has become one of the first Australian banks to certify its retail deposits, mortgages and wholesale funding, potentially creating billions of dollars worth of responsible investment. The certification comes from the Responsible Investment Association Australasia (RIAA) and could generate more than $3.5bn in socially responsible investments for the bank by 2021. This certification will cover deposits and mortgages for all Teachers Mutual Bank Limited brands, including Teachers Mutual Bank, UniBank, and Firefighters Mutual Bank. Steve James, CEO of Teachers Mutual Bank, said, “This TEACHERS
announcement demonstrates Teachers Mutual Bank Limited’s determination to champion responsible investment. We’re acting on our values and aligning our business practices with our members’ expectations. “We’re not a bank that has to be forced to do the right thing for our members by regulation; our members know we work for them alone. That’s the standard our community should expect of all banks.” The bank estimates the certification will cover a cumulative $1.3bn worth of retail mortgages and deposits in 2019, $1.9bn in 2020 and $2.7bn in 2021. Simon O’Connor, CEO at RIAA, said, “At a time when more and
Aug 2017
Aug 2018
more consumers are wanting to ensure their banking and investments are managed ethically, RIAA certification provides certainty that an organisation has reached high standards of disclosure and performance and confirms the authenticity of their commitment to responsible banking. “We congratulate Teachers Mutual Bank on meeting these requirements and delivering ethical banking for their clients.” The certification builds on the bank’s wholesale $1bn debt issuance program, which is an RIAA-certified ethical investment. In June 2015, $500m of this was certified based on fossil fuel exclusions. This figure rose to $1bn in 2018 with an additional $500m investment covering exclusions in alcohol, armaments, correctional facilities, gambling, gross environmental degradation, slavery, and other harmful activities. The RIAA certification for responsible investment products came into effect on 1 December.
www.brokernews.com.au
5
NEWS
A S S O C I AT I O N S AUSTRALIA HEADED FOR ‘DARK AGES’ managing director Peter White has said that adopting all 76 recommendations from the royal commission would send Australia “back to the dark ages”, due to restricted competition. Following the release of the final report, White said, “Brokers service people, and people want to deal with brokers, and they are happy with the commission structure. Fiddling with this isn’t going to help borrowers, it’s going to hurt them.” FBAA
MFAA’S ‘YOUR BROKER BEHIND YOU’ CAMPAIGN EXTENDED Industry association kicks off campaign to highlight the value of mortgage brokers as industry reels from royal commission recommendations MFAA and a coalition of industry partners are urging Australians to write to their MPs in defence of mortgage brokers. The call to action is part of the MFAA’s national campaign in response to the recommendations set out in Commissioner Hayne’s final report. CEO of the MFAA Mike Felton said the changes to remuneration, starting with the ban on trail commission from July 2020, would have a “devastating effect” on the industry, kill competition and drive up the cost of borrowing. He said consumers could feel rightly disappointed by the outcome of the royal commission, with recommendations effectively giving power back to the major banks. THE
“The royal commission was set up to protect [consumers] from big bank power but has simply entrenched it further,” Felton said. “How mortgage brokers can be front and centre of the recommendations is inexplicable to me. A massive new bank fee added to the cost of buying a home cannot be a good outcome for Australians. “As reviews by ASIC, the ABA and the Productivity Commission have found, brokers drive competition by providing a shopfront for smaller lenders, particularly for rural and regional customers. We are critical to the health of Australia’s mortgage lending market.” MFAA data shows broker market
share has reached a record high of 59.1%, and Felton said much of the growth in market share came from small and regional lenders who were now able to compete with the big four. “Brokers are critical to competition in home lending. As such, the MFAA is leading a campaign to call attention to this issue and help Australians understand that low interest rates, competition and the services they receive from brokers are under threat,” Felton said. “We have launched a national advertising campaign and we are calling on everyday Australians to join us in a grassroots campaign to protect competition by letting their local representatives know they support the broker channel.” Brokers can share the campaign with their customers, who can enter their postcodes to find and contact their federal MPs via the Your Broker website at www.brokerbehindyou.com.au.
COBA CONCERN FOR CHALLENGER BANKS open letter from the Customer Owned Banking Association and member organisations has called for the government to consider challenger banks when making changes to the financial services industry. Criticising a “broad-brush approach”, CEO Michael Lawrence said, “Competition isn’t just about having more players in the market, it’s about making sure each and every player has an equitable opportunity to compete against one another.” AN
“There are some very radical suggestions here that need some very careful thinking before they are rushed into” Anna Bligh CEO, Australian Banking Association
Helping borrowers since 1946. When borrowing gets difficult, talk to Australia’s most experienced non-bank lender, with 70+ years experience. 03 8600 7900 I brokersupport@vicgroup.com.au
6
www.brokernews.com.au
www.brokernews.com.au
7
NEWS
MARKET LABOR ‘FLIP-FLOPPING’ ON NEGATIVE GEARING Property Investors Council of Australia has said recent media reports indicate the Opposition may be “flip-flopping” on its controversial negative gearing policy. Chairman Ben Kingsley said it was “no doubt due to falling property prices”. He added: “Restricting negative gearing to new property was always a ridiculous ‘solution’ to Sydney’s price growth, which has now well and truly dissipated because it was merely a sign of the peak of a market cycle.” THE
INVESTORS FLOCK TO BROKER CHANNEL to research conducted and published by the Property Investment Professionals of Australia, 86% of investors intend to finance their next investment loan through a broker, and 75% of surveyed investors used a broker for their last loan. Group chair Peter Koulizos said, “With property prices continuing to fall, inflation stubbornly low and wages flat-lining, lenders need to release their stranglehold on credit so our economy can get moving again.” ACCORDING
“My view is that upfront commissions will not go, fee-for-service will not be implemented in Australia, and the conversation over trailing commissions has not finished” Peter White FBAA, Managing director
8
www.brokernews.com.au
RBA HOLDS RATE WHILE BANKS CONFIRM RISE As the RBA announces its first cash rate decision for the year, several second-tier lenders have confirmed out-of-cycle rate increases Reserve Bank of Australia held rates at 1.50% in its first meeting of the year. The news broke despite earlier indications from Governor Philip Lowe that Australia should prepare for a rate increase. Commenting on the RBA announcement, CoreLogic’s head of research, Tim Lawless, said, “The weeks preceding the RBA meeting saw several smaller lenders pushing mortgage rates higher in response to persistently high funding costs, following an average 14 basis point rise in owner-occupier mortgage rates since September last year. “If we see mortgage rates rising more broadly, we might see the RBA become more willing to THE
consider a rate cut in an effort to offset higher funding costs and support heavily indebted household balance sheets.” Among the smaller lenders, ME increased its reference rates for all existing variable home loan customers by 18bps, a move announced on 4 February. It has also increased the advertised variable rates for new customers by 8bps, following a 10bps increase to some new customer variable rates in December. ME’s CEO, Jamie McPhee, said, “The changes are in response to the sustained increase in the cost of funds. It was a difficult decision but we have sought the right balance between delivering a strong customer value proposition
across our product range while responding to the sustained increase in funding costs.” The week prior, ING announced that from 7 February variable rates for all its customers would increase by 0.15%. This hike followed ING’s July 2018 decision to lift variable rates by 0.10% for owner-occupiers and 0.15% for investors. The decision means ING’s owner-occupier customers on a variable rate are facing a total increase of 0.25% on their rate since July. Further rate hikes were confirmed following the RBA announcement. Macquarie increased its owneroccupier P&I variable rate loans by 0.06%, while those with interest-only repayments saw an increase of 0.16%. In better news, Resimac has enhanced a 3.74% per annum promotional rate it first announced in December. New applications will now benefit from extra discounts of up to 15bps.
www.brokernews.com.au
9
NEWS
TECHNOLOGY
FINTECH PANEL HITS $100M MILESTONE Lending Express, which helps facilitate loans between its panel of lenders and small businesses, has reached the $100m milestone since launching in October 2016. More than 110,000 small and medium-sized businesses in the US and Australia have been registered on the Lending Express platform. Expressing his pride in reaching the milestone, CEO and co-founder Eden Amirav said, “We really feel we’re having a positive impact on the economies in two of the biggest markets in the world.” FINTECH
From left: Greg Moshal and Beau Bertoli
PROSPA MEASURES SUCCESS IN NEW STUDY Economic impact study reveals that every $1m loaned to Australian SMEs corresponds to a $4m increase in GDP conducted by Prospa has revealed that in lending $3.65bn to its small business clients, the fintech has helped to maintain 52,500 FTE (full-time equivalent) jobs. The survey considered the value of funds lent between 2013 and 2018, and assessed the increase in revenue and employment that the money facilitated, as well as the trickle-down effect on the wider economy. According to Prospa, results demonstrated that for every $1m in lending there was a corresponding $4m increase in GDP. More than 80% of customers said they believed their most recent Prospa loan had resulted in an increase in business revenue, RESEARCH
while 26% said they might not be operating today if it wasn’t for the funds borrowed. Greg Moshal, Prospa’s co-founder and joint CEO, said, “As the leader in online small business lending in Australia we wanted to quantify our overall impact. This report reinforces how important it is for small businesses to be able to access funding, the significant role of Prospa in providing that funding, and the flow-on impact on the wider Australian economy. “The results are greater than we had ever imagined and give us an immense sense of pride, both in Prospa and in our partner network who share our vision and values.” Prospa’s contribution to GDP
has increased year-on-year as originations continue to grow. The value of its GDP contribution in 2018 was $1.69bn, an increase of 49% on 2017, which in turn was more than double its contribution in 2016. The industry sectors in which Prospa’s lending made the biggest impact were hospitality, building and trade, manufacturing, retail, professional and other services. “Brokers are an invaluable part of Prospa and enable us to support as many small businesses as we can,” Moshal said. “In providing their small business clients with fast, simple access to finance, they are directly contributing not just to their customers’ revenue and jobs but to the wider Australian economy.” The survey found that Prospa customers had used an average of 32% of their most recent loan for working capital, 24% for purchasing inventory/stock and 12% on additional hardware such as machinery and tools.
RENOVATIONS BACK IN VOGUE Source: ABS; CommSec
Total value of alteration and additions approvals, trend, $m $750
Record high
$700 $650 $600 $550 $500 Jan 2012
10
www.brokernews.com.au
Jan 2014
Jan 2016
Jan 2018
FINTECH LAUNCHES NEW COMPARISON TOOL new rating tool devised and launched by uno Home Loans will “empower” borrowers, the company says. LoanScore rates how a customer’s loan stacks up against thousands of real-time deals and provides tips to manage and reduce the debt, such as increasing repayments. “Having this information in the palm of their hand helps customers move from ‘set and forget’ to active management of their loan on an ongoing basis,” said CEO Anthony Justice. A
www.brokernews.com.au
11
NEWS
R E G U L AT O R S
BANK BOSSES COULD FACE CRIMINAL CHARGES Hayne made 24 recommendations for criminal charges in his final report, potentially putting many banking executives in the firing line for hefty penalties and up to 10 years’ jail time. The recommendations relate to the big four and AMP, all of which were hauled before Hayne over 68 days of public hearings. Their cases relate to dishonest conduct under the Corporations Act and will be referred to the corporate watchdog, ASIC. COMMISSIONER
FRYDENBERG NAMES EXPERT PANEL FOR APRA REVIEW Treasurer appoints Graeme Samuel AC, Diane Smith-Gander and Grant Spencer to APRA capability review panel Josh Frydenberg has revealed the names of the “expert panel” he has appointed to conduct a capability review of APRA, in line with recommendations set out by Commissioner Kenneth Hayne. Graeme Samuel AC, the former ACCC chair and National Competition Council president, will chair the panel, supported by Diane Smith-Gander and Grant Spencer. Smith-Gander previously held senior executive positions at Westpac and served as a partner at McKinsey & Company. She is currently an adjunct professor in corporate governance at the University of Western Australia. As a former executive at the Reserve Bank of New Zealand, Spencer has previously held the roles TREASURER
Martin North
REGULATORS IGNORE SYSTEMIC ISSUES politicians and regulators are “tinkering around the edge” of addressing the systemic issues that exist in the financial industry, according to Martin North, principal of Digital Finance Analytics. “I wouldn’t be surprised if we see another royal commission into the financial services industry in another five years, because we haven’t addressed the systemic issues we have,” he told Australian Broker. “We’re now looking at a much more serious economic cycle ahead of us,” he added. AUSTRALIA’S
12
www.brokernews.com.au
of deputy governor, head of financial stability and acting governor, as well as senior roles at the IMF. The capability review will build on the recently completed IMF Financial Sector Assessment Program, which included an assessment of APRA’s policy and supervisory framework for banks and insurers. In a statement, Frydenberg said, “As part of its activities, it is anticipated that the panel will give specific consideration to APRA’s capability to promote financial stability within its frameworks, as well as its readiness to respond to issues raised by the royal commission and the Productivity Commission. “This includes APRA’s capability to regulate superannuation entities for the benefit of members; the role
of enforcement activities and coercive powers; and the supervision of culture, governance and remuneration in regulated institutions.” The APRA capability review will provide a forward-looking assessment of its ability to respond to an environment of growing complexity and emerging risks in APRA’s regulated sectors. Echoing recommendations set out by the Productivity Commission, the royal commission’s final report stated, “A capability review should be undertaken for APRA as soon as is reasonably practicable.” As part of its response, the Coalition government has agreed to conduct regular capability reviews, commencing in March and reporting to the government by 30 June. Frydenberg’s statement said: “The Coalition has agreed to take action on all 76 recommendations, and in a number of important areas is going further. Restoring trust in Australia’s financial system is part of our plan for a stronger economy.”
30/06/2003
ROYAL COMMISSION IN NUMBERS
10,323 submissions
69 days of public hearings
61%
9%
of submissions related to banking
of submissions related to financial advice
12%
7%
of submissions related to superannuation
increase in Westpac shares one day after final report
www.brokernews.com.au
13
FE AT URES
SPECIAL REPORT
OPPORTUNITY FROM CHAOS
Urging brokers to step away from distractions in the market, founder and CEO of Blue Wealth Property Dr Tony Hayek tells Australian Broker why the current environment provides the greatest investment opportunities
KEY BUSINESS METRICS
210+
accredited brokers in the network
460+
settlements in 2018
114
educational events in 2018
94%
satisfaction rate in recent broker survey
40
broker PD days
14
www.brokernews.com.au
in the information age isn’t all it’s cracked up to be. At a time when information is commoditised, distorted and pushed to audiences through a plethora of connected devices, it’s hard to keep your head above water, let alone distil fact from fiction. Although there is more information available than ever before, people are increasingly wary of trusting it – and when they do, it brings conflicting narratives that compromise the ability to make decisions. This paradox is officially known as ‘information overload’. The term was coined in 1964 by Professor Bertram Gross, but it’s more relevant today than ever before. “When information overload occurs, it is likely that a reduction in decision quality will also occur,” Gross wrote. The fallout cascades throughout daily life and, according to founder and CEO of Blue Wealth Property Dr Tony Hayek, it has given an unprecedented edge to the property cycle’s current phase. “I think the intensity of the feelings around this property cycle has been driven by the availability of information,” Hayek says. “Everyone has a social media feed. Your smartphone is notifying you about the front page of the Sydney Morning Herald and a disastrous article about the property industry. It’s a much more difficult environment in which to form a clear and concise opinion and stick with it.” In terms of economics, the last property cycle – which peaked in pre-social-media 2004 – is echoed LIVING
in today’s cycle, and Hayek says the usual scenario is to experience three to four years of strong growth, up to 18 months of correction and stabilisation, and a “handful of years” of stagnation. “There’s nothing unusual this time, but the one key factor that is different about this cycle is the availability of information. You used to have to go looking for it. Now it finds you,” he says. While that information includes an “overwhelming wave of negative sentiment” around the property market, over recent weeks brokers,
for the coming year. Now that its training and education program is established, a full agenda of events is scheduled for the coming months, with more to come. These cover the Insurance Masterclass, Boot Camp – the highest-level course – and a new Masterclass Mechanics focused on the key skills needed to run a business, ranging from time management to client goal-setting (see page 2 for dates). In Hayek’s words, the courses teach the “things that brokers should know but don’t know”. He reports a 50–60% increase in attendance at Blue Wealth’s training seminars in 2018, fuelled in part by the firm’s proactive expansion activities and by brokers’ desire to tap a new and extensive client base. “What we found was a hunger from brokers for new knowledge,” Hayek says.
“We all need to give clients clarity around why they should buy an investment property when the media is telling them not to” Dr Tony Hayek, founder and CEO, Blue Wealth Property too, have found their interests volleyed across the media, again intensifying an already-complex situation. Add to this the potential for the industry to be used to score political points in the impending election, and the distractions soon add up. “There needs to be some real focus. Never in the entire history of the broker channel has there ever been as much noise as there is now,” Hayek says. Back to school Focus isn’t just a skill for brokers to hone; it’s Blue Wealth’s theme
“I think one of the skills that has become underrated over the last few years is just basic human communication skills, basic sales skills, your ability to communicate your message clearly to your customer and explain what’s in it for them. We have lost sight of that.” In the new environment, training attendance figures are likely to increase again as brokers look to diversify their portfolios of client solutions. Although aggregator training plays an important role, Hayek says there’s a secret to success.
In partnership with
Dr Tony Hayek, founder and CEO, Blue Wealth Property
“If you want to diversify, learn from the organisations that you’re diversifying with. “I think one of the things about the aggregators is that a lot of them are delivering very similar information and training programs. Quite often brokers get a different perspective on the client, environment and pitch from an organisation that does things a little bit differently,” he says. Eyes on the prize In going back to basics in their professional skill set, Blue Wealth’s network of brokers will have a new tool at their disposal – a market-first calculator to help
their clients visualise the financial benefits of property investment. Developed by Blue Wealth for
and investment interests and applies a modest level of growth in order to generate a date for
“The intensity of the feelings around this property cycle has been driven by the availability of information” Dr Tony Hayek, founder and CEO, Blue Wealth Property exclusive use by its broker network, the calculator incorporates the balance of any existing home loan
when the investment property will have paid off the home loan. “It’s absolutely brilliant,” Hayek
says. “It was created to help brokers find solutions for their clients. The great Australian dream is to pay off the home loan, and we believe investing in property is a great way to build wealth. We all need to give clients clarity around why they should buy an investment property when the media is telling them not to. They want to know, what’s the end game? What’s the big picture?” For the housing market, the big picture remains a blurry apparition with a lot of dark clouds. Steadfastly objective in his outlook, Hayek is quick to draw on his own advice, applying focus and perspective to his observations of recent trends. “I think it’s very important to find a way to get some perspective, because when the media talks about places like Sydney and Melbourne losing up to 15% on the back of gains of 75% and 80%, it’s really easy to lose that perspective,” he says. Assuming the credit outlook will bring more of the same muted activity that was seen in 2018, Hayek expects there may be more regulatory intervention on the cards. “We expect there will be some relaxation of policies similar to the lending cap threshold last year, which was a small sign of change. I think those signs will continue throughout this year,” he says. After a strong 2018, during which Blue Wealth saw hundreds of clients settle despite the market conditions, Hayek is confident about keeping the pace. However, for brokers a number of unknowns remain on the horizon, meaning that focus will be paramount over the coming months, along with diversification and book building. “Times like these present the greatest opportunity,” Hayek says. When it comes to transacting well-negotiated property deals, these are the markets that you find them in.” AB www.brokernews.com.au
15
RO UND TA BL E
ROUNDTABLE
THE NON-MAJOR DYNAMIC Almost two years after returning to the mortgage market with Aussie Home Loans, HSBC talks to the group’s franchisee brokers about its service proposition and why customers are increasingly turning to non-major lenders
Among consumers, how strong is HSBC’s brand recognition for mortgage products? Peter Corta: Where I am in Brisbane, it really depends on the demographic. People who don’t have a lot of experience with banking haven’t much recognition of HSBC, but for those who have travelled or lived overseas the brand is well and truly in their minds. Most people tend to know the big four and maybe one or two others.
holders, Australians with international jobs, etc?
Peter: It has been phenomenal for me. I work with Australians living overseas, and having HSBC has just made that so much easier. Some bank with HSBC already as Premier account clients, so Alice Del Vecchio Head of mortgages and third party distribution, HSBC Australia
Sana Hosseini: We are in inner Melbourne and find that our customers are mostly young professionals who are well travelled and know HSBC. In my regional store, we do more to introduce HSBC. Olivia Lane: I’m based in Sydney and many of the people we deal with are professionals who travel often. The others are expatriates, are aware of HSBC and may even hold an account with them in their home country. Reema Katrib: I have a lot of customers in Sydney’s eastern suburbs, and they are all savvy enough to do a lot of online research before meeting with me, so by the time I get there they often know what HSBC is offering. Those clients are rate driven because of the loan size. I also find a lot of my customers like the fact that, with HSBC, they can go to different countries and still use the same bank.
As brokers, how have you been able to leverage HSBC’s international brand presence to diversify from straightforward residential lending and work with foreign investors, visa 16
www.brokernews.com.au
one bank one day and another the next and get a completely different response. Whatever the outcome is, you need to be able to explain it to the client. Sana: I think it comes down to options and choice, and I think that’s what mortgage brokers provide to the market.
“When things go wrong, it doesn’t matter who is actually at fault; in the eyes of the customer the broker gets the blame” Olivia Lane, Aussie broker, Sydney, NSW as soon as I mention the brand they’re on board. And aside from rate, their international reach is the biggest draw for my clients.
Peter Corta Senior Aussie broker, Brisbane, Qld
Reema: I have a few customers who hold a Premier account. It offers the full package – overseas branches, easy access to funds, and visas haven’t been a barrier. Olivia: The brand recognition is really great. HSBC is familiar with foreign income and will work with us and our borrowers to ensure we’ve lent them all we can. As the non-majors continue to enjoy a record market share, what do you consider to be their role in helping brokers to build their businesses?
Olivia Lane Aussie broker, Sydney, NSW
Peter: It’s about proposition and service. Consistency between assessors is also vital. I guarantee that I can put a deal into
As we have found regulators becoming more particular, lenders are moving into niches based on their risk appetite and how they want to do business, so a wider choice of lenders is even more important. Reema: A non-major bank provides customers with more options. The rate is important, too. Clients often show me a rate they found with an online comparison site and expect to be able to get it in real life. Peter: Anyone can calculate their borrowing capacity online. They come to you with a number, and most of the time you have to disappoint them because that figure is so inflated. There will always be a place for brokers because of the personal touch, the thorough approach and the ease of what we offer. We are in a service industry and there will always be a place for that. Reema: Also, with online and DIY loans, the customer speaks to someone
In partnership with
different every time. Brokers come to know a lot about their customer over the course of the application – their work, family, dependants – and that’s where your word-of-mouth referrals come from. When you build rapport, you become friends with clients. Sana: One thing I see frequently is clients calling me when they are about to change jobs, and they will say, “We’re looking to buy something in six months and I have been offered a better position with another company. This is the pay, but I’m a bit worried because I want to buy X. Can you run the figures for me and let me know?” So in a way we tell them yes, you can change jobs due to lender policies. Because lending has tightened, it has now become a deciding factor for career opportunities, not just what kind of loan can I afford on this salary? Reema: The services of a broker are comparable to those of a personal banker. Peter: Explaining to the customer that you aren’t affiliated to any lender also helps. A lot of people don’t understand the broker model, often questioning what our services cost them.
differentiate between channels, and we don’t want channel conflict. We have an established proprietary network, a call centre, and now we have brokers too. The price we offer is available through each channel.
Mark Brennan Head of broker partnerships, HSBC Australia
Alice Del Vecchio: It also helps that our broker support centre in Sydney acts like a virtual branch. That’s probably part of why the relationship between the channels we have works so well.
38 MILLION
customers served worldwide
4
global businesses
Reema Katrib Senior Aussie broker, Sydney, NSW
HSBC reduced its rates in 2018 at the same time that some of the majors were hiking theirs. What has this meant for market dynamics and competition? Peter: The HSBC rates are unbeatable in the marketplace and the best on offer by far, so it’s a good product. Reema: At the end of the day it is the customer’s choice which loan they take, but HSBC comes out on top every time because of their rate offers. I’m doing some good loan sizes, so customers want to fix their rates and the fixed rates are just as good.
How can lenders with branch and broker distribution safeguard their broker partners against channel conflict? Mark Brennan: At HSBC we’re about customer choice. The channel our customers choose to access their mortgage is largely determined by the service they get and the experience they have. From our point of view, we don’t
Sana: From a general industry view, when I first started broking the retail side was more protected, but now as the volumes are changing and brokers are driving more business to lenders, a lot of these conflicts are being smoothed over much quicker because the lenders realise the value of having brokers.
HSBC IN NUMBERS
Sana Hosseini Franchise principal, Aussie South Yarra, Vic, and Aussie Northern Rivers, NSW
Sana: Mix it with a low-value variable and no fees, or with the Premier pack for those that need it, and HSBC has become a great option for our customers.
66
countries and territories in the network
3,800
offices worldwide
www.brokernews.com.au
17
RO UND TA BL E
How do HSBC’s BDMs support all of this? Peter: When it comes to keeping brokers happy a good BDM makes a big difference. They drive the business. The BDM I work with is prompt, knows the business and how to source answers and is very proactive. That’s what you want; when you are trying to grow a business that support is important.
“The channel our customers choose to access their mortgage is largely determined by the service they get and the experience they have” Mark Brennan, head of broker partnerships, HSBC Australia
Sana: Having the assessors call you makes a difference, too. They quickly check an expense or a deposit, and the deal continues through the process. Some lenders are very protective of that direct contact with their assessors, so instead of a two-minute phone call it goes back in the queue and the process becomes longer.
confidence in the brand. Often, I’ll do a comparison to demonstrate. For example, if
Alice: As a brand, we pride ourselves on customer relationships and service. From the partnership
MARKET SHARE MAJOR VS NON-MAJOR – Q1 FY19 Source: AFG Mortgage Index FY 2019, Q1
Financial year: 2019 Quarter 1 Northern Territory
South Australia
56.03
23.
Queensland
Western Australia
76.
% 39
%
Victoria
45.21%
37.63
%
54.79%
36.16
8%
62.3
% 22
29.7
New South Wales
63.8
www.brokernews.com.au
% 61
70.
18
Non-major
43.97%
Major
Reema: I see customers who aren’t interested in non-major banks from the outset, but I show them the figures and suddenly they can see the difference. With HSBC, the global presence gives them confidence. Olivia: My customers are quite conservative when it comes to rates. They often have multiple direct debits and outgoings, so to come up with an attractive rate
that difference becomes huge. As a product, it just makes sense, and it’s an easy application process, too.
4%
Peter: And when they can’t always compete on price they will give a rebate, or frequent flyer points. There is a major push on those soft benefits at the moment.
you’re borrowing $100,000 to $200,000, the difference between five or 10 points is nominal, but if you’re talking $800,000 to $1m,
7%
Sana: Having non-major banks on our panel means the big banks need to work for the business they get, and consumers are the winners.
is a big advantage. Additionally, many of my customers are expats or frequent business travellers, so they have heard of HSBC and have
%
Reema: I did an expo recently, and a lot of the people there were concerned about what the upcoming election would mean for rates. They were asking me to show them the best rate for various outcomes, and when I did, they couldn’t believe the cost per month that was possible with HSBC. It’s little things like that – the repayments, the ongoing cost of having the loan. Even if they have 27 years remaining, the HSBC rate is still lower. For my clients it’s proven to be very competitive and often comes out on top.
Olivia: When things go wrong, it doesn’t matter who is actually at fault; in the eyes of the customer the broker gets the blame. So to have the support of a good BDM is brilliant. To have someone at the end of the phone, and to know you can get things done, makes a difference; just to be able to pull some strings and have support when you need something. Availability and assessment time are also important. People get excited, and they want their loan approved yesterday.
In partnership with
manager to the broker care team and the credit department, it’s all about how we make sure the customer is served. It was a conscious decision to recruit highly experienced people to our BDM roles. We spent a lot of time recruiting and we interviewed a lot of people. It’s really about overall credit knowledge, operations and end-to-end service, not just credit policy. What traits did HSBC look for when recruiting its BDMs? Alice: We looked for industry knowledge, and we believe that if someone is stepping into this role they need to understand what it’s like to be in the broker’s shoes, including the pressure and time constraints brokers work to. Experience, knowledge and being really good with people are all very important, and a good BDM also has to be firm but fair when required. If we really can’t do something or don’t have an appetite for it, they are encouraged to say that from the outset. They really go in hard to fight for the deal internally if they believe in it, and you may not always see that elsewhere. It’s a healthy conversation and it’s about the right decision and the right outcome. They know you, and they know the quality of the business being delivered. Mark: A lot of people who applied for BDM roles wanted to be part of something new, and they demonstrated a great level of passion to be involved in HSBC’s journey. Another thing is that we look for people who can support the brokers. At the end of the day, brokers are running a business, and it’s about helping them to help their customers’ outcomes. The broking industry is facing many changes at the moment. How should brokers continue to connect with their clients after settlement? Olivia: It depends on the individual client. I deal with a lot of mums in my area, and they are very active on social media, so that’s one point
of contact. I also see them out and about, or our kids are at the same school, so we have a strong rapport there, too. Then there are the traditional follow-ups. We always keep in
no level of branding, advertising or marketing could ever do that as effectively. Regardless of what happens in terms of the industry, the rise in online lenders, or digital broker
“Experience, knowledge and being really good with people are all very important, and a good BDM also has to be firm but fair when required” Alice Del Vecchio, head of mortgages and third party distribution, HSBC Australia contact to make sure they can’t get a better deal elsewhere. Mark: Brokers play many roles, but one is to disseminate lender information to the community, and
tools, there will always be an appetite from people who just want someone to hold their hand. It all comes back to the original proposition: why do we have brokers? Because a lot of
organisations have lost that personal element, and there was a gap in the market between the borrowing public and the lenders. Reema: I like to educate my customers. I find that when you do that they really appreciate the difference a broker can bring, and they trust you. I explain the servicing rate; I show them the impact of adding an extra $500 per month to their repayments. When you take time to explain and demonstrate that you’re showing a bit of compassion, they connect with you and they know that you’re genuine and you want to help them. Sana: It all feeds into how we generate repeat business. We keep in touch with their first loan, then after a few years when they have built up some equity, they come back and want to do it all again. AB www.brokernews.com.au
19
FE AT URES
OPINION
THE NEW CREDIT REPORTING LANDSCAPE From July, comprehensive credit reporting will centralise details about a person’s financial history. But what many don’t realise is that ATO records can also be considered in non-consumer credit applications. Solicitor Joseph Trimarchi of Joseph Trimarchi & Associates explains the implications July 2019, comprehensive credit reporting – or CCR – will be rolled out across the finance industry. However, the initial rollout started on 1 July 2018, a fact that mostly went unnoticed because of the headlines made by the royal commission. The broader impact of CCR has been well documented. However, as the system is still in its infancy, the effects are yet to be measured and fully assessed. A little-known fact about the new credit reporting system is that the Australian Tax Office is now capable of disclosing outstanding tax debts owed by selfemployed individuals or corporations. It should be noted that such reporting is limited to non-consumer credit. This is an unprecedented move by the ATO, which argues that such listings enhance the transparency of the credit reporting system by making tax liability information readily available when determining creditworthiness. Previously, a credit provider would only have become aware that a tax liability existed if the ATO had commenced proceedings and been awarded judgment, which would then have been recorded on a credit file. The recent change will now see the ATO listing the payment history of those who enter into a payment arrangement with the tax office for outstanding tax liabilities. The implication for brokers and their commercial clients is problematic as this could seriously affect creditworthiness, in the event that adverse information is recorded. Further, as the ATO reporting occurs in commercial matters only, any challenge to this information would be difficult to mount, given that commercial matters are not afforded the same level of protection as matters involving consumer credit. Finance professionals should make their clients aware that the ATO will now be reporting outstanding payments, and of the
importance of adhering to the terms of any payment arrangements entered into. Many commentators are still stuck making comparisons between the new credit reporting system and the old, and looking for an answer as to which system is better. In short, I believe both systems have their pros and cons, and the answer will crystallise as CCR gains traction. Positive credit reporting, ie CCR, is designed to give credit providers greater insight into creditworthiness. It also allows consumers the opportunity to ensure their use of credit gives them the best opportunity of being accepted for future credit if they maintain a good repayment history through the life of a loan. Yet with an increase in the volume of
FROM
20
www.brokernews.com.au
Accordingly, a default or other adverse listing may appear on any one of the three reporting agencies’ records. Prior to submitting a loan application for a client, the finance professional must obtain a copy of all three of the client’s credit reports. Failure to do so may lead to a doomed application from the outset. Further, some credit providers are exploiting the system by listing information with one reporting agency and then some time later listing the same information with the other two agencies. This is problematic as a removal of adverse information held with one credit reporting agency does not necessarily guarantee a removal from all three agencies. The Australian credit reporting
The implication for brokers and their commercial clients is problematic, as this could seriously affect creditworthiness
Joseph Trimarchi Solicitor, Joseph Trimarchi & Associates
information being captured on credit files comes a proportional increase in this information being recorded incorrectly. As part of the services they provide, finance professionals should educate their clients as to the importance of maintaining a good payment history, which directly impacts on creditworthiness. In recent times the two main credit reporting agencies, illion (formerly known as Dun & Bradstreet) and Equifax (formerly known as Veda), have been joined by a new kid on the block, Experian. The introduction of a new credit reporting agency has made it more difficult for consumers to manage their creditworthiness. It is difficult to know with any certainty which reporting agency a creditor will list with, and each creditor may list with one and not the other.
landscape in recent times has undergone significant change and has evolved into a system that is stringent and designed to catch out those who are not honouring their obligations under finance agreements. But these people are not the problem. The problem is that consumers with normally good creditworthiness have the potential of being punished for a vicissitude of life which, in some instances, is unforeseeable and unavoidable and brands them as less than creditworthy. Finance professionals need to understand that their clients will have financial hardship situations arise from time to time, and they should therefore educate their clients on the best ways to avoid falling foul of their financial obligations, as this could have long-lasting effects on their creditworthiness. AB
www.brokernews.com.au
21
FE AT URES
BUSINESS PROFILE
THE POWER OF PRIME There’s a new(ish) prime lender on the block promising to take the pain out of loan processing, while providing an alternative to the majors and pioneering a hybrid tech-focused approach for brokers. Australian Broker catches up with Mortgage House finance landscape has evolved significantly in the last 30 years. From the dawn of the digital age to the GFC and most recently a royal commission, the only constant has been change. Having been present through it all, Mortgage House CEO Ken Sayer is now well versed in finding the opportunity in change. When he established the company in 1986, he did so as a broker, and the firm’s first incarnation saw focus fall on mortgage management. In 2007, Mortgage House made the transition to lending before pulling back during the GFC to focus on a new USP – the development of its technology. In the years since, Mortgage House has invested heavily in developing a cutting-edge tech proposition and a solutions-based approach to lending. The idea is to promote better outcomes for prime customers, and for brokers to outsource mundane administration work to a digital assistant that never takes a day off and always delivers on time. The approach enables brokers to engage in the more meaningful elements of their role by employing a suite of digital tools, which also comes with the option to white-label. “Essentially, I’ve been working all my life to get here, and now we are putting it all together,” Sayer tells Australian Broker. “I am very close to the disappointing moments brokers have with lenders. I know the pain and suffering; I know the poor experience they have.” To address its objectives, Mortgage House recruited Luke Vassallo, a former travel tech THE
22
www.brokernews.com.au
specialist who previously worked on systems for Flight Centre, Webjet and Expedia, to name a few. He is tasked with driving the development of the lender’s digital
we saw a shift from bricks and mortar travel agencies to everything online. It’s similar here, but the label is fintech.” All technology is developed
“Our claim is not that we are better than any one bank; we just have the single-system approach which helps us create efficiencies” Ken Sayer, CEO, Mortgage House tools as its head of technology and business solutions. “The parallel between the tech and finance industries is quite interesting,” Vassallo says. “In travel
in-house in line with the business’s core values, with specialist vendors brought in when needed, mostly for consultancy on the user experience. The idea is to create an economic
edge by avoiding adoption of the legacy systems that hold established lenders back. The soft launch is scheduled for March. “Every financial institution has anywhere between 20 and 40 systems, and none of them talk to the other. We just have one system,” Sayer explains. “Our claim is not that we are better than any one bank; we just have the single-system approach which helps us create efficiencies.” A to Z of automation The transition to a tech-based application and management process has taken less than three years, meaning all applications are now electronic, documents can be uploaded, and accounts can be linked. The focus for this year will fall on rolling out the infrastructure to provide rapid approvals under the mantra ‘in by 12, out the same day’. “Little things like that allow us to differentiate from the rest of the market,” Vassallo says. “This business is all about scale, and we need systems to support scale and growth so we apply lessons from the travel industry. It’s uncanny that we used to scrape airfares from airline websites before the airlines used APIs. Now, for example, we can scrape bank accounts.” The single-system approach employed by Mortgage House means intelligent decisions can
MORTGAGE HOUSE MILESTONES
1986
Founded by Ken Sayer, Mortgage House starts life as a mortgage management firm
2007
The company expands from broking to lending
2011
Technology development is ramped up to meet new business objectives
2019
Digital broking assistant with white label capabilities scheduled for launch
Ken Sayer, CEO, Mortgage House
be made easier and faster, accelerating the service provided to customers and readjusting the effort-to-outcome ratio for brokers, without forcing them to outsource or automate their operations. These are natural developments for an industry experiencing its digital dawn, but they aren’t entirely new. According to Vassallo, there are many parallels between travel and finance and, as such, many lessons the finance industry can learn. “A loan is a big part of your life, and there are lots of opportunities for us to connect with our customers at all times, so you know what their saving patterns are, if they have paid off their loan, what they spend their money on, and so on,” Vassallo says. “We want to provide a one-stop shop and be with them through their whole journey.” Reporting that there are “some really cool features” in the pipeline, Vassallo reveals that there will also be scope for developers to build apps based on the Mortgage House platform.
Luke Vassallo, head of technology and business solutions, Mortgage House
Back to basics It could be argued that now is not the time to launch a new prime lending solution that is dependent on brokers and A-grade borrowers, but Sayer argues to the contrary. “The timing is spot on,” he says,
Sean Bombell, general manager, Mortgage House
changed for the big banks, but we are looking for the same customers we were 12 months, two years, three years ago,” Bombell says. “We have accelerated the push in the broker channel based on what’s been happening in the
“Banks are tightening up, and I think the broker community needs another player to help them through this next phase” Sean Bombell, GM, Mortgage House and GM Sean Bombell agrees. “Banks are tightening up, and I think the broker community needs another player to help them through this next phase,” Bombell adds. However, while the royal commission has given rise to multiple non-banks specialising in near prime, that is not a space Mortgage House intends to play in. “In our eyes, the prime borrower hasn’t changed. It might have
marketplace with responsible lending, the tightening of credit, the royal commission. That was the catalyst for us coming back to the broker market.” The next piece of the puzzle is risk-based pricing. Mortgage House has used this approach for seven years, and considers everything from LVR to employment to create an accurate rate. The approach even goes as far as to have an ‘Essential
Employer’ list, which names the ASX-listed and government entities that, theoretically, employ the lowest-risk borrowers. “The broker community is very mature, and they know what their customers are all about, so it’s basically turning that philosophy into solutions-based lending,” Bombell says. “It’s not one size fits all, it never has been, but some lenders are trying to have that approach and it just isn’t going to work.” With new developments scheduled throughout the coming year and conversations with aggregators ongoing, broker originations are set to comprise up to 15% of total lending in 2019, with further targets to ramp this back up to the 60% that was ballpark prior to 2007. Sayer says, “You know how in an organisation you think you know it all, but you don’t really know it all until you speak to your customers? We want to spend a lot of time with brokers making sure we have the value proposition right.” AB www.brokernews.com.au
23
PEOPLE
CAUGHT ON CAMERA Specialist Finance Group held its annual national conference and awards at Perth’s Optus Stadium in December. Speakers included Dale Alcock, managing director of ABN Group; Huy Truong, CEO of ALI Group; Ben Braysich, CEO of Century 21 Home Loans; and Dave Ward, director of First Step Financial. Promising to “inspire, educate and celebrate”, the event included a lender and business partner expo as well as an awards presentation recognising the aggregator’s highest achievers. Group owner and managing director William Lockett addressed delegates and shared his industry predictions for 2019. The following day, award winners and prime business partners relaxed and recharged with a trip to the Aravina Estate winery in southwest WA.
24
www.brokernews.com.au
Wednesday 5 June • The Westin Sydney
FUTURE-PROOF YOUR BUSINESS Hear from award-winning brokers:
Karen Bashford General Manager South Coast Business and Financial Solutions MPA Top 100 Brokers 2018
8
Hannah Nguyen Director HAH Finance Solutions MPA Top 100 Brokers 2018
Andrew Mirams Managing Director Intuitive Finance MPA Top 100 Brokers 2018
As a continuation of our support, we are waiving the registration fee for brokers to attend this year’s Broker Business Exchange.
8
8
Navjeet Singh Matta CEO Gain Home Loans MPA Top 100 Brokers 2018
8
2 2018
Alycia Inglis Director Stoneturn MPA Top 100 Brokers 2018
8
Shawn Allen Principal Owner Matrix Mortgage Global Canada’s Top Mortgage Broker
MPA has been a proud supporter of the broker channel since 2001. In light of the recommendations following the royal commission and with a Federal election looming, there’s never been a more important time for a national forum to address the issues impacting the industry.
Digital partner
Workshop sponsor
Registration partner
Exhibitors
Supporting publications
Organised by
Register today at www.brokerbusinessexchange.com.auwww.brokernews.com.au
25
DATA
VICTORIA
TAS SPOTLIGHT
Regional areas outstrip metro as Melbourne’s downturn drags on According to CoreLogic’s Regional Market Update for November, the top-performing areas outside of Melbourne were Latrobe-Gippsland, Wide Bay and Geelong, with the latter reporting the highest annual increases in house and unit median values. “The Ring Road has long functioned as Geelong’s growth boundary, but plans are underway – Lovely Banks has already started, for example – for suburbs on the other side of this road, meaning a lot of outer suburbs become middle ring,” says Henry Fields, property research and acquisitions coordinator at Research Property Real Estate. He also points to Corio as an example of where buyers in Geelong can look. “Corio continues its run as an impressive long-term steady capital growth suburb. It has averaged over 6% per annum growth over the last three, five, 10, 15 and 35 years – it is matched only by Norlane in the city for that history of growth at that price point,” Fields says. Area
Type Median value
Quarterly
12-month
growth
growth
Melbourne
H
$710,000
-1.0%
3.9%
VIC Country
H
$355,000
1.4%
6.9%
Melbourne
U
$533,000
0.0%
2.9%
VIC Country
U
$265,000
-1.9%
-1.1%
NEW SOUTH WALES
A downturn of two halves for investors and residents According to CoreLogic data, property values in Sydney have recorded their sharpest annual decline since 1983, at 8.1%. But for upgraders the downturn has been a positive, as they are now able to buy in prestige suburbs. “I don’t think conditions have ever favoured these buyers as universally as they do now,” says Nick Viner, founder of Buyers Domain. “There’s an incredibly rare window of opportunity to secure a really good quality property with extraordinary long-term potential because the competition just isn’t there at the moment.” Some driving factors include the tax duty surcharge on foreign investors and the overall tightness of credit. “It is impossible to know when the market has hit the bottom until it is on the way back up. Buyers can be picky, so there’s a chance to purchase blue-chip properties that are usually very difficult to secure in a rising market,” Viner says. Area
Type Median value
Quarterly
12-month
growth
growth
Sydney
H
$925,000
-2.0%
-2.0%
NSW Country
H
$465,000
0.0%
4.4%
Sydney
U
$715,000
-0.4%
-1.4%
NSW Country
U
$400,000
0.6%
1.3%
26
www.brokernews.com.au
BITTERSWEET SUCCESS
Australia’s strongest-performing housing market is struggling to overcome its affordability issues, which, according to commentators, are causing a housing gridlock
currently boasts the strongest property market conditions in the country. In fact, CoreLogic data indicate that Hobart’s property prices rose by nearly 10% overall in the 12 months to November. Some pockets of regional Tasmania experienced double-digit growth in that period. Certainly a big contributor to this upward trajectory is the University of Tasmania campus development in Inveresk, a minor suburb in Invermay, Launceston. However, while the Apple Isle’s lifestyle appeal will continue to spur demand, the same popularity is unfortunately beginning to whittle down the state’s affordability as Hobart takes on more residents than it has room for. This has been particularly evident in the city’s extremely tight rental market, where there is a clear lack of supply to meet existing demand. This has been exacerbated by the rising appeal of short-term accommodation like Airbnb rentals. The Rental Affordability Index – a biannual report released by National Shelter, Community Sector Banking, SGS Economics and Planning, and the Brotherhood of St Laurence – highlights this issue in its November 2018 edition, noting that Hobart has become the least affordable capital city rental market in Australia. “Tasmania’s capital city is in a housing gridlock. Rental affordability in Hobart dived even lower during winter, and working families are now facing rental stress, with the averageincome household now paying 30% of income on rent. This means these households are unable to save sufficiently for a deposit on a mortgage,” says SGS Economics and Planning partner Ellen Witte. “Short-term rental accommodation needs to be curbed until the rental affordability situation improves,” she adds. AB HOBART
OPPORTUNITIES AND KEY INFRASTRUCTURE
Education $260m invested in University of Tasmania Northern Transformation project
Tourism $100m mega development earmarked for Cambria Green
Infrastructure $13.9bn 10-year infrastructure spending announced in July 2018
Housing pipeline Building approvals posted a 24% decline at the end of 2018
SUBURB TO WATCH: MIDWAY POINT Median price (houses) $396,729
Median price (units) $303,245
Source: CoreLogic
12-month growth
3-year growth
5-year growth
Indicative gross rental yield
16.3%
42.1%
51.7%
5.4%
12-month growth
3-year growth
5-year growth
Indicative gross rental yield
15.0%
21.0%
27.5%
5.1%
AUSTRALIAN CAPITAL TERRITORY
Momentum keeps Canberra going strong – for now
HIGHEST-YIELD SUBURBS IN TASMANIA Suburb
Type
Median price
Quarterly growth
12-month growth
Rosebery
U
$60,000
-3%
-6%
Zeehan
H
$80,000
-1%
-2%
Queenstown
H
$75,000
-2%
15%
Gagebrook
H
$190,000
6%
19%
Rocherlea
H
$153,525
1%
4%
Acton
H
$170,000
0%
7%
George Town
H
$161,000
-1%
1%
Risdon Vale
H
$250,000
4%
24%
Campbell Town
H
$187,500
7%
9%
Mayfield
H
$175,000
8%
21%
Ravenswood
H
$168,000
5%
8%
Campania
H
$350,000
3%
8%
Canberra is recording some of the highest property prices in the country and was one of the strongest markets in Australia in 2018. However, buyers should be mindful of the Canberra land tax, which has driven some to buy over the state border. Yet those who accept the tax are spoilt for choice. “There’s an opportunity in the improvement sector, whether it’s a renovation or adding value to a site through subdivision and gentrification,” says Damien Lee, head of acquisitions at Caifu Property. In line with Sydney’s downslide, Lee expects property values in Canberra to plateau, but a flat market remains a good market to be in. In December, Malcolm Gunning, the outgoing president of the Real Estate Institute of Australia, said: “Over the September quarter, prices for dwellings other than houses decreased in all capitals except Melbourne and Canberra.” And of all the states, the ACT recorded the greatest increase in housing finance trends over October, at 2.3%. Area
Type Median value
Quarterly
12-month
growth
growth
Canberra
H
$665,000
0.5%
3.2%
Canberra
U
$435,000
0.4%
0.6%
www.brokernews.com.au
27
DATA
SOUTH AUSTRALIA
12-month
growth
growth
Adelaide
H
$455,000
1.0%
1.7%
SA Country
H
$265,000
0.8%
-1.9%
Adelaide
U
$335,000
-0.6%
-0.9%
SA Country
U
$202,500
1.8%
-3.2%
MEDIAN HOUSE AND UNIT PRICES
Lifestyle demand drives performance in the Sunshine State
$1,000,000
Quarterly
12-month
growth
growth
Brisbane
H
$539,999
0.8%
2.6%
QLD Country
H
$438,000
0.0%
0.0%
Brisbane
U
$385,000
-1.3%
-3.5%
QLD Country
U
$370,000
-0.1%
0.7%
28
www.brokernews.com.au
109
Sold
38
Not sold
34
Clearance rate
52.8%
PERTH Total auctions
30
Sold
4
Not sold
12 25%
Houses
$900,000
Units
Sydney Melbourne Brisbane Adelaide
Perth
Hobart
$515,000
$410,000
$350,500
$0
$383,500
$100,000
$466,000
$200,000
$310,000
$300,000
$433,000
$500,000 $400,000
$495,000
$600,000
$626,000
$700,000
$630,000
$800,000
$750,000
Since the mining crash, Queensland has become a popular property market in Australia. Damien Lee, head of acquisitions at Caifu Property, says, “Demand is still very high, so we’re still seeing good rewards and growth in Southeast Queensland from a land perspective. I’m also seeing a very good growth in the lifestyle cities of the Gold Coast and the Sunshine Coast.” There's been considerable development in Cairns as well, with developer Urbex Realty setting up shop close to the CBD. “We are seeing the economy steadily regaining composure on the back of growth in employment and increased tourism in the region, with positive indicators such as a 6.3% decrease in unemployment rates in 2018 alone, improvements in housing building approvals, and airport passenger numbers ticking up,” says Craig Covacich, general manager of Urbex Realty. “We are thrilled to be a part of Cairns’ economic resurgence and to contribute to the local economy.”
Type Median value
Total auctions
Clearance rate
QUEENSLAND
Area
ADELAIDE
Darwin
$399,500
Quarterly
$379,000
Type Median value
The first week of auctions for 2019 saw 526 capital city homes go under the hammer, down almost 34% year-on-year. The preliminary clearance rate came in at 47.8% – higher than the end of 2018, which closed at 40%. Over the same week last year, the final rate reached 62%. However, it is important to note that volumes are significantly lower than at the end of last year and clearance rates are generally less indicative over periods of such low activity. As the number of auctions held increases over the next few weeks, we will be able to get a firmer perspective on conditions for the year ahead. Looking at the individual capitals, Sydney returned the strongest clearance rate of 53.7% across 129 auctions. However, Melbourne saw the highest number of auctions at 156 and a preliminary clearance rate of 44.1%. Adelaide was the second-best-performing auction market this week, according to preliminary results, with 102 homes under the hammer and 52.8% sold.
$525,000
Area
WEEK ENDING 3 FEBRUARY 2019
$610,000
One thing Adelaide has going for it is its steadiness amid the turmoil in the national property market. “Adelaide is not going to see double-digit price growth – it’s not that sort of market. But it is a steady market. If you’re someone who’s after steady capital [growth], if you’re after the ability to buy a pretty good quality home at a relatively affordable price, then Adelaide is definitely worth a look,” says Nerida Conisbee, chief economist at REA Group. According to Propertyology, pockets of the market are seeing price rises even with slow population growth, such as the suburb of Berri. “Adelaide has had a terrific year when compared to the larger states, and I would be surprised if it doesn’t post a solid 5%-plus growth number,” says Century 21 Australasia chairman and owner Charles Tarbey. “The city seems to be well planned, and there is a nice balance between supply and demand, which may serve the market well going forward.”
CAPITAL CITY AUCTION CLEARANCE RATES
$345,000
Adelaide provides refreshing change from nationwide downturn
Canberra
CAPITAL CITY HOME VALUE CHANGES Capital city
Weekly change
Monthly change
Year-to-date change
12-month change
Sydney
-0.3%
-1.3%
-1.5%
-9.8%
Melbourne
-0.2%
-1.5%
-1.7%
-8.4%
Brisbane
-0.1%
-0.3%
-0.4%
-0.1%
Adelaide
0.0%
-0.3%
-0.3%
0.9%
Perth
-0.4%
-1.0%
-1.2%
-5.7%
-0.3%
-1.2%
-1.3%
-7.4%
Combined 5 capitals
*The monthly change is the change over the past 28 days
BRISBANE CANBERRA Total auctions
43
Sold
16
Not sold
16
Clearance rate
Total auctions
54
Sold
13
Not sold
19
Clearance rate
40.6%
50%
SYDNEY Total auctions
129
Sold
44
Not sold
38
Clearance rate
53.7%
TASMANIA
MELBOURNE Total auctions
156
Total auctions
5
Sold
45
Sold
2
Not sold
57
Not sold
0
Clearance rate
Clearance rate
44.1%
WESTERN AUSTRALIA
Area
Opportunities abound as Perth prepares for a strong year The Real Estate Institute of WA (REIWA) reported a boost in Perth house prices in November 2018, the second straight month in which values increased in this capital – a positive sign for the year ahead. “Perth’s median house price has been fairly flat throughout 2018, so it’s pleasing to see two consecutive months of median price growth,” says Damian Collins, president of REIWA. “REIWA analysis shows there was a shift in the composition of sales in November, with a greater proportion of transactions occurring above $1m than there were in October. This has contributed to the increase we’ve seen in Perth’s median house price this month.” Listings also increased between October and November as sellers looked to get into the market before the holiday season hit. Collins says “buyers have a good supply of choice available to them, making it a very good time to buy”.
N/A
Type
Median value
Quarterly growth
12-month growth
Perth
H
$487,500
-1.0%
-1.0%
WA Country
H
$320,000
-1.2%
-3.5%
Perth
U
$373,000
-1.9%
-4.0%
WA Country
U
$228,250
-2.2%
-15.4%
All data sourced from CoreLogic.com.au
www.brokernews.com.au
29
PEOPLE
IN THE HOT SEAT John de Bree, the managing director of fintech lender Capify, reflects on the excitement of securing a credit facility from Goldman Sachs and the value of using knowledge to adapt to market changes
What’s one of your recent career highlights? There have been many, but a recent highlight was A definitely receiving the backing from Goldman Sachs. We secured a $135m credit facility that will accelerate the growth of our lending to SMEs. As the first alternative unsecured business lender in Australia, this partnership reinforces what Capify is here for, which is to give us the ability to drive more responsible capital to SMEs and additional support to our broker channel.
Q
What’s the highlight of your working day? I cannot ignore the culture at the Capify office in Sydney. A Our team are incredible, and if you hear some of the conversations with business owners and referral partners, they really go above and beyond to help their clients and each other. It’s full of energy and we all feed off each other throughout the day. We allow for best practice to be shared, and communicate that with our brokers as well so that we operate with complete transparency.
Q
What do you wish you’d known when you started out in finance? I think the best thing about starting up in finance is that A you are constantly learning. If you come into a particular industry – such as this one – and assume to know too much, then you may only be stopping yourself from improving. Surrounding myself with strong partners and resources has allowed me to refine what I already knew, but it has also allowed me to be able to adapt to shifts and changes in the market.
Q
What’s one thing, personal or professional, that you hope to achieve in 2019? Professionally, we cannot ignore the impact that the A royal commission has had on the finance industry, and especially brokers. We are looking to ensure we support our broker channel throughout 2019. As part of that, our Partnership team will be even more involved with industry events throughout the course of this year, to ensure that brokers are supported. AB
Q
30
www.brokernews.com.au
www.brokernews.com.au
31
32
www.brokernews.com.au