Mortgage Professional Australia magazine Issue 14.03

R O T S E V L N I CIA

MPAMAGAZINE.COM.AU ISSUE 14.3

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CONTENTS / 14.3

S R T O E K T R A S M E T N E V G R N U I A RES 20

COVER STORY

Investors

How to target this resurgent market

NEWS 4 | Round-up The latest market intelligence from the world of property, economics and mortgages 10 | News analysis High LVR loans under the spotlight

44 FEATURE

Non-banks: fighting back

MPA speaks to some of the industry’s leading lights

FEATURES 30 | Top 100 suburbs Australia’s top 100 property investment hot spots

BUSINESS STRATEGY 63 | Motivation Turning problems into positives

MORTGAGE INSIDERS WEEKLY INVESTIGATIONS NOW ONLINE: Bring in young brokers Sell at a higher multiple mpamagazine.com.au

14 | Glenn Gibson AMP Bank’s head of sales explains their broker offering

58

BUSINESS STRATEGY

SEO How to maximise your online presence on a budget

40 | Paul Eldridge Why Australis College is the new name for Intellitrain 62 | Favourite things nMB’s Alison Keating on London, Australia, AFL and James Bond

MARCH 2014 | 1

EDITOR’S LETTER / 14.3

INVESTING IN THE FUTURE Hello, and welcome to MPA Issue 14.3. In this issue we’ve decided to focus on the resurgent investor market and offer brokers the advice and information they need to boost their investor client base.

As part of our investor special, we’ve spoken to a handful of brokers who specialise in the property investment scene to procure their advice on how to bring investors into their book – and how to service their very specific needs.

We’ve also partnered with MPA sister publication Your Investment Property to give our readers a sneak peak at Australia’s top 100 property investment suburbs. Are you operating in a property investment hotspot? Flick through to the Top 100 to find out.

On the subject of investment, our profile on Australis College highlights the hard yards this organisation is putting in to allow new brokers to invest in their future careers without breaking the bank.

Meanwhile, our non-bank round-up explains why brokers should consider investing some time in exploring the options the non-bank and mortgage management sector can offer to them and their clients. You may be surprised at what they have to offer.

Robin Christie, managing editor, MPA

2 | FEBRUARY 2014

COPY & FEATURES

EDITOR Robin Christie JOURNALIST John Hilton PRODUCTION EDITORS Roslyn Meredith, Moira Daniels CONTRIBUTORS Maggie Crowley, Cindy Tonkin

ART & PRODUCTION

DESIGNER Red Redrico DESIGN MANAGER Daniel Williams

SALES & MARKETING NATIONAL SALES MANAGER Rajan Khatak ACCOUNT MANAGER Simon Kerslake MARKETING EXECUTIVE Anna Farah TRAFFIC MANAGER Abby Cayanan

CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Robin Christie tel: +61 2 8437 4787 robin.christie@keymedia.com.au

CONNECT

Contact the editor: robin.christie@ keymedia.com.au

Printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

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NEWS / ROUND-UP

BUYERS

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CONFIDENCE

CONSUMERS

FIRST HOME BUYERS ‘LOST IN THE WASH’

Outdated processes mean first home buyer stats are likely not as dire as they appear, say industry experts.

While the latest ABS statistics saw first home buyers rise slightly to 12.7% – up from 12.3% in November – Mortgage Choice spokesperson Jessica Darnbrough said these statistics didn’t tell the full story.

“While brokers may know that they’re a first home buyer, unfortunately when they’re applying for a loan with a particular lender they don’t have to tick a box that they’re a first home buyer unless they’re applying for a grant,” Darnbrough said.

“For us, first home buyers still account for about one fifth of our loan enquiries, so The percentage they still make up a good proportion of our book and they always have done and we of mid-market believe they will continue to do so.” businesses that Brisbane Business Finance director Peter Fraser said he made a conscious effort not expect a better to tick the first home buyer box when making an application for buyers that were not performance in 2014 eligible for a grant. when compared “In the three most populous states – Queensland, New South Wales and Victoria – with 2013 there’s no first home buyer grant for existing homes, so when I enter the data I leave it out,” said Fraser.

Source: Commonwealth Bank “In fact I tried to do one last week that were first home buyers, and when I tried to put Future Business Index them in as first home buyers it kept wanting me to enter an amount for the grant, so in the end I had to treat them as non-first home buyers even though that was clearly not the case.”

FIRST HOME BUYER PERCENTAGES Fraser and Darnbrough both suggested aggregator software updates could be part of the solution, but Darnbrough also believes 16 improved collaboration with brokers is a way forward.

15 “Maybe the data that is being recorded by the Australian Bureau of Statistics is as right and as true as it can be, but perhaps there 14 needs to be more liaising with the third-party distribution channel 13 and what they’re telling the lenders,” said Darnbrough.

An increase in off-the-plan purchases and buyers choosing to 12 purchase investment properties as their first homes could also 11 have contributed to slightly off-kilter statistics, she added, as off-the-plan purchases by first home buyers will not show in 10 statistics for a number of years, and many first home buyers are JUL JAN FEB MAR APR MAY JUN likely to have been identified in statistics as investors.

2013

77%

4 | MARCH 2014

81.5%

The satisfaction level of the personal customers of banks

Source: Roy Morgan customer satisfaction survey

AUG

SEP

OCT

NOV

DEC

Source: ABS

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DECEMBER 2013 | 5

NEWS / ROUND-UP

AVERAGE LVRS ON THE WANE

The average LVR for home loans in Australia fell by 1.6% towards the end of 2013, according to stats from AFG. Looking at the AFG Mortgage Index, four of the six states and territories covered saw a reduction in average LVR during December 2013, while just two experienced an increase.

The biggest drop was seen in the NT (-8.7%), followed by Victoria (-1.5%), Queensland (-1.1%) and NSW (-0.1%).

SA and WA saw average LVR increases of 1.4% and 0.6% respectively.

Meanwhile, APRA figures reveal that new housing loan approvals by all authorised deposit-taking institutions (ADIs) for loans with LVRs of 90% or above saw a recent peak in March 2009 of $12,962m. That figure more than halved to $5,967m by March 2011, but in recent months has slowly increased – to $10,820m at last count in September 2013.

6 | MARCH 2014

59.2%

NATIONWIDE

AVERAGE LVRS: DEC 2013 VS NOV 2013

(-8.7%) Northern Territory

71.3%

68.7% (-1.1%) Queensland

(+0.6%) West Australia

67.3%

(+1.4%) South Australia

Source: AFG Mortgage Index

65.4% (-0.1%) New South Wales

70%

(-1.6%) Australia

69.5% (-1.5%) Victoria

APPROVALS

NEW HOUSING LOAN APPROVALS: LVR>90% 1 3 ,0 0 0

All ADIs

1 2 ,0 0 0

Banks

Building societies

Credit unions

Major banks

Other domestic banks

1 1 ,0 0 0 1 0 ,0 0 0 9,0 0 0

$m

LVRS

8 ,0 0 0 7 ,0 0 0 6,0 0 0 5 ,0 0 0 4 ,0 0 0 3 ,0 0 0 2 ,0 0 0 1 ,0 0 0 500 100

2008

2009

2 01 0

2 01 1

2 01 2

2013

Source: APRA Quarterly ADI Property Exposures

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BUSINESS

BUSINESS PLANS LOST IN TRANSLATION

Does your team know what the company’s goals are for 2014? You may think that they do, but are they really in the loop?

According to a recent Leadership Management Australasia (LMA) workplace survey, 83% of leaders and managers claim to have a business plan for 2014, but only 66% of employees believe such a plan even exists.

Almost all leaders, managers and employees recognised a plan was essential to secure the future of their organisations, said LMA CEO Andrew Henderson, so it’s disturbing to discover that one third of employees believed their organisations had started the new work year without one.

“The plan starts with leaders clearly identifying the vision and plan, clearly communicating the goals, direction and vision and then having the confidence in themselves as well as gaining the confidence of their people to execute the plan,” he said.

COMMUNICATION

LEADER AND MANAGER RESPONSES

83%

70% 70%

83% claim to have a business plan for 2014 (compared to just 66% of non-managerial/ supervisory employees) 70% believe they have communicated the plan very well (18%) or quite well (52%) to their people 70% believe people understand their role in helping the organisation fulfil the plan very well (15%) or quite well (55%)

89%

89%

89% are very confident (29%) or quite confident (60%) that the plan supports the achievement of the organisation’s overall objectives and priorities Of those who don’t know or don’t believe there is a plan, 89% believe it is very important (63%) or quite important (26%) that the organisation has a plan

Source: Leadership Management Australasia workplace survey

MARCH 2014 | 7

NEWS / ROUND-UP

MARKET

OWNER-OCCUPIED MARKET GROWTH SLOWING

The tail end of 2013 saw the slowest growth in the owner-occupied market for the past year.

Housing finance figures for December 2013 show, in trend terms, that the number of owner-occupied finance commitments rose by 0.3%, following increases of 0.5% in October and November. This is the lowest monthly increase, in trend terms, since December 2012.

If refinancing is excluded, in trend terms for December, the number of owner-occupied finance commitments increased by 0.6%, said Real Estate Institute of Australia president Peter Bushby.

“Increases were recorded in New South Wales, Queensland, Western Australia and Tasmania, with New South Wales having the biggest rise, up 1.0%. The Northern Territory’s fall of 2.0% was the country’s largest,” he said.

“In trend terms, the number of commitments for the construction of new dwellings climbed 1.1% and the purchase of established dwellings went up 0.3%; however, the purchase of new dwellings fell by 1.1%.

“December 2013 results highlight the need for Government to act on housing affordability and to stem the rapid decline in the number of first home buyers.”

The ABS data also shows capital city dwelling prices increased by 3.4% in the final quarter of 2013 and were 9.3% higher than a year earlier, according to Housing Industry Association senior economist Shane Garrett.

Steady and sustainable price growth reinforces confidence in the market, and healthy lending activity must be seen in this context,” said Garrett.

“In order to maintain a healthy level of activity in the market, more will have to be done to deal with constraints around planning, land supply and infrastructure funding.

Addressing these issues will do much to improve longer-term housing affordability and will ensure that Australia achieves its full economic potential over coming years and decades.”

8 | MARCH 2014

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LENDING

NUMBER OF DWELLING COMMITMENTS: OWNER-OCCUPIED HOUSING 52, 5 00 50, 000 47, 5 00 45 , 000 4 2, 5 00 40 , 000

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

2 013 Source: ABS

RESULTS

$4.2bn

BUYERS

1.4%

Commonwealth Bank’s profit for the half-year ending 31 December 2013

The month-on-month increase in housing finance for owner occupation

Source: CBA 2014 Half Year Results

Source: ABS, Nov 2013

NEWS ANALYSIS / LVRs

High LVR loa A recipe for disaster?

High LVR loans have come under attack in recent months. Are they as risky as the fearmongers would have us believe?

Amy Rosenfeld investigates

10 | MARCH 2014

The claim that high LVR loans can be bad for borrowers is nothing new, but in recent months an increasing number of stories have cropped up in the mainstream media, claiming that dangerous borrowing practices could be creeping into the Australian marketplace.

One of the parties voicing this concern is consumer group CHOICE, whose spokesperson Tom Godfrey told MPA sister title Australian Broker that some “risky” home loans being offered to borrowers had the potential to put homebuyers in financial difficulty.

“No- or small-deposit mortgages can get you into trouble, especially if house prices decrease or your situation changes, as it can happen that you owe more than your house is worth,” he said.

Godfrey believes that many of the home loan products currently offered on the market have the potential to be damaging to consumers’ financial well-being.

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ns

“It’s of concern if consumers are offered mortgages that can get them into trouble. One example of such a risky home loan is a 120% LVR mortgage offered by RAMS,” he said.

“If your parents or siblings guarantee your loan or even have to take out a mortgage themselves – as it is necessary in case of the RAMS loan – you endanger not only your own home but also theirs.”

The RAMS loan in question is a guarantor loan.

This type of loan was introduced a number of years ago through the bank’s ‘Fast Track’ program – an option popular with first home buyers – explained a RAMS spokesperson.

“It’s one option, but it’s not the only option,” said the spokesperson. “If customers are finding it difficult and parents are willing to go in as the guarantor, it’s a way they can keep upfront costs down.”

The spokesperson dismissed Godfrey’s claims as misleading, stating that guarantor loans were often at less risk of default than other loan products, as parents were quick to ensure their children stayed on top of loan payments. The option also helped first home buyers avoid expensive LMI costs, said the spokesperson.

MANAGING RISK Otto Dargan, director of Home Loan Experts, said guarantor loans – offered by a number of providers – did carry additional risks, but these risks could be effectively managed.

“Removing the product would be a real blow to first home buyers, particularly in expensive property markets,” said Dargan.

“The risks need to be explained to the borrowers and the guarantors; they need to investigate getting various insurance products to reduce their risk and they need to have a plan to pay down the loan and remove the guarantee as soon as possible.

“Our job is to work out which clients are suitable for these types of loans and to educate them about the risks. I think most brokers are doing this really well.”

FALLING LVRs Figures from AFG’s January Mortgage Index show the aggregator’s average LVR figures have fallen slightly across the country, but this is driven mostly by an increase in investor activity. States with strong levels of first home buyer activity continue to have higher average LVRs, such as WA (71.3%) and SA (70%).

Meanwhile, APRA figures reveal that the nationwide value of new housing loan approvals with an LVR greater than 90% saw a steady increase during 2013, with the total value of these high LVR loans rising from $9,051m in the March quarter to $10,820m in the September quarter.

This was still well down on March 2009’s recent peak of $12,962m, however.

“Lax lending standards are a concern because consumers may find they are unable to repay the debt they have taken on,” said Godfrey.

“In the worst-case scenario this can result in your home being repossessed by the lender. From a big-picture point of view, systemic lax lending practices in the US were the primary cause of the global financial crisis, a scenario we don’t want to see repeated here.”

RAMS’ spokesperson, however, said that if anything the bank’s lending criteria had tightened in recent years.

“We have lending guidelines and credit policies, and we’re not in the business of writing loans for people who can’t afford to pay. That’s not prudent for us as a business or prudent for customers, so we do have a level of responsibility in our business and there are a lot of checks and balances that go into writing loans.”

Dargan agreed, stating that, while there may have been some evidence of “lax” lending standards prior to the GFC, that was no longer the case.

“If you want to go through every lending policy and find one or two that look bad, then of course you can; however, if you look at the types of people getting approved and declined, as well as the arrears rate, then you can see that the system isn’t broken.”

MARCH 2014 | 11

NEWS ANALYSIS / LVRs

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12 | MARCH 2014

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MARCH 2014 | 13 A106340-0314

HEAD TO HEAD / GLENN GIBSON

THI

14 | MARCH 2014

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INKING

BIG

This year is set to be a busy one for the mortgage industry, with the non-majors pushing for increased market share, and opportunities cropping up for brokers. MPA catches up with AMP Bank head of sales and marketing Glenn Gibson for his thoughts on what 2014 has in store MPA: How are you expecting the mortgage market to perform in 2014?

GG: If the last quarter of 2013 is anything to go by, it’s going to be a very busy 2014. While net mortgage borrowing across the industry up to October 2013 was running at about 5%, there was certainly a jump in the final quarter. Very early indications show that the market remains buoyant after the Christmas break, with property auctions in a number of states starting sooner than in previous years.

“I believe we will see a further increase in the non-major market share in 2014”

MARCH 2014 | 15

HEAD TO HEAD / GLENN GIBSON

MPA: Do you see the non-major banks challenging the big four for market share this year?

GG: I think the non-majors are making solid inroads in winning a greater market share of the mortgage market. It’s a competitive market as a lender, and continual enhancements to products, policies and service is a must.

“Brokers continue to want to enter the SMSF lending space but are not sure of just how to do it” All the brokers I speak to want to diversify their lending panel, but it’s up to the non-majors to earn the business with compelling offers and consistent service. I believe we will see a further increase in the non-major market share in 2014.

MPA: What do you think the main challenges are that brokers will face this year?

GG: I think the challenges for brokers in 2014 will have more to do with the opportunities. This may be the year for expansion for a lot of broker businesses, and that can bring its own set of issues.

For the smaller operators it will be about how you handle a growing business (putting on staff; dealing with increased applications and the phone calls that go with that; referral sources suddenly presenting themselves). As with any lender, how a broker handles a large spike in volumes can have a positive or negative impact on the business for up to six months.

MPA: What opportunities do you think brokers will be presented with this year?

GG: As mentioned, I believe 2014 is all about the opportunities for brokers. A stronger property market combined with low interest rates is a great environment to operate in; 2014 should bring a wider client base to brokers and it will be a good time to review the suite of products they have used to make sure they are capturing all opportunities.

16 | MARCH 2014

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Whether it’s SMSF, investors or even first home buyers, having the knowledge coupled with a wider range of products will ensure brokers make the most of this year’s opportunities.

MPA: AMP identified BDM support as an area of focus last year. How have brokers responded to improvements in the AMP BDM team?

GG: In 2013 we increased the broker sales team by over 25%, and in the last quarter we added an additional four contracted BDMs to support the increase in volumes and broker activity. The response from brokers was excellent, and while AMP Bank has always rated well in surveys for our BDM team, I’m very happy with the added focus.

MPA: Product diversification has been another area of focus, especially SMSFs. Have brokers been keen to go down the SMSF route?

GG: Brokers have taken to SMSF lending strongly,

“If the last quarter of 2013 is anything to go by, it’s going to be a very busy 2014”

MARCH 2014 | 17

HEAD TO HEAD / GLENN GIBSON

CAREER TIMELINE

2000–2002 CEO, Security Credit Union

2002–2004 Director, wholesale, Resimac

2004–2005 Head of sales and marketing, mobile lending, ANZ

2006–2008 National sales manager, GMC-RFC

2010–2013 National sales manager, third party distribution, AMP Bank

2013–present Head of sales and marketing, AMP Bank

and the number AMP Bank receive each month continues to increase. To highlight the uptake, brokers currently submit more SMSF loans to us than our planner network. While we do receive a higher percentage of SMSF loans due to our experience in this space and the products and services we offer that support it, it still only represents a small portion of the total broker lending market.

Brokers continue to want to enter the SMSF lending space but are not sure of just how to do it.

Our BDM team work closely with brokers on education around SMSFs and not simply our products. We’re always willing to have a chat to any broker who would like to know more about how SMSFs work, the size of the market and the opportunities.

MPA: AMP is well known for its wealth management. Aside from SMSFs, what are your thoughts on how brokers can tap into this space?

GG: Brokers need to firstly identify if wealth management is something that will enhance their business. With the right research and focus it can be very beneficial, but it could also take a broker’s focus off their own successful business.

“The broker channel is AMP Bank’s largest channel for mortgages” There are a number of ways brokers can tap into the wealth management space, from setting up a referral partnership with a wealth management specialist to setting up their own separate business department. It’s important for brokers to first understand what they want to get out of diversifying, and the benefits to both their clients and their business.

MPA: More consistency in service, especially in high-volume periods, has been another focus for AMP. Are brokers noticing improvements there?

GG: The challenge with all lenders, and particularly the non-majors, is how to handle the spikes when

18 | MARCH 2014

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you have the best offer in the market. Our approach over the past year has been from an end-to-end perspective. In 2013 AMP Bank made nine product/ price enhancements, and each time we assessed how our servicing was handling the increase.

We finished the year with three of the highest application months in the history of the bank, and while we were certainly stretched, we controlled the volumes better than we ever have.

MPA: What are your plans for this year? Where will brokers notice improvements when dealing with AMP? GG: AMP Bank has had four record years in a row for mortgage applications, and we are planning to move that up again in 2014. As they say, “you are only as good as your last game”, so we will be making sure we continue with the product development, pricing initiatives and service enhancements this year.

MPA: What would you say to brokers who haven’t used AMP recently to persuade them to give your organisation a fair go?

GG: I believe our product suite is very competitive across the entire range, and in particular in the SMSF and investor markets. We have a few credit niches when it comes to investor clients, which can make a big difference to borrowing capacity, so please speak to one of our BDMs if you are unsure what these are.

In a recent survey of 10,000 consumers, AMP Bank was selected as having the best fixed rate home loans and best bank loan features, so please have a look at what we have to offer your clients.

MPA: Are there any other key messages that you’d like to pass on about AMP’s approach to servicing the broker channel?

GG: The broker channel is AMP Bank’s largest channel for mortgages, and as such we appreciate the support we have received from brokers over the past few years. We will continue to develop our product and service proposition with the view of working closer with both the brokers that have supported us and with the brokers that are yet to use us.

FEATURE / INVESTORS

T S E V N I

T E K R A M T N E G R U S E R A

ithin ar w tum the ye ost n e om e into the m e m the ntinu make es som d n , a to co t and vass s r o st ected arke A can e v r in is exp this m ? MP o f r a rket o sents t e n y i big e ma rs tap it pre a s wa r of th broke nities dvice 3 1 20 secto can portu heir a this ad. How ing op ts for t ahe e grow ecialis h of t stor sp inve

20 | MARCH 2014

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S R O T The investor market was one of the success stories of 2013. With capital

appreciation ramping up in many areas during the second half of the year and interest rates remaining at historic lows, Australia’s property investment community saw an opportunity and began to come out of the woodwork.

This year investors are expected to continue to buy into the property market in numbers that haven’t been seen for some time. So how can mortgage brokers go about servicing this resurgent market?

As part of this month’s investor special issue, MPA has spoken to several brokers who between them have a wealth of experience in the investor market.

It’s clear from their interviews that the benefits of servicing this market – both in terms of business growth and job satisfaction – can be immense.

Read on for some food for thought on how you can go about boosting your investor client base.

Property investors are driving the recent strong performance of the property markets, particularly in NSW and Victoria. For the 12 months ending December 2013, the housing market grew by 5.4%, with the investor market share at 7.1% and the owner-occupied market at 4.6%.

Demand for investor housing loans is strongly linked to rental yields and return on other asset classes. With interest rates at historically low levels and the return on cash being currently low, property is an attractive investment.

CBA is proud to support this feature with insights into how brokers can maximise their full potential with the investor segment. We are also pleased to offer brokers a full range of flexible lending solutions to support your investor customers in building their property portfolio.

Sam Boer general manager, broker sales, Commonwealth Bank

VALUE OF DWELLING COMMITMENTS: INVESTMENT HOUSING 11,000,000,000 10,000,000,000 9,000,000,000 8,000,000,000 7,000,000,000 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

2013 Source: ABS, seasonally adjusted figures MARCH 2014 | 21

FEATURE / INVESTORS

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BEN KINGSLEY

CEO and founder, Empower Wealth North Melbourne, Vic Is it harder to get investment loans over the line?

For the first or second investment properties, lending options are usually available to find a suitable lending solution. After this point, depending on the property’s immediate income-producing potential, it usually gets harder to meet servicing requirement for most lenders, as most properties require clients to put in some of their household surplus income. As you grow a portfolio bigger, it can get even harder, especially if the portfolio building plan is to acquire several properties over a relatively quick period, like five properties in, say, seven to 10 years.

Are there any common issues you encounter with investors?

There are a couple of common themes, but they are often just ‘human nature’ type responses. For example, if we locate a great investment property and we secure it for a client, and 12 months later the value of the property has

increased significantly, the natural reaction of our clients is to think it is easy money and they want to go again and again real quickly. So we have to remind these clients it’s not always that easy or that simple.

There will be times when the values plateau or correct slightly, so we need to remind them to keep their heads and stick to the plan.

The other common theme is that people sometimes forget it’s a high-value item and there is a lot at stake in terms of potential losses and general investment risks, as with other types of investments.

It’s important to ensure your clients understand the risks and make informed decisions about this when assessing the reward.

How demanding are investor clients?

Happy investor clients aren’t demanding at all; in fact, the only demand comes from wanting to potentially repeat their success story more often than not. It’s all about educating your client and ensuring you develop a tailored solution around what they are trying to achieve. If you do this well, then you are better placed to only get contacted when they are considering going again or on occasions when they are seeking some advice around their property manager and tenant.

Do investor clients require much education?

Yes, they are looking for knowledgeable advisers who know their specialisation well. Our finance advisers are specialists when it comes to lending strategy and structuring, because it’s such an important part of the overall plan. They leave the property stuff up to their experienced and qualified colleagues instead of the potential of ‘slipping up’ on property matters. Having a little bit of knowledge about property investment is like a GP having basic knowledge about heart surgery: you wouldn’t let him operate or take his advice as that of a specialist heart surgeon because your life would be at risk.

Although your life isn’t at risk with getting basic property investment advice, your client’s financial well-being certainly is.

What are the long-term benefits of taking on investor clients?

Sticky, loyal clients whose lending balances remain strong for a very long period as they build a property portfolio. They are very rewarding clients to work for, as over time you are making a significant contribution to their wealth base and passive income for retirement.

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DECEMBER 2013 | 23

FEATURE / INVESTORS

MONICA VAN RIET

Principal and owner, Mortgage Choice South Melbourne, Vic Is it harder to get investment loans over the line?

I think it’s probably easier, just because they have probably had a loan before. So they probably have a really strong asset base at that point, and have been through the process before. And, providing they have sufficient equity and asset base and everything like that, it generally goes through relatively smoothly and easily I think.

Are there any common issues you encounter with investors?

First-time investors, yes – not being educated enough

– and the process of structuring the loans or the accounting and tax implication; the things to do, the things not to do; buying the wrong type of property in the wrong location; not doing enough research; jumping in because they think they are going to miss out because they think prices are going to go through the roof – all those kinds of things. First-time investors need a bit more hand-holding because they have never done it before; they don’t know what to expect and they have to be guided through all the processes. I give them tips and tools that they can use to educate themselves on property investing and figuring out what’s the right strategy for them.

What are the long-term benefits of taking on investor clients?

I think they will potentially buy more than one property. So that could obviously help build up my trail. But I can expand my network and business associates through referrals; through financial planners; through accountants who might in turn refer business back to me. And they might diversify into self-managed super funds or might open up opportunities for me to refer to investment property specialists that we have on our panel. And if they have a great experience, obviously they tell their friends, family and work colleagues as well.

Where do you see the investor market heading this year?

I maybe see a bit more self-managed super funds.

And I feel like I’m starting to get more of my first home buyers actually wanting to buy an investment property and are renting where they actually want to live.

Are there any other issues to bear in mind with investor clients?

I think it’s really important investors have a good accountant and financial planner that they have met with before they decide to take the plunge.

I work in conjunction with accountants and provide the finance guidance on that side of things.

Also, very important is that they don’t overcommit on loans and credit cards. It’s really important to keep all that under control and make sure you’ve always got a buffer: when it comes to reviewing the numbers on an investment scenario, I’m very conservative and I think worst-case scenario in terms of how much rent they are going to get, how long the property’s going to be vacant, and things like that.

24 | MARCH 2014

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GRANT MATTHEWS Franchisee, Smartline Cheltenham, Vic How do you go about bringing in investor clients?

What are the long-term benefits of taking on investor clients?

I have a CRM model, so regular emails on interest rate movements, anything interesting in the market.

The way I bring in investor clients is it’s nearly all word of mouth. And I think the key to it is the two most important calls you make: the call to the person who has been referred to introduce yourself and make an appointment, and also the call to the person who referred to thank them and follow up with a small gift – even if the lead doesn’t go through. That tends to generate business.

One of the main benefits is your loan volume. If you’ve got a larger percentage of investors on your loan book, your loan book average per client is going to be much, much higher. So for the same amount of work, in theory every client has a certain amount of need and the same amount of work. If you’ve got a higher percentage of investors, then you’ve got a higher return for your ongoing service level requirements.

Are there any common issues you encounter with investors?

The biggest issue I encounter with investors is a bit of a fear. The biggest fear people have is vacancy, so we mitigate that – we try and set up a buffer like a small line of credit. With damage to property, we explain to them they have good landlord’s insurance and really it’s only going to cost an excess on an insurance premium. With interest rate movements we have a bulk email system where we alert our clients of interest rate movements in the fixed rate markets. We also send out what the RBA and futures expect with rates, and we also show them historical data on interest rates and where they have moved to.

How demanding are investor clients?

Far less demanding than first home buyers. They have more of a macro view than a micro view. So they are not as stressed about every little fee and every little issue with the loan.

Do investor clients require much education?

They definitely seek education in those areas, and we try and steer clear from all these companies that try to push their products and pay us a fee. We avoid all that. We try not to get involved in the recommendation of property because, for example, if it was shares, you wouldn’t recommend which shares to buy, but people always seem quite happy to recommend which properties to buy. I do recommend buyers’ advocates to people that have no experience.

MARCH 2014 | 25

FEATURE / INVESTORS

ROB LEES

Franchisee, Mortgage Choice Blaxland and Penrith, NSW Is it harder to get investor loans over the line?

Not really. It depends on the client really, and their circumstances. The main thing is they need to have enough equity, and they need to be able to service the loan. Sometimes people will do their own numbers and they will see that they can get a 5%

rental return and interest rates are at 5%, and on their numbers it is not really going to cost them anything much to hold. They don’t understand why it doesn’t service, and that’s because the lenders normally add on a margin to the interest rate. So they still need to have enough equity and they still need to prove serviceability. But it’s really just like any other loan. You have to do that with any loan really.

How demanding are investor clients?

I don’t think they are really any more demanding than any other clients. It’s just such a mixed bag. It’s not really demanding, but they sometimes just want a bit more information.

Do investor clients require much education?

I really do spend quite a bit of time with people, talking it through and explaining. They hear things being thrown around, like negative gearing. But most of the time, certainly first-timers don’t really understand what it is. So I show them how it works and I model it. I do spend a bit of time with them.

I also talk about the things to look for when buying properties for investment. And I give all our clients information from RP Data and that kind of thing.

So I try to act as a resource and I am happy for them to contact me to talk through what they are looking at doing.

Do you think investors require a high-touch service?

Not necessarily. It just depends on the person. Some people, whether buying owner-occupied or investment, are high maintenance. And some aren’t.

What are the long-term benefits of taking on investor clients?

I think the greatest benefit is the ongoing relationship. It’s really good when we can be looking after them and we’ve got multiple loans. Obviously multiple loans is good because that’s more business, but it’s all about relationships and it’s just great to actually be working with someone when they come back again a year later, or a couple of years later, and we’re able to work with them over a longer period.

Are there any other issues to bear in mind with investor clients?

I just think education is important, especially the hand-holding thing with the first-time investors.

They really want to talk it through.

26 | MARCH 2014

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SARAH WELLS

Senior finance adviser, Rate Detective Finance Osborne Park, WA How do you go about bringing in investor clients?

I have established a word-of-mouth referral relationship with a group of medical and business professionals who are very tax driven in their investment decisions. The relationships have developed by keeping things simple yet delivering a comprehensive offering. This really consists of understanding the drivers behind the purchase (liaise with accountant and advisers), developing a strategy with the key parties, and then executing it.

Clients will then tell the like-minded people they mix with.

This year, however, I will look to expand this with some small seminars and online education to reach a broader client base.

Is it harder to get investment loans over the line?

This, like anything, depends on the quality of the client. If you have a high-net-worth investor, servicing may not be an issue, but the complexity of their affairs may make the process a little more cumbersome.

How demanding are investor clients?

No more than the rest of my client base. They, like every other client, are looking to have their business catered to and delivered in a timely and professional manner. Given they buy more frequently than a non-investor, they are accustomed to the process and are familiar with the requirements of obtaining finance, and the buying process.

Do investor clients require much education?

I wouldn’t say they require additional education.

What is required, however, is taking additional time to factor in their complexities and ‘what if’ scenarios to ensure that the loan provides enough protection and flexibility along with complying with ATO rulings.

Do investors require a high-touch service?

In most cases they have a team that supports them and tend to make decisions that need to be actioned quickly with a number of drivers to be included.

Updating all the parties and ensuring all items and requirements are actioned (i’s dotted and t’s crossed) can take a little bit of extra time and care.

What are the long-term benefits of taking on investor clients?

They tend to be repeat clients with a higher portfolio value, which gives them a greater value to any broker.

Are there any other issues to bear in mind with investor clients?

Interest rates and market volatility tend to be the big ones, as when they bleed they bleed badly. A good team will ensure that they are not overly exposed to any risk, and that precautions are taken to mitigate and transfer risk associated with high levels of debt.

MARCH 2014 | 27

FEATURE / INVESTORS

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the end goal of the investor client, it shouldn’t be any harder to have them approved than a ‘vanilla’ first home buyer.

Are there any common issues you encounter with investors?

Generally speaking, valuations would be the largest hurdle, especially when you are borrowing against a ‘perceived’ equity in multiple properties. One short or declined valuation could result in the deal going south, or a requirement of a cash injection from the client.

How demanding are investor clients?

Investor clients tend to understand the process a little more than owner-occupied clients, generally because they have been through it before. As long as you keep an open channel of communication and discuss all of the possible hurdles and product specifics, there shouldn’t be any additional level of difficulty working with investor clients.

PHIL COUCH

Senior mortgage broker, Loan Market Plympton, SA How do you go about bringing in investor clients?

Most of my investor clients are referred to me by previous investor clients, real estate agents, financial planners, accountants and conveyancers. By establishing a strong referral network with these professionals, investor clients are always aplenty.

What kinds of properties are investors targeting in your area?

My key business area consists of small one-bedroom units, to large multimillion-dollar beachside properties or developments. I have investor clients that purchase either – or anything in between. The right property for the investor is dependent upon their financial situation, comfort level, what risk level and timeframe they are considering.

Is it harder to get investment loans over the line?

There are certainly more complexities to dealing with investment loans and liaising with the lender, but if you understand the process, bank policies and 28 | MARCH 2014

Do investor clients require much education?

I deal with complex investors often. Many of these clients understand the process. The best part is when I can save them thousands and restructure their lending to simplify things for them and their accountant.

Do investors require a high-touch service?

I keep in contact with all my clients at the same level. I can say I spend more time contacting investor clients throughout the home loan process on every milestone update or after settlement. All of my clients receive an email from me every month after settlement and at least one phone call every six to 12 months.

What are the long-term benefits of taking on investor clients?

Investor clients, if looked after correctly, are very loyal, not to mention the monetary reward of keeping them and their growing portfolio on your book.

Are there any other issues to bear in mind with investor clients?

Make sure you know what you are talking about. It can be an expensive mistake for the client, and potentially for you, if you give out incorrect or unqualified advice.

TOP 100 SUBURBS

OP T S ' A I AL R T S U A

100 S B R U B U S 2014

Eager to find out if you’re working in a property investment hot spot? The team at MPA sister publication Your Investment Property has put in the hard yards to provide the answers in this year’s ranking of the Top 100 suburbs for capital growth and rental returns

N

ew year, new markets. If the rolling by of one year into the next has shown investors anything, it is that investment opportunities are continually changing.

What made property buyers big money in 2013 won’t necessarily be as fruitful in 2014.

With that in mind, the team at MPA sister publication Your Investment Property put together its Annual Suburbs Guide – an in-depth ranking of the Top 100 property markets for 2014.

These are the markets that are forecast to outperform the rest of Australia for short-term capital growth, but which also offer sustainable, long-term price growth for property investors.

30 | MARCH 2014

Chosen from the more than 15,000 suburbs in Australia, the Your Investment Property Top 100 is the pre-eminent guide to property investment markets in this country.

The data in the pages that follow is the result of months of research and data collection. A range of property analysts, real estate agents, economists, statisticians and experts in the property industry were consulted to draw a picture of where Australia’s best property markets are going to be.

Each suburb description contains all the important facts your investor clients need to know and understand about the local housing market and why it offers a prosperous investment opportunity.

The team behind the Top 100 looked at the streets and property types that attract the most value, at how public infrastructure is improving and how local residents view the suburb, and at the demographic shifts driving demand for property.

Some results may be surprising, some not.

The only way to find out is to read on, so without further ado MPA presents its highlights of the Your Investment Property Top 100. To read the full in-depth report, pick up a copy of the January 2014 issue of Your Investment Property at www. yourinvestmentpropertymag.com.au

MPAMAGAZINE.COM.AU

THE RANKINGS FORMULA How the best investment destinations were determined, compared against each other and vetted The Top 100 Suburbs Guide was formulated using an intensive research process and calculation methodology.

First up, Australia’s top property market analysts were canvassed for their top picks of markets that are forecast to perform strongly over the immediate and distant future.

These analysts included: Your Investment Property then compared these Aaron Maskrey, forecasts with past sales data, supply and demand research analyst, indicators and its own research and findings, and PRD Nationwide began a national hunt for the number one property market in the country.

All research and analysis focused on core issues Peter Koulizos, such as: property author and lecturer

Jeremy Sheppard, research director, Redwerks

Dr. Andrew Wilson,

senior economist, Australian Property Monitors Andrew Peterson, TheNextHotspot. com.au

Lachlan Walker, Place Advisory

Terry Ryder, Hotspotting.com.au

James Freudigmann, Propell National Valuers

Tenant demand Each suburb had to pass the criterion of being a desirable place to live, one where a large and diverse tenant base would put long-term demand on accommodation.

The local economy Top 100 candidates had to have a growing economy and one that would support wages growth and relatively high disposable incomes.

The rationale was that property markets backed by sound economics had the best price and rental growth potential.

Capital growth potential Markets with the most potential to grow were ranked highest. Potential took into account past property cycles, current buyer sentiment, supply and demand issues and the strength of the local economy.

Significant changes Markets were ranked highly if there were a number of changes in effect – or in the pipeline – that would bring more people into the area and push up demand for properties. These included improvements to infrastructure, gentrification and urban renewal initiatives.

Demographics Suburbs were ranked higher if they had a growing population placing increasing and continuing demand on the housing market. Suburbs where the average household income of residents was increasing also scored highly.

WHAT DO THE NUMBERS MEAN? Here’s how you can decipher the lingo used in these reports •• Auction clearance rates A healthy figure is anything above 65%, but a true indicator of a market in high demand is a figure above 80%. Of course, vendors in some markets tend not to go the auction route.

•• Vacancy rates Anything around the 3% mark usually indicates a market where the supply of rental accommodation meets demand.

Less than roughly 2% shows a shortage of rental properties and above 3% suggests an oversupply.

•• Rental yields An average rental return is anywhere between 4% and 5%. For properties to be positively geared they normally require a yield of 6.5% or higher.

•• Stock on market This indicates how many of the total number of properties in a suburb are up for sale. An average figure is roughly 1%.

•• Days on market The average time that most Australian properties are on the market is 85 days, or about 12 weeks. A really competitive market has properties that sell in less than 50 days – seven weeks.

•• Average vendor discount Few vendors sell their properties for the original price they are listed at, so a good gauge of demand is to see how much they have to drop that price in order to make a sale. The Australian average is roughly 10%.

Affordability Suburbs with competitive prices, either for the base of people they appeal to or compared with neighbouring areas with a similar offering, ranked highly.

The research team at OnTheHouse.com.au

TOP 100 SUBURBS VS ‘HOT SPOTS’ Excluded from the Top 100 were markets where investors are likely to only make short-term gains over a period of less than five years. This meant the following markets were not included: Speculator markets Suburbs that could benefit from a development or investment that is far from being confirmed

One-industry mining towns Small, isolated communities that rely only on a major mining project that creates a shortterm shortage of accommodation Future retirement or holiday havens It is almost impossible to forecast which areas will be in vogue for the next generation of retirees or holiday-home buyers

MARCH 2014 | 31

Top

100

SUBURBS

15

Williamstown, Vic Location: 8km from Melbourne CBD Median house price: $422,500 Rental yield: 4% Vacancy rate: 2.6% 12-month price growth: -4%

DEMOGRAPHICS

POPULATION

13,203

MEDIAN AGE

41

3.6%

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$1,792 14

34%

GROWTH SINCE ’06

••

Local economy – 8/10:There has long been a large-scale maritime industry, and this continues to dominate. The big employers are shipbuilding companies, retail and tourism.

••

New infrastructure plans – 6/10: Local government is planning extensive road upgrades and improvements to parks. The Williamstown Town Hall has an extensive refurbishment scheduled.

••

Amenities – 8/10: As a hot spot for tourists, as well as traditional workers, Williamstown is well served in terms of retail, cafes and restaurants, and has a good range of sports clubs.

••

Supply and demand – 6/10: There is not a huge amount of stock on the market, but it doesn’t sell as quickly as might be expected. With the vacancy rate at 2.6%, the market is not short of rentals, and the yield is 4%.

Belmont is a suburb in the Hunter region of NSW, sitting close to the ocean on the banks of Lake Macquarie.

Prices in Belmont are going up a bit but it is Location: 20km from Newcastle, 101km from Sydney still reasonably affordable. There is some private Median house price: $375,000 development occurring along the foreshore of Brooks Parade. Belmont has a shopping centre Rental yield: 5% and decent amenities, and there are a number of Vacancy rate: 1.36% 12-month price growth: -1%

6,420 -0.8%

KEY INDICATORS ••

Local economy – 7/10: The Lake Macquarie area has a significant coal-mining industry, as well as smaller agricultural and manufacturing industries. This means the local economy is stable and reasonably diverse.

GROWTH SINCE ’06

••

New infrastructure plans – 5/10: The city council’s focus is on the economic development of the area.

There are some environmental projects underway.

••

Amenities – 8/10: Belmont is home to a variety of shops and eateries. There is a good range of schools in the area.

••

Supply and demand – 7/10: There is an average amount of stock on the market (1.35%) and, in terms of sales, turnover is about 86 days. However, rental vacancies are above average and the rental yield is a decent 5%.

46

AVERAGE HOUSEHOLD INCOME (P.W.)

17%

GROWTH SINCE ’06

Toowong, Qld Location: 5km west of Brisbane CBD Median house price: $413,792 Rental yield: 5% Vacancy rate: 2.5% 12-month price growth: -4%

DEMOGRAPHICS

MEDIAN AGE

11,255 13.9% POPULATION

28

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$1,601 32 | MARCH 2014

good public and Catholic schools. But the biggest attraction is probably that it is possible to buy into streets very close to the lake or the ocean.

Belmont’s rental market is stable, with a vacancy rate of 1.36%. The range of industry in the area means there is a reliable pool of tenants.

With the rental yield at 5%, the market treats landlords well.

MEDIAN AGE

POPULATION

$860

provides a constant supply of workers looking to rent.

Thanks to this steady tenant pool, and the fact that Williamstown has no hotels or motels, which means tourists often like short-term rentals, the rental market is very reliable.

The public transport infrastructure is solid and there are a number of decent schools in the area. RP Data stats show Williamstown has grown by 26% during the past five years.

KEY INDICATORS

Belmont, NSW

DEMOGRAPHICS

13

Williamstown is a premier inner-west neighbourhood with a community feel and a magnetic attraction for tourists.

“This alone is attractive for many investors, but it is even more so when combined with the lifestyle on offer,” says Adrian Butera from Compton Green Real Estate.

The ongoing presence of shipbuilding companies like Tenix ensures there is a solid local economy to support the area. It also

38%

GROWTH SINCE ’06

The Toowong population grew by 14% between the last two censuses, and there is a good reason for that. As the closest railway suburb to the University of Queensland, Toowong is at the heart of Brisbane’s increasingly popular innerwestern suburbs.

Already home to a modest commercial precinct, Toowong is set to benefit from largescale commercial investment. This includes a

$50m project to refurbish the Toowong village shopping centre, due to commence in early 2014.

Many local residents are students at the University of Queensland, while families and young city workers reside in the area as well.

Getting to the Brisbane CBD is easy and convenient via the Toowong train station, which is four stops away from Central Station.

KEY INDICATORS ••

Local economy – 8/10: Brisbane is forecast to be one of Australia’s best-performing capital city economies over the next year at least. Toowong’s planned commercial precinct will also boost suburban services.

••

New infrastructure plans – 8/10: As the Brisbane economy continues its growth, infrastructure is improving and Toowong will benefit from this.

••

Amenities – 8/10: Toowong has everything a resident could want: supermarkets, bars, restaurants and schools. A University of Queensland campus is 3km away.

••

Supply and demand – 8/10: The suburb has recorded high sales over the last year and there is now a shortage of properties coming on to the market.

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12

Hebersham, NSW Location: 47km west of Sydney CBD Median house price: $290,000 Rental yield: 6% Vacancy rate: 0.9% 12-month price growth: 7%

DEMOGRAPHICS

POPULATION

5,438

MEDIAN AGE

-4.6%

31

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

22%

GROWTH SINCE ’06

$1,066 11

Newtown, Qld Location: 127km west of Brisbane Median house price: $260,000 Rental yield: 5.6% Vacancy rate: 1.5% 12-month price growth: 9%

POPULATION

MEDIAN AGE

35

-2%

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$900 10

19%

GROWTH SINCE ’06

South Toowoomba, Qld Location: 127km west of Brisbane CBD Median house price: $276,750 Rental yield: 5.3% Vacancy rate: 1.3% 12-month price growth: 6%

5,255

MEDIAN AGE

0.4%

35

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$934

KEY INDICATORS ••

Local economy – 7/10: Despite the Sydney CBD being a tiresome 47km away, Hebersham is just 10km from the thriving employment centre of Blacktown.

••

New infrastructure plans – 8/10: This region of Western Sydney is receiving increasing attention in terms of infrastructure spending, mainly on education and medical facilities, and transport links.

••

Amenities – 6/10: Schools, parks, buses and basic shops are in the area. For everything else, a car or bus is needed.

••

Supply and demand – 9/10: Hebersham is one of Western Sydney’s standouts in this category, with an auction clearance rate of 100% and just 0.3% of stock on the market.

Newtown lies within Toowoomba, which NextHotSpot’s Andrew Peterson describes as “Australia’s jobs capital”.

“Some 15,000 new jobs will be coming into the city, and the local council has even realised that there is going to be a big shortage of property in the future,” he says.

A lot of the employment growth is a result of coal seam gas activity in nearby Surat Basin.

Toowoomba is the natural service centre for the

Basin and a more practical choice of home for many of its mining workers, who choose to commute long distances rather than live in small mining communities.

The established suburb of Newtown is one of the city’s best property markets. Many homes here are older houses in desperate need of an upgrade. Some sell for as little as $200,000. The result is a plethora of renovation opportunities.

••

Local economy – 9/10: Toowoomba has been branded Australia’s “job capital” because its unemployment rate is among the lowest in the country and wages are rapidly rising.

••

New infrastructure plans – 9/10: $3bn in transport upgrades is coming, and over $350m is being spent on expansion of retail centres.

••

Amenities – 8/10: As one of Toowoomba’s oldest suburbs, Newtown has better amenities than most of the city and many can be accessed on foot. There is a Woolworths, a Coles, an IGA, and the train station is a five-minute drive away.

••

Supply and demand – 6/10: The supply of properties is tight; however, high demand isn’t evident just yet, but should be coming. Rental yields are growing and the vacancy rate is shrinking, indicating that the rental market is excellent.

Toowoomba benefits from an enviable combination of massive infrastructure upgrades, economic activity and staggering employment growth.

“Toowoomba is the main support hub for the regional south of Queensland and supports growing agricultural and coal seam gas industries.

Sales activity has always been solid, and in a lowinterest environment we can expect price growth to continue rising,” says PRDNationwide research analyst Aaron Maskrey.

One of the suburbs taking a share of that growth should be South Toowoomba. The suburb is conveniently close to the services and shops in the Toowoomba city centre and has always been popular among owner-occupiers.

Critically, there is little space for further development, unlike the city’s outer areas, which could support large-scale house-and-land package developments.

KEY INDICATORS

DEMOGRAPHICS

POPULATION

“If you buy now you’re not jumping in at the end of a long bull run. An investor can buy a house in this Western Sydney suburb for under $300,000.”

There’s also been significant growth in rents over the last 12 months, but this area can have trouble spots, so local advice and the best property managers are a must.

KEY INDICATORS

DEMOGRAPHICS

9,565

Investors on a tight budget would do well to consider Hebersham – in particular because median house prices are so low and the rental yield is a strong 6%. Moreover, these desirable factors could translate to capital growth.

“Prices haven’t moved much in Hebersham for the last 10 years,” says Jeremy Sheppard, research director at Redwerks.

19%

GROWTH SINCE ’06

••

Local economy – 8/10: Cashed-up resource workers are streaming into the city, bolstering retail trade and driving growth in wages.

••

New infrastructure plans – 8/10: Road and railway infrastructure is seeing billions of dollars in the way of upgrades.

••

Amenities – 6/10: The suburb’s facilities include Toowoomba Hospital and a good selection of shops and schools. There is also convenient access to all the services in the Toowoomba CBD.

••

Supply and demand – 9/10: Conditions support property investment. Demand is rising and the supply of listed properties remains limited. Listed properties have fast sales turnaround times – an average of just 55 days – and figures from DSRscore.com.au show that properties for sale attract a high rate of online views.

MARCH 2014 | 33

Top

100

SUBURBS

9

Menai, NSW Location: 21 km from Sydney CBD Median unit price: $520,000 Rental yield: 5% Vacancy rate: 1.13% 12-month price growth: 6%

DEMOGRAPHICS

POPULATION

10,529

MEDIAN AGE

35

-2%

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

18%

GROWTH SINCE ’06

$1,967 8

Nundah, Qld Location: 8km northeast of Brisbane CBD Median house price: $615,000 Rental yield: 4% Vacancy rate: 2% 12-month price growth: 9%

DEMOGRAPHICS

POPULATION

10,386

MEDIAN AGE

34

25%

GROWTH SINCE ’06

Menai is a sought-after family-oriented suburb.

Many of the houses were constructed in the late 1970s and early 1980s and were purpose built for families. This means typical properties often have four or more bedrooms, several bathrooms, substantial living and entertaining spaces, and two-car garages.

There is an excellent range of childcare and educational centres. The suburb also has a bustling commercial centre with a variety of shopping, restaurant and entertainment options.

KEY INDICATORS ••

Local economy – 6/10: As a largely residential area, the local economy revolves around retail.

••

New infrastructure plans – 5/10: Community renewal and upgrading projects are the focus in this quiet suburb. There are no major infrastructure developments on the cards.

••

Amenities – 6/10: There is a busy commercial centre, which has a variety of shopping outlets and a number of dining establishments. A range of childcare facilities and schools are close to hand.

••

Supply and demand – 8/10: The percentage of stock on the market is low, and properties in Menai tend to be snapped up very quickly, in around 29 days. There aren’t a vast number of rentals around and yields are sitting at 5%.

Nundah is 20 minutes from the Brisbane CBD by train, and it is also just a 10-minute drive to the international and domestic airports. The latter could be a huge driver of rental demand for Nundah, due to the massive employment growth predicted.

Last year, property consulting firm Urbis estimated that jobs at Brisbane Airport would grow by 6.2% annually, which could reach 50,000

$1,317 7

GROWTH SINCE ’06

Artarmon, NSW Location: 9km northwest of Sydney CBD Median unit price: $632,000 Rental yield: 4.4% Vacancy rate: 1.6% 12-month price growth: 8%

DEMOGRAPHICS

POPULATION

8,642

MEDIAN AGE

3.3%

34

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$1,910 34 | MARCH 2014

21%

GROWTH SINCE ’06

workers by 2029. Nundah may further benefit from the recent construction of the Nundah Bypass and upgrades to the airport link tunnel and the Nundah village precinct.

Currently, almost a quarter of all residents are aged between 25 and 39. The average income has also risen quite rapidly. Over the past five years, the median income has grown by 41%, according to the ABS.

KEY INDICATORS ••

Local economy – 8/10: The CBD is just 8km away and Nundah itself is becoming increasingly commercialised.

••

New infrastructure plans – 8/10: In 2012, the Brisbane Airport Corporation released a development master plan that includes putting $2.9bn towards new offices, hotels, retail and leisure facilities over the next 10 years.

••

Amenities – 8/10: Schools, sports facilities and restaurants are in abundance. There’s a small shopping centre in Nundah itself, and Westfield’s Chermside Shopping Centre is just five minutes’ drive away.

••

Supply and demand – 6/10: Auction clearance rates are not great, but the fact that 1.25% of houses are on the market isn’t too bad.

AVERAGE HOUSEHOLD INCOME (P.W.)

41%

A private bus company provides services to major centres. There are three train stations nearby.

With the typical price of a townhouse sitting at $520,000, Menai doesn’t have a cheap entry point for investors. However, it does have a reasonably strong rental market.

Strong demand and a tight housing supply mean Menai is on track to see good growth in the near to medium term.

Artarmon’s $632,000 median unit price may seem stiff, but it pales in comparison to the median house price of $1.4m – which should hint at the opportunities on offer.

As one of the Sydney North Shore’s bestconnected suburbs by public transport, Artarmon is a highly desirable area, not least because it is close to a number of different employment hubs.

These include St Leonards and Chatswood, which Artarmon is sandwiched between.

Most units are congregated around the train station, and this is where the majority of suburb services tend to be. Beyond that, Artarmon is peaceful and green and is arguably one of the quietest suburbs within 10km of the Sydney CBD. Families like the good schools and suburban feel of the area, while young professionals and singles like the proximity to city attractions and places of employment.

KEY INDICATORS ••

Local economy – 9/10: The suburb benefits from the job centres at Chatswood, North Sydney, St Leonards and the Sydney CBD.

••

New infrastructure plans – 6/10: There are no major projects in the pipeline, but infrastructure is already good and there aren’t too many things council could do to improve the suburb.

••

Amenities – 9/10: Train services to the city are frequent, parks abound, there are a number of schools with an excellent reputation, and shopping is good, both in the suburb and in nearby Chatswood.

••

Supply and demand – 9/10: How often do units with a $600k price tag sell in just 33 days? This wouldn’t be happening unless demand was high.

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6

Glendenning, NSW Location: 44km west of Sydney CBD Median house price: $384,000 Rental yield: 5.4% Vacancy rate: 1.4% 12-month price growth: 4%

DEMOGRAPHICS

POPULATION

5,026

MEDIAN AGE

29

4.3%

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

26%

GROWTH SINCE ’06

$1,581 5

Harris Park, NSW Location: 23km west of Sydney CBD Median unit price: $324,000 Rental yield: 5.8% Vacancy rate: 2.2% 12-month price growth: 8%

DEMOGRAPHICS

POPULATION

19,745

MEDIAN AGE

30

7%

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$1,114 4

26%

GROWTH SINCE ’06

Dulwich Hill, NSW Location: 9km southwest of Sydney CBD Median unit price: $492,250 Rental yield: 4.7% Vacancy rate: 1.9% 12-month price growth: 5%

DEMOGRAPHICS

MEDIAN AGE

12,982 6.3% POPULATION

36

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$1,540

26%

GROWTH SINCE ’06

Glendenning gets high demand from owneroccupiers and investors alike because it meets the Warren Buffett principle – it is a “value investing” market. That’s because for the price buyers pay they get big houses on large blocks that have access to a range of amenities and services.

As part of the Blacktown LGA, Glendenning also benefits from expanding infrastructure in

the region. The population is rapidly increasing and transport is being improved.

A large proportion of the population are migrants, which ensures steady demand for rental property. Most of these new residents rent, but eventually many like to buy. As the housing shortage increases, so do property values in most cases, in areas such as Glendenning.

KEY INDICATORS ••

Local economy – 8/10: There are plenty of nearby businesses where tenants could work, and the area benefits from being within the Greater Sydney economy.

••

New infrastructure plans – 7/10: Major employment hubs are emerging in nearby Hoxton Park and Minchinbury. Road and rail transport in the Blacktown area is being improved.

••

Amenities – 6/10: The suburb lacks its own train station, but there are nearby services at Rooty Hill, Doonside and Quakers Hill. Amenities are limited in Glendenning, but there are plenty of services in neighbouring suburbs.

••

Supply and demand – 9/10: There is a shortage of properties for sale, and as prices are affordable a lot of buyers are interested.

Harris Park is in walking distance of Sydney’s ‘second CBD’, Parramatta, and round the corner from a campus of the University of Western Sydney. This has seen demand for property surge in recent years, and the area is now one of Sydney’s most densely populated.

As a small suburb that stretches roughly a kilometre in either direction, there isn’t any land left to build on, which could assuage oversupply

concerns. Blocks of units already make up the majority of properties, and developers would face a tough time knocking down the supply of detached housing left, provided they can even get their hands on it. Owners of detached houses are holding on to their properties like a vice.

It adds up to a high-rise unit market that has a wonderful attribute for investment: undersupply.

KEY INDICATORS ••

Local economy – 9/10: Parramatta is a major employment hub in Sydney, and good express railway links mean getting to the Sydney CBD is easy, despite the geographic distance.

••

New infrastructure plans – 7/10: Parramatta City Council’s Parramatta 2038 strategy details plans to improve transport and public services.

••

Amenities – 9/10: There is a small shopping centre around Marion Street, and Harris Park is near the commercial centre of Parramatta, which has an abundance of food establishments and shopping.

••

Supply and demand – 9/10: Auction clearance rates are at 92%, indicating very high demand, and units sell quickly (55 days on average). Vendors are only discounting by an average of 5%.

Dulwich Hill currently offers among Sydney’s Inner West region’s best property investment opportunities. Neighbourhood streets tend to be a lot wider than those in surrounding suburbs, and the properties are a little larger too. At the same time, Dulwich Hill’s median unit price is cheaper than that of almost all its neighbours.

The University of Sydney is 10 minutes away, down New Canterbury Road, while popular nightspot Newtown is even closer. Family-

friendly parks line tranquil Cooks River, which runs through the suburb. Families also benefit from the good local schools.

One more thing for investors to consider – and this is where Dulwich Hill’s property market really starts to look good – is that there has been a major demographic shift within the suburb, with the average annual household income growing considerably over the last 10 years.

KEY INDICATORS ••

Local economy – 9/10: The suburb benefits from good proximity to the Sydney CBD. It has also seen significant growth in average household income.

••

New infrastructure plans – 7/10: Gentrification is still an ongoing theme across Dulwich Hill’s local council, Marrickville.

••

Amenities – 8/10: There is a decent selection of shops and services in the suburb itself, while the nightlife of Newtown is close by. Schools are good and easy public transport to the city is attractive to would-be tenants and owner-occupiers.

••

Supply and demand – 9/10: Affordability makes units here very popular, and high auction clearance rates (84%), fast selling times (43 days on average) and high sales show that demand is robust.

MARCH 2014 | 35

Top

100

SUBURBS

3

Woolloongabba, QLD Location: 3km from Brisbane CBD Median house price: $575,000 Rental yield: 4% Vacancy rate: 2.12% 12-month price growth: -4%

POPULATION

MEDIAN AGE

31

22%

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$1,330 2

47%

GROWTH SINCE ’06

Newcastle CBD, NSW Location: 162km north of Sydney Median unit price: $430,00 Rental yield: 6% Vacancy rate: 2.6% 12-month price growth: 0%

DEMOGRAPHICS

POPULATION

2,394

MEDIAN AGE

34

37%

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$1,750 1

46%

GROWTH SINCE ’06

New Farm, QLD Location: 2km east of Brisbane CBD Median unit price: $493,000 Rental yield: 5% Vacancy rate: 3.3% 12-month price growth: 3%

11,330

MEDIAN AGE

0.8%

36

GROWTH SINCE ’06

AVERAGE HOUSEHOLD INCOME (P.W.)

$1,620 36 | MARCH 2014

••

Local economy – 8/10: Woolloongabba’s economy is strong, and further enhanced by its proximity to the CBD. The Gabba Central shopping complex has helped to diversify it.

••

New infrastructure plans – 8/10: There have been recent developments of transport infrastructure, but more is to come. The area is also part of a local government urban renewal project.

••

Amenities – 8/10: Woolloongabba’s proximity to the CBD and to the hip precinct of Logan Road means it is well served in the amenities department. The suburb is also home to ‘The Gabba’, Brisbane’s legendary cricket ground.

••

Supply and demand – 6/10: There is a fair amount of stock on the market, and properties average 91 days on the market. While the vacancy rate is average, the suburb is popular with tenants and has a rental yield of 4%.

The Newcastle CBD is rapidly changing due to state government initiatives to revitalise the city centre. Part of the government’s vision includes termination of the railway at Broadmeadow Station and replacement of the existing railway line in the inner city with a pedestrian-friendly corridor.

“The area is already experiencing a growing retail and food culture and the restoration of several iconic sites around the CBD is underway,”

PRDNationwide research analyst Aaron Maskrey says.

Other improvements include the granting of a 99-year lease over the Newcastle Port, with half the proceeds – $340m – allocated to the replacement of the port’s heavy rail line with light rail.

Developments at the port are also significant given a forecast jump in expected coal export activity.

KEY INDICATORS ••

Local economy – 8/10: Newcastle’s economy is robust and being strengthened by an increase in exporting activity.

••

New infrastructure plans – 9/10: Railway upgrades, urban renewal programs and an expanding university – Newcastle is rapidly changing for the better.

••

Amenities – 9/10: The CBD is close to three beaches, railway stations, an abundance of shopping and food options, and some great inner-city parks.

••

Supply and demand – 6/10: Demand is slowly chipping away at what was once an excess supply. Over the long term, demand should outstrip supply, with double the number of current units expected to be needed in the next 20 years.

One of Brisbane’s best long-term performers, New Farm has grown to become Brisbane’s most densely populated suburb. Its geographic boundaries have also meant that it has been forced to develop upwards. However, since the area has a diverse mix of housing that includes high-density units and multimillion-dollar riverside properties, there is a certain NIMBYism* among established residents in New Farm.

This makes it harder for additional high-rise

developments to get off the ground, and stops the area from having large-scale issues with oversupply.

New Farm ranks so highly in this year’s Top 100 because prices are at an affordable entry point, thanks to a spell of flat growth brought on by 2011 flooding and softness in the Brisbane market as a whole. *Not In My Back Yard

KEY INDICATORS

DEMOGRAPHICS

POPULATION

Fortunately, the relatively recent advent of the Clem 7 tunnel has decreased Woolloongabba’s overall traffic congestion.

Several major private apartment developments are currently being constructed in the area. This is said to be due to the urban renewal surrounding the development of the Logan Road precinct and the Boggo Road Urban Village, including the Ecosciences Precinct.

KEY INDICATORS

DEMOGRAPHICS

4,789

Home to three hospitals, five private schools, and precincts attached to three universities, Woolloongabba is becoming an employment hub.

This is making it increasingly attractive to tenants, particularly students who now have easy campus access. The rental market is set to benefit from this trend.

Railway and bus stations provide reliable and easy access to public transport. Additionally, the Pacific Motorway cuts through the suburb.

42%

GROWTH SINCE ’06

••

Local economy – 9/10: New Farm benefits from the full employment offering in the Brisbane CBD, which is in a strong expansion phase.

••

New infrastructure plans – 8/10: Seven major roadway projects are in the pipeline – some already completed – which will improve links between inner Brisbane and the rest of the city.

••

Amenities – 9/10: New Farm has all the services and convenience of being Brisbane’s most densely populated area, and its infrastructure and local services are among the city’s best.

••

Supply and demand – 6/10: Two in three New Farm residents are renters, so it’s not surprising that the vacancy rate has edged past 3%. Contradictory as it may seem, the unit market is more on the side of undersupply than oversupply. And this mirrors the Brisbane City market as a whole. Just 0.8% of all units are on the market.

MPAMAGAZINE.COM.AU

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

QLD NSW QLD NSW NSW NSW NSW QLD NSW QLD QLD NSW QLD NSW VIC NSW NSW NSW WA NSW VIC WA VIC WA NSW NSW QLD NSW NSW QLD WA NSW NSW WA QLD WA WA NSW NSW NSW NSW QLD NSW VIC QLD VIC NSW NSW

NEW FARM NEWCASTLE CBD WOOLLOONGABBA DULWICH HILL HARRIS PARK GLENDENNING ARTARMON NUNDAH MENAI SOUTH TOOWOOMBA NEWTOWN HEBERSHAM TOOWONG BELMONT WILLIAMSTOWN NORTH LAMBTON WALLSEND WESTMEAD LOCKRIDGE KARIONG COBURG NORTH COOLBELLUP FLEMINGTON QUEENS PARK ST PETERS MAYFIELD SOUTH BRISBANE CANTERBURY MOUNT COLAH COORPAROO EAST VICTORIA PARK ROOTY HILL HOMEBUSH SCARBOROUGH UPPER KEDRON GREENWOOD PADBURY ALEXANDRIA REVESBY HEIGHTS CARDIFF SOUTH NARARA WEST ROCKHAMPTON EAGLE VALE RESERVOIR SPRINGWOOD FERNTREE GULLY ST MARYS FRESHWATER

4005 2300 4102 2203 2150 2761 2064 4012 2234 4350 4350 2770 4066 2280 3016 2299 2287 2145 6054 2250 3058 6163 3031 6107 2044 2304 4101 2193 2079 4151 6101 2766 2140 6019 4055 6024 6025 2015 2212 2285 2250 4700 2558 3073 4127 3156 2760 2096

U U H U U H U H U H H H U H U H H U H H H H H H U H U U H U H H U U H H H U H H H H H H H U H U

493,000 430,000 575,000 492,250 324,000 384,000 632,000 615,000 520,000 276,750 260,000 290,000 413,712 375,000 422,500 385,000 350,000 405,000 345,000 390,000 470,000 420,000 660,000 439,975 527,250 357,000 452,000 513,250 641,250 366,000 616,500 395,500 497,500 445,000 527,500 525,000 515,000 515,000 652,100 337,750 350,000 258,000 337,500 465,000 400,000 360,000 351,250 510,500

2% -4% -5% -1% 0% 2% 5% 1% 1% 3% 2% 4% -2% -1% -1% 2% 3% 3% 5% 1% 1% 1% 0% 2% 5% 2% 0% -4% 0% -1% -2% 3% 4% 1% -1% 1% 3% 6% 4% -4% 0% -1% 2% 1% 0% 0% 5% 2%

3% 0% -4% 5% 8% 4% 8% 4% 6% 6% 9% 7% -4% -1% -4% 7% 8% 7% 8% 2% -3% 9% 0% 9% 10% 7% 3% 8% 0% -1% 6% 7% 5% 3% -2% 9% 8% 11% 5% -3% 2% -2% 1% 4% 2% 2% 6% 2%

7.2% 1.5% 7.0% 4.4% 3.5% 2.9% 4.4% 8.9% 3.3% 8.6% 8.4% 2.9% 4.7% 3.8% 5.2% 5.2% 5.5% 2.2% 11.5% 1.9% 5.5% 11.0% 6.3% 11.0% 4.4% 5.2% 4.8% 5.6% 3.6% 7.5% 13.6% 3.2% 3.0% 9.1% 5.5% 10.4% 10.7% 3.4% 4.1% 4.4% 2.1% 12.0% 2.8% 6.3% 6.8% 6.5% 3.3% 3.0%

430 500 470 440 360 400 530 373 480 280 280 340 400 375 320 368 361 410 380 420 360 420 450 425 490 380 520 420 550 365 405 400 460 420 535 480 450 550 580 380 405 333 380 330 420 350 360 475

90 103 91 43 47 56 33 81 29 56 74 88 84 86 101 66 67 67 34 51 65 27 61 35 n.a 56 82 77 56 70 55 65 76 55 99 37 28 74 44 36 71 66 37 98 91 46 64 56

5% 6% 4% 5% 6% 5% 4% 5% 5% 5% 6% 6% 5% 5% 4% 5% 5% 5% 6% 6% 4% 5% 4% 5% 5% 6% 6% 4% 4% 5% 5% 5% 5% 5% 5% 5% 5% 6% 5% 6% 6% 7% 6% 4% 5% 4% 5% 5%

AVERAGE GPO DISCTANCE

GROSS RENTAL YIELD

TIME ON MARKET (DAYS)

WEEKLY MEDIAN ADVERTISED RENT ($)

AVERAGE ANNUAL GROWTH

12-MONTH GROWTH

QUARTERLY GROWTH

MEDIAN PRICE ($)

TYPE

POSTCODE

SUBURB

STATE

POSITION

2014 TOP 100 SUMMARY

2 111 3 7 19 36 6 7 21 106 109 38 4 101 8 116 115 19 12 48 9 15 4 10 5 118 1 9 24 4 6 35 10 11 12 15 19 4 20 110 54 520 39 12 20 28 41 11 MARCH 2014 | 37

AVERAGE GPO DISCTANCE

GROSS RENTAL YIELD

TIME ON MARKET (DAYS)

WEEKLY MEDIAN ADVERTISED RENT ($)

AVERAGE ANNUAL GROWTH

12-MONTH GROWTH

QUARTERLY GROWTH

MEDIAN PRICE ($)

TYPE

POSTCODE

SUBURB

STATE

POSITION

TOP 100 SUBURBS

49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73

WA SA NSW NSW WA NT NSW NSW NSW QLD QLD NSW NSW WA QLD NSW NSW NSW NSW NT WA QLD NT NSW VIC

BALGA TROTT PARK BERALA MARRICKVILLE MOUNT LAWLEY TIWI WENTWORTHVILLE WILEY PARK WINDALE ALEXANDRA HILLS STAFFORD HEIGHTS MORTDALE BLIGH PARK TUART HILL MOUNT GRAVATT PENRITH LALOR PARK GLADESVILLE LEUMEAH NIGHTCLIFF MURDOCH KEPERRA MILLNER DARLINGTON ST KILDA WEST

6061 5158 2141 2204 6050 810 2145 2195 2306 4161 4053 2223 2756 6060 4122 2750 2147 2111 2560 810 6150 4054 810 2008 3182

H H H U U H H H H H H U H U U H H U H U H H H H U

377,000 335,000 572,500 510,000 399,200 542,000 562,500 545,000 248,000 390,000 455,000 443,000 407,000 365,000 435,000 368,000 360,000 473,125 340,000 335,000 800,000 408,500 550,000 790,000 500,000

5% 1% 2% 4% 3% 2% 1% 4% 7% 1% 2% 3% 0% 1% 4% 2% 3% 1% 1% -1% 10% 0% 1% 2% -4%

9% 1% 5% 11% 2% 8% 2% 7% 7% 4% 6% 9% 6% 1% 7% 5% 1% 3% 3% 4% 11% 1% 6% 3% -1%

10.5% 7.6% 3.7% 5.7% 10.4% 11.7% 3.1% 4.7% 7.1% 6.0% 6.3% 4.3% 2.5% 9.9% 7.5% 2.7% 2.6% 3.4% 2.6% 12.5% 9.5% 7.0% 11.5% 5.2% 6.2%

380 330 450 420 400 550 430 340 320 400 410 390 400 500 410 370 375 410 370 420 600 420 540 680 360

55 48 71 52 63 45 66 51 90 55 60 41 83 47 54 61 64 41 58 103 36 44 62 n.a 83

5% 5% 4% 4% 5% 5% 4% 6% 7% 5% 5% 5% 5% 5% 4% 5% 5% 5% 6% 7% 4% 5% 5% 4% 4%

11 17 16 5 3 12 22 14 106 20 8 16 45 6 9 45 28 9 40 9 12 10 7 3 5

74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

QLD VIC QLD NSW VIC VIC QLD VIC VIC WA WA QLD VIC QLD QLD VIC NSW QLD NSW QLD SA NSW NSW NSW SA SA VIC

ROCKVILLE WEST WODONGA ALDERLEY CAMPSIE GEELONG WEST SUNSHINE WESTBROOK THE BASIN BENDIGO SPEARWOOD MIDLAND CHERMSIDE WERRIBEE KAWANA ALBION MELTON GOULBURN EMERALD ROPES CROSSING REDCLIFFE THEBARTON TWEED HEADS SOUTH NORTH EPPING WILLOUGHBY EAST TORRENSVILLE WHYALLA COLLINGWOOD

4350 3690 4051 2194 3218 3020 4350 3154 3550 6163 6056 4032 3030 4701 4010 3337 2580 4720 2760 4020 5031 2486 2121 2068 5031 5600 3066

H H H U H H H H H H H U H H H H H H H H H H U H H H U

245,000 260,000 595,000 419,500 429,000 398,500 410,000 416,000 328,750 492,500 369,500 380,000 292,500 450,000 575,000 240,000 285,500 450,000 448,000 335,000 439,000 391,250 670,000 646,000 473,500 307,500 530,000

-1% -1% -1% 5% 5% 0% 0% 1% 3% 4% 1% 5% 1% -1% 4% 0% 0% -2% 2% -7% -1% 0% 1% n/a -3% -3% 0%

7% -2% -2% 8% 5% -4% 0% 4% 7% 9% 7% -5% -4% 0% 4% -4% 4% 0% 2% -7% 0% 1% 1% n/a 5% -2% 7%

8.5% 3.5% 6.3% 4.7% 6.8% 6.4% 9.0% 6.7% 7.2% 10.3% 10.9% 7.5% 5.2% 10.1% 6.1% 5.1% 5.9% 12.8% 11.6% 7.1% 6.7% 4.6% 3.5% 6.0% 6.6% 10.6% 4.7%

270 300 493 370 320 300 388 349 290 430 380 395 270 350 450 250 310 500 480 335 360 310 565 n/a 380 380 425

92 84 70 60 56 91 109 40 83 85 97 106 94 72 79 100 101 82 82 113 n.a 101 47 68 95 150 75

6% 6% 4% 5% 4% 4% 5% 4% 5% 5% 5% 5% 5% 6% 4% 5% 6% 6% 6% 5% 4% 6% 6% n/a 4% 6% 4%

108 251 6 10 65 11 115 31 130 18 16 9 28 523 5 37 163 655 41 27 3 578 16 8 4 230 2

38 | MARCH 2014

PROFILE / PAUL ELDRIDGE

TRAINING

SUCCE Australis College, formerly known as Intellitrain, has gone from strength to strength since it hit the market.

MPA catches up with CEO Paul Eldridge to discover the reasons behind the name change, and what Australis College is offering in the broker training space this year MPA: Why did you choose to rename Intellitrain as Australis College?

Paul Eldridge: We are launching into different markets in Australia and going internationally next year. So, whilst Intellitrain has built a great reputation in the mortgage broking industry, it isn’t well known in other industries. We felt that Australian and international students would value gaining a qualification from a college.

The Australis part came from our desire to tap into the fact that we are an Australian-based educational provider and Australian education is actually highly valued overseas. The combination of ‘Australis’ and ‘College’ is intended to represent that students are able to gain a recognised qualification from a quality Australian provider.

For those people who have grown to love the Intellitrain brand as much as we do, the good news is that it will continue, albeit in a different capacity. Intellitrain Solutions Pty Ltd will build 40 | MARCH 2014

courses and content but will not deliver training or qualifications. So the brand is not going away; it’s just being refocused.

MPA: What’s the key message you’d like to pass on to brokers regarding the name change and Australis College’s plans for the broker market?

PE: For all of our clients and our students, its business as usual. We have worked hard to win the respect of this industry and I believe we have done this through our commitment to providing quality education to our students and to helping our clients achieve their business goals. Our trainers are industry experience experts who love training and helping students learn and acquire new skills. So nothing changes from that perspective. And if you have an Intellitrain-branded qualification, it is still valid after our name change, so no need to ask for a new copy of your qualification!

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FOR

ESS MARCH 2014 | 41

PROFILE / PAUL ELDRIDGE

MPA: How has Australis College been promoting broking as a career opportunity?

PE: We are working with individual companies in this industry who are passionate about bringing in new entrants. We’ve been working with Stephen Moore and his team at Choice Aggregation, Huw Bough at RAMS and of course Loan Market, who have their Broker Academy. It’s been great partnering with these organisations as we are slowly building a really great pipeline for this industry.

What we have been working on is an end-to-end solution where we are able to say to potential new starters, “Hey, come and look at this great industry”, followed by, “There are plenty of employment and self-employment opportunities. In fact, look at these great companies and look at their opportunities”. So we need businesses at the other end of the funnel who are prepared for and willing to take new entrants. We are helping these businesses by providing all the training, qualifications and mentoring for the first two years so all these businesses need to do is provide the opportunity and, of course, some on-the-job training.

We have kicked off careers nights where we are informing potential new entrants about the exciting opportunity that this industry provides.

February also [saw us] launch our awareness campaigns in major Westfield shopping locations.

We will have people manning stalls, talking about career opportunities and promoting our New Entrant Program. So we are really investing heavily in this space.

MPA: How are Australis College graduates performing in the broking industry?

PE: The results from our New Entrant Program have been stunning. We’ve basically gone out and recruited brand new people to the industry and had 40% of them offered a position within six weeks of joining the industry. If you go back through some of your past editions and you look at students you have featured for articles in areas such as diversification, etc, you will note that many of them are alumni of Australis College (Intellitrain). We’re also really proud of the relationships we have established with our clients. Most of our clients we have held for five years or more, many for longer than eight years.

42 | MARCH 2014

AUSTRALIS COLLEGE’S PLANS This year we are focusing heavily on three areas: •• The first is our New Entrant Program.

This program leverages VET Fee Help and provides new people to the industry with everything they need for the first two years in the industry. So, not only are we actively recruiting new people, we are providing them with all the training, qualifications and mentoring they need. Our pilot program kicked off in August last year and has been hugely successful. From the first group of 11 students, four were offered (and accepted) positions in various broking outfits and are now working in the industry.

•• The second area we are focusing on is our CPDone app. We now have over 6,500 brokers on this platform, which is a tremendous achievement really. We have been working closely with franchise groups and aggregators since the launch of this program and we’re now opening it up to the general broking community. CPDone is basically a complete CPD solution in a box. For a broker they can get all of their 30 hours needed in any one year from the platform. It has videos, podcasts, e-learning courses and articles. We’ve had great support from the wider training and publishing community, with high-quality trainers such as Michael Firth, Doug Mathlin, Tracie Palmer, and James Veigli all providing great content. Recently, RP Data have come on board and are providing regular contributions and we’ve got a bunch more trainers and publishers getting content ready to go up. So this is really exciting. We’ve invested well over $200,000 in the platform and we have huge things planned for it this year.

•• Our third area of focus is on helping those brokers who want to add insurance or full financial planning services to their business.

We have a great track record in helping brokers to add insurance and other services to their business. It’s not about getting a qualification; it’s about actually gaining the knowledge and the practical skills needed to write this business. Our students typically take about six months to go through the program, but the ones who do are actually earning real dollars from their qualifications.

MPAMAGAZINE.COM.AU

MPA: What can brokers who recruit Australis College graduates expect from them?

PE: Brokers who take our graduates outsource the majority of the time and skills training burden to us. One of the issues for brokers has been trying to bridge the gap between needing someone to help them grow their business but not having the time to bring a new person up to speed. Our graduates will have a solid foundation of knowledge. This is no crash course where they get a diploma in three weeks, as well as completing company inductions and software training. Those types of programs give people a piece of paper but not much in the way of usable knowledge or skills.

Once our students have completed the Cert IV component of their training, they are ready to enter a broker’s business and receive some on-the-job training. We then provide all the ongoing mentoring for the next two years as well as gradually building on their skills through an upgrade to a diploma.

MPA: How is Australis College working with industry stakeholders to provide a service that the profession needs?

PE: Some companies in this industry are really focused on bringing new entrants, and we’ve been working with those groups, as mentioned previously.

We’ve also had great support from the MFAA and FBAA for what we are doing in this space.

MPA: What are the key issues that brokers face when working towards their certifications, and how does Australis College help brokers overcome them?

PE: It takes a new entrant about nine months to really get up to speed and productive. So they need a lot of support in that first nine months, with basic knowledge around structuring deals, conducting interviews, as well as building up their own lead pipeline.

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FEATURE / NON-BANKS

NONFIGH

THE PANEL

Daryl Hill Vice president, head of major clients, La Trobe Financial

44 | MARCH 2014

John Mohnacheff National sales manager, Liberty Financial

Greg Mitchell General manager, sales, Homeloans

Mario Rehayem Director of sales and distribution, Pepper

David White Managing director, AFM

Peter Wood General manager, Bluestone Asset Management, Australasia

MPAMAGAZINE.COM.AU

-BANKS TING BACK As 2014 kicks into gear and the property market picks up where it left off last year, non-banks and mortgage managers are keen to increase their slice of the mortgage market. MPA speaks to some key players for their take on why you should give the non-bank sector a try With every year that passes, the GFC looks less mountainous in the rear-view mirror. But its effects have left quite an impression on the Australian lending sector, as well as the consumer psyche.

However, the non-banks and mortgage managers that have weathered the financial storm have come out of the experience fighting fit, and are keener than ever to secure a larger slice of the mortgage market.

With record low interest rates predicted to be with us for some time, and buyers finally having come out of the woodwork last year, non-banks and mortgage managers are seriously staking their claim as valuable partners to the third-party mortgage origination channel.

To get a clearer understanding of the value proposition that the non-banks are presenting to brokers, MPA spoke to several of the sector’s big names to discover where their strengths lie.

A common theme brought up by our panel of non-bank and mortgage manager spokespersons was their organisations’ ability to provide solutions for clients whose circumstances may have left them out in the cold with the larger lenders.

Customer service, too, came up in conversation as something the non-bank sector takes extremely seriously. Giving brokers clear access to the decision-makers that they need to speak to certainly appears to be a priority.

Still unconvinced? The following pages will provide you with some food for thought, as we ask the tricky questions of our non-bank representatives and quiz them on the challenges they face, how they expect to perform, the opportunities they present to brokers, and how you can persuade your clients that non-banks and mortgage managers are worth considering.

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FEATURE / NON-BANKS

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What challenges do non-bank lenders face this year?

Mario Rehayem The biggest challenge non-bank lenders face at present is articulating their point of difference to consumers. The point of differentiation needs to be relevant and achieve cut-through in a market receiving constant mixed messages. Following the GFC, non-banks can no longer differentiate easily on price or product features. Non-banks that are currently doing well have found new ways to differentiate, such as specialist lending capability, through better customer service, and by tailoring products for niche customer segments.

John Mohnacheff As market conditions continue to improve, more non-banks will continue to try to restart their businesses. In the interim, industry dynamics have changed due to increasing regulation and a focus by all lenders on relationships. Therefore, it will be a challenge for non-banks to re-establish these relationships when many brokers tend to concentrate their non-bank activities on only a handful of companies. This challenge will be even greater for those non-banks that previously withdrew from the market during difficult times.

Daryl Hill The biggest challenge for non-bank lenders continues to be to overcome people’s insistence on using a major bank, as generally they are the only finance brands they know and hear about in the media, and are likely to have banked with them all of their life.

However, there has been a steady increase in the use of non-bank lenders over the past five years, particularly as a result of the GFC when many of the country’s largest institutions tightened their loan acceptance criteria, leading to an increased footprint for the non-bank lending sector. The major banks and mortgage insurers are yet to relinquish their tight grip on credit criteria, therefore demand in this area has remained high and continues to grow.

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IN FOCUS: PEPPER MPA: What’s your value proposition to brokers?

Mario Rehayem: Pepper is a truly independent one-stop mortgage provider that enables brokers to capitalise on more opportunities to find the right home loan for all their clients, not just those that neatly fit mainstream lending criteria.

MPA: What’s your standout product, and what are its features?

MR: Pepper’s success is not hinged on any one product. We service

a large spectrum of different borrowers, from prime to those with a slightly impaired credit history, and we have a suite of products that meet their individual needs.

MPA: What are your plans for the year ahead?

MR: A key focus is to continue and expand upon the successful broker

education program ‘Better Business’ that we launched in 2013, with the addition of new modules and the launch of a more broker-friendly portal. Pepper commits to continuing its long-standing tradition of listening to its brokers and challenging the status quo with regard to innovation and service standards.

MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?

MR: Pepper has been successfully lending in the Australian market for 13 years, and

was one of few non-bank lenders to not only survive but continue to lend through the GFC. Pepper is a global company with operations in the UK, Ireland, Spain and South Korea. We have very strong, successful and long-standing relationships with our funders, NAB, CBA and Westpac. This gives Pepper access to ample and diverse funding arrangements, which in turn generates confidence that Pepper is here for the long term.

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DECEMBER 2013 | 47

FEATURE / NON-BANKS

David White The challenge is to remain competitive in a very competitive market and bring new products and rates to the market, which we have done successfully for the start of the year. Funding is no problem, which will allow non-banks to continue the resurgence and take back some market share. As non-bank lenders provide a strong alternative with good rates, I believe the growth will continue.

Peter Wood Over the coming 12 months non-banks face an increased challenge to remain relevant to the third-party distribution network and maintain the advances which have been made in 2013. Bluestone is optimistic about the sector growth and corresponding market opportunities.

Greg Mitchell The biggest challenge for non-bank lenders is to claw back market share lost immediately after the GFC. It is obviously well documented that a range of factors, such as the cost of funds and changes to policies, resulted in a decline in the share of volumes written by the non-bank sector.

In light of this, over the past three years Homeloans has aggressively explored areas of reversing this trend. And this had been achieved by reducing our ‘get in’ costs, reducing our interest rates, and providing a suite of products that are well featured and priced to be at the forefront of the market. We have also employed industry-leading BDMs and focused on maintaining our excellent levels of service to both brokers and customers.

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How do you expect non-bank lenders to fare compared to the banks this year?

Peter Wood As a leading non-bank lender, Bluestone offers products which don’t fit major banks’ lending criteria and target smaller niches of the market where major lenders don’t compete. We expect considerable market growth in specialist lending as brokers realise the potential of broadening the depth of their customer base, increase referral sources and drive revenue growth through diversification.

Mario Rehayem The non-bank segment will continue to grow this year due to their ability to offer home loan solutions to underserviced niches, and on the back of a superior customer service proposition. The nonbanks that deliver a consistently high level of service will continue to grow not just this year but for many years to come.

John Mohnacheff Non-banks should outperform banks this year as non-banks mainly rely on the broker community and are therefore more responsive and attentive, which is why having relationships with non-banks remains important. Also, with the GFC now behind us, consumers are looking for and are open to alternatives. Liberty has benefited from these dynamics as we continue to offer one of the widest

MPAMAGAZINE.COM.AU

IN FOCUS: LIBERTY FINANCIAL MPA: What’s your value proposition to brokers, and what’s your standout product?

John Mohnacheff: Liberty offers a diversified range of industry-

leading home loans, commercial mortgages, SMSF loans and motor finance to a wide range of prime and custom customers. However, we believe our standout product is our relationship with our business partners. We understand that we are only as successful as our relationships, and Liberty is dedicated to supporting our business partners and their success. This is seen in our BDM team, flexible policies and direct access to credit assessors, for example. Liberty stands by our business partners in good times and bad, and can be relied upon to work hardest to find win-win outcomes for everyone.

MPA: What are your plans for the year ahead?

JM: We have some exciting initiatives that we will be announcing

throughout the year. As Liberty has demonstrated since 1997, we will continue to offer timely solutions and unmatched support to our business partners.

MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?

JM: Unlike some other non-banks that had to change their business models, cease

originations or exit the industry altogether, Liberty has been able to offer our products and services without interruption since 1997. Liberty has been able to help almost 150,000 customers by advancing over $12bn in funds. Our proud history is only surpassed by our exciting future. We look forward to partnering with the broker industry to continue offering innovative solutions that help clients achieve their goals.

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FEATURE / NON-BANKS

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product ranges, flexible policies and an unmatched track record in the non-bank sector. We are confident that there is just no comparison.

Greg Mitchell We have noticed a number of other non-bank lenders have stepped up their game in order to compete with the larger banks, provide a range of products, and be ‘relevant’ in what could be described as an ‘interesting’ environment. For Homeloans, we believe the increased aggression by the big banks puts us in a stronger position. Whilst the banks have a limited offering, Homeloans has a broader offering.

Daryl Hill We expect to see a significant increase in volumes over the coming two years as more people become comfortable with non-bank alternatives, and other product initiatives unfold.

As generations of internet-savvy consumers who are more likely to pursue alternatives come through the finance system, we expect a larger portion of consumers will use a non-bank, where service is often more personal and products are tailored to meet their individual requirements.

La Trobe Financial does not credit score; instead we assess each application on its merits using a common-sense approach. The incoming reporting regime will actually drive more business our way until other ‘credit scoring’ organisations figure out how to handle the additional data that will be available.

What kinds of opportunities can non-banks offer to brokers at present?

David White Non-banks provide a range of products with flexible credit policies which brokers can tap into and use these products to allow them to provide an option to each client, including those that don’t fit the standard credit policy of the banks. There are also a range of cheap fixed and variable rate options for brokers, with options for them to choose higher upfront or higher trail commission, providing real flexibility to the brokers.

50 | MARCH 2014

IN FOCUS: LA TROBE FINANCIAL MPA: What’s your value proposition to brokers, and what’s your standout product?

Daryl Hill: At La Trobe Financial we provide flexible solutions for brokers on the spot, as our experienced credit analysts and senior managers, client partnerships, all have credit approval mandates, and we provide brokers with direct access to our credit analysts. We also offer a very competitive commission structure with no clawback.

Our credit repair products are our most popular products largely due to our ‘life event’ risk grade methodology. Rather than count the number of, or size of, defaults and judgments, we look at the number of events, such as redundancy or divorce, which led to the impairments. We have recently launched an SMSF loan product and the response has been very welcoming.

MPA: What are your plans for the year ahead?

DH: We will be announcing more new products and further

competitive improvements which will mean brokers will be logging on to our electronic loan closing system, making loan settlement faster and easier.

MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?

DH: La Trobe Financial is one of Australia’s leading bank-independent, credit

specialist fund managers, providing funding and investment solutions to a diverse range of customers since 1952. We have been a proven and trusted investment partner for institutional and retail investors alike, covering $10bn and 120,000 customers.

We have demonstrated our long-standing commitment to the third-party channel for over 60 years. Third-party originators account for 88% of our new business; brokers are our lifeblood, and we treat them as such.

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DECEMBER 2013 | 51

FEATURE / NON-BANKS

Non-bank lenders can also tap into the online lending section of the market, which is growing rapidly as non-banks can provide the rates to compete with online lenders – this is a great opportunity for non-banks.

Peter Wood The non-bank sector caters for a wide range of selfemployed and PAYG borrowers who are unable to obtain mortgage finance from a traditional lender.

This includes those who have past or present credit issues which have occurred due to a speed bump in life (eg divorce, illness or loss of job). Many of our customers don’t have current up-to-date financials, mortgage arrears, and tax debt needing to be paid, to name a few. In addition to becoming an excellent referral source, if managed appropriately brokers have the opportunity to place the borrowers back with a major lender after a suitable period of time, thereby increasing their revenue.

IN FOCUS: AFM MPA: What’s your value proposition to brokers, and what’s your standout product?

David White: Excellent service and the ability for a

broker to talk to the directors at any time. It is hard to provide a standout product as we specialise in so many areas; however, recent changes to our Complete and Alliance Options, allowing the broker to choose the commission of either high upfront and lower trail or lower upfront and higher trail to suit their cash flow needs, offer an excellent option.

MPA: What are your plans for the year ahead?

DW: To continue our organic growth plans while we still work on new products to release to the market. A strong marketing campaign will commence this year, promoting our brand and products to brokers. We are just finalising our sponsorship of select aggregators and will continue to promote our services to the aggregators. An additional focus this year will be to provide funding to large broking firms for a white label program where the broker will be able to sell their brand with branded application forms, website access for consumers, and statements.

MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?

DW: We have an open book with our brokers, and

being 10 years old with a portfolio well over $2bn and no debt, with commissions paid on time every time, proves we are a sustainable business. Our main funding comes from bank balance sheets and not securitised lending, ensuring stability of rates for the customer – the strength of a bank without dealing with one.

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Mario Rehayem Due to their size, non-banks are able to offer a more personalised service through the whole mortgage process, and this is a key area for them to continue to outperform the banks. Another area that nonbanks have an advantage in is the ability to find home loan solutions for borrowers who are declined by automated credit scoring, or who don’t neatly fit the credit model of the LMI insurers. This applies to the large number of small-business owners throughout Australia who often have seemingly complex business structures and find it difficult to fit into the commoditised major bank approach to mortgage finance.

John Mohnacheff I can’t speak for other non-banks but we have continued to strengthen our value proposition to our business partners. For instance, we have recently made our products available through ApplyOnline. Combined with our personalised support, flexible criteria, innovative products and financial stability, we offer brokers the ability to satisfy a range of customers spanning prime and custom scenarios, and to expand into new products such as SMSF lending, motor finance or commercial mortgages.

Daryl Hill The value-add when working with non-bank lenders is simply the ability to write more business as they cater for a wider market, which ultimately impacts positively on a broker’s bottom line.

Non-bank lenders give brokers access to a broader product range than the major banks generally provide. At La Trobe Financial we have one of the broadest product suites available in the market.

Greg Mitchell In the case of Homeloans, we are able to offer solutions across most features and most scenarios – and it can be done with one simple application form. Credit advisers can now recommend Homeloans products to nearly all types of borrowers, from prime to non-conforming and from SMSF trustees to self-employed low-doc borrowers.

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FEATURE / NON-BANKS

MPAMAGAZINE.COM.AU

IN FOCUS: BLUESTONE MPA: Why has Bluestone decided to start issuing mortgages again?

Peter Wood: After extensive due diligence and discussion with a number of aggregation groups and brokers, we felt that the non-conforming market was not being served to its optimal potential and would directly benefit from broad solutions that extended the current product offering available.

MPA: What’s your value proposition to brokers, and what’s your standout product?

How can brokers go about persuading clients that non-banks are worth considering?

Greg Mitchell It comes down to a number of factors: specialisation; longevity of the lender; competitive interest rates; flexible, innovative solutions; and support provided by the lender to both broker and borrower. These are all areas that Homeloans has focused on to create a strong value proposition for both brokers and their customers. Simply put, we pride ourselves on being home loan specialists, with a focus on providing outstanding service.

Daryl Hill Brokers can assist by selling the solutions, service and capabilities that non-banks offer. Non-banks display a higher level of personalised service and work with consumers underserved by the traditional retail banks to find a suitable outcome to meet their needs, not just leaving them on the docks after failing the automated lending processes of retail banks due to minor (but often paid) impairments in credit criteria, alternate modes of 54 | MARCH 2014

PW: Bluestone’s value proposition is to provide diverse, market-specific, well-priced, quality products combined with exceptional service levels.

Bluestone’s flagship products targets borrowers who are self-employed/PAYG and/or have past or present credit defaults, judgments or mortgage arrears.

MPA: What are your plans for the year ahead?

PW: Having been number one in the market before, we have no doubt that Bluestone can become the market leader again. The outlook for the non-conforming market is positive. We have a high level of confidence and anticipate excellent growth as brokers become more familiar with the various products available and how this expands their offering (and corresponding client base).

MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?

PW: Bluestone is committed to the market

long term. Our business model is established, sustainable and reflects extensive due diligence and collaboration with our business partners.

The company offers flexible solutions via its range of quality, niche products. Tailoring specific solutions on a loan-by-loan basis is also key to attracting business. This is assisted by the depth and experience of our underwriters, who are not only accessible but are encouraged to adopt a flexible lateral-thinking approach to each case. Conformance, transparency and ease of process are core Bluestone principles.

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FEATURE / NON-BANKS

MPAMAGAZINE.COM.AU

income verification, older-than-usual accepted age, or past minor default history due to missed bills.

IN FOCUS: HOMELOANS MPA: What’s your value proposition to brokers, and what’s your standout product?

Greg Mitchell: Homeloans has a number of value propositions:

• Home loan specialists

Unlike banks, we are home loan specialists, with a focus on providing outstanding service to customers and brokers.

• Longevity and stability

Homeloans was established almost 30 years ago and is listed on the ASX.

• Australia-wide presence

We have representation in every state of Australia, with dedicated credit assessors and BDMs.

• Customer-service-focused approach • Innovation

Homeloans continuously seeks to enhance the credit adviser and customer experience with innovative products.

• Low, competitive interest rates Homeloans provides a comprehensive array of products across both prime and non-prime markets, with options to suit all types of borrowers and features to suit individual needs. We certainly don’t take a ‘one size fits all’ approach.

Our feature-packed Homeloans MoniPower loans are our bestsellers.

MPA: How would you go about reassuring any brokers or consumers who may have concerns about the sustainability of your business model?

Greg Mitchell: Homeloans has been operating for almost 30 years and in that time has gone from strength to strength. Being a publicly listed company demands high standards of integrity and compliance and a need to demonstrate good corporate governance and best-practice recommendations.

We also have a diverse funding base, which enables us to be agile and provide a wide range of products. And we don’t believe in a set-and-forget approach when it comes to our home loan solutions. We continually monitor the performance of all our products, and regularly survey brokers and borrowers to ensure we continuously innovate and adapt our processes and products to respond to market needs and requirements.

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David White It all comes down to the client’s needs. A broker will offer a range of products that suit the client’s needs, and the client can choose the right product for them. When comparing the products, the client will see that rate, fees and features of the product are similar and in some cases superior to the major banks. Brokers can promote non-banks, as products are fully featured and the service non-banks provide is generally superior to banks as there is a more personal approach to servicing the client.

Peter Wood It is important that brokers understand the borrower’s needs and provide a solution that enables them to achieve their goals, which is particularly pertinent if the borrower fits outside the traditional lending criteria. This represents a substantial group, who for some time now have not been catered to, and as such improves brokers’ value proposition and enables access to an expanding market estimated to be worth $3–$5bn.

John Mohnacheff Although it has been several years since the onset of the GFC, it did expose the vulnerabilities of some non-banks and highlighted that not all non-banks are alike. As clients now seek and consider alternatives available to them, it is important for brokers to protect their reputation by choosing their non-bank relationships wisely. Doing so will allow brokers to offer innovative solutions, flexibility and personalised service, enabled by non-banks like Liberty.

Mario Rehayem By continuing to offer a superior customer service experience to borrowers. Nobody likes their home loan, but they remember the experience they had in obtaining their home loan, and the personalised service offered by non-banks is something they will not only remember for a long time but will share with their family and friends. Brokers can use this service experience previous clients experienced to persuade new clients to at least consider what a non-bank has to offer.

BUSINESS STRATEGY / SEO

THE BEST SEO IN LIFE

MAY BE FREE

Here’s a little irony for brokers helping direct hundreds of thousands of dollars in client investment: a no-cost SEO strategy may be the best way of growing your outreach and revenue for 2014, writes industry expert Maggie Crowley

58 | MARCH 2014

MPAMAGAZINE.COM.AU

When clients type your name or firm into Google (or any search engine), what do they find? The answer to that question, and what happens next in the seconds following, can have a huge impact on your success as an adviser.

Google director Chris O’Neill knows. Some 86% of consumers do research online to get more information about products and services before they buy. That means, he says, your prospects, referrals and even clients are going online to learn more about you, your services and how you can help them.

The rub for brokers is that those prospects, referrals and clients take very little time to arrive at a conclusion about you – one that may or may not accrue to your advantage.

When visitors arrive at your website they make a quick judgment about your firm – is this company trustworthy, professional and stable? Psychologists call this unconscious decision ‘the trust factor’ and say it takes no more than three seconds to formulate.

If your website makes a negative first impression, visitors are likely to leave and not return.

So, what’s worse than being found online and creating a poor first impression with a bad website?

Not being found online at all. Firms without an online presence virtually do not exist to the 20-million-plus Australians doing research online.

Every website on the internet has a goal of ranking number one for related search terms, but very few succeed. While your site doesn’t need to rank on top to generate traffic, it’s vital that it appears on the first page of a search engine’s results page because searchers rarely scroll past the first page of results.

Full disclosure: you can buy a winning, firstplace spot using pay-per-click advertisements, but internet users are about 40% more likely to click on organic results (translation: links that are not paid for).

How can you make sure your adviser website ranks organically in search engine results? The answer is all about search engine optimisation (or SEO), and if that’s a term that scares you, you’re not alone. Many brokers are uncomfortable with the concept for one underlying reason: a lack of knowledge and understanding of what SEO is and how it works. So, here’s my attempt at explaining the functionality of SEO and how to improve your broker website’s search ranking.

Search engines favour websites with more inbound links and give them a higher ranking Search engine optimisation is the process of improving the visibility of a website on a search engine’s results page. The earlier and more frequently a site appears in the search results list, the more visitors it will receive.

Two key factors come into play in order to improve your broker website’s SEO: off-page SEO and on-page SEO. Off-page SEO refers to optimisation strategies outside of your website’s design. The biggest element of off-page SEO is getting other quality websites to link back to your site. Conversely, on-page SEO consists of strategically placing your most important keywords within the content elements of your actual website pages.

TAKE ACTION Create high-quality content that others find valuable and useful. When visitors find information that is helpful and relevant, they are likely to share it. When people begin sharing links to your high-quality content, your website becomes relevant to search engines. The easiest way to share valuable content on your website is in the form of a blog.

1

Begin guest-blogging. Seek out opportunities to write articles for well-established online publications.

Your audience will begin to view you as an expert and you’ll naturally create buzz around yourself and your site. (Don’t forget to include a link back to your adviser website – it will fit nicely with your bio.)

2

Submit your website to online directories.

This is an easy one. Even online directories like yellowpages.com.au count. Another quick win: make sure all of your social media outlets link back to your site.

3

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BUSINESS STRATEGY / SEO

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OFF-PAGE SEO Search engines rank websites that they believe are authoritative and relevant. One way search engines measure relevance is by analysing content on a website based on the number and quality of other webpages that link back to it. Think of it like votes: each link back to your website counts as one vote; the website with the most votes gets ranked higher by search engines, and finally, as a result, the site is more likely to appear first on the results page (and, ultimately, win more traffic).

Search engines favour websites with more inbound links and give them a higher ranking. The more inbound links you have, the more important and relevant your site must be, thus, the higher you’ll rank. Because link building is mostly out of your control, it isn’t an easy feat. But when it’s done right, it’s worth the work and creates very lucrative results for your advisory firm.

So, how do you increase the number of websites that link back to your site? Following are some ideas you can use to take action:

ON-PAGE SEO

Maggie Crowley is the digital marketing coordinator at AdvisorWebsites. com. The firm is focused on delivering websites that push the boundaries on online presence for financial industry professionals through tracking, analytics and content management

60 | MARCH 2014

The other part of SEO takes place within the pages of your website. Properly optimising your on-page search engine ranking takes time and consistency.

One of the simplest, yet most important, ways to improve your search engine ranking is to optimise the keywords within your website content. What’s a keyword? Here’s an easy definition of the term: Keyword: a search term typed into Google (or any other search engine) that searchers use to describe what they’re looking for.

The most important place to include keywords is naturally throughout the content of your site (including your blog). Google uses those search words (or keywords) to identify what people are looking for online. From there, the search engine works to match a searcher’s keywords with those keywords used within websites (like yours) to determine the ranking of search results.

When marketers use the term ‘long-tail keywords’, they are talking about a very targeted search phrase that contains at least three words.

Long-tail keywords are what searchers actually type into Google when performing a search. Here’s an example: Keyword: adviser; money; planning Long-tail keywords: how to find a financial adviser; advisers in Brisbane; tips from a financial adviser Using specific and descriptive keywords within the content of a website dramatically enhances the odds of ranking higher on the search engine results

BLOG VS NO BLOG

55%

WEB VISITS

page. Tie the keywords in with local terms in your page titles, URLs, tags, pages and blog posts.

The best way of deciding which keywords to target is to imagine searching for a financial adviser using Google. Think about what words and/or search phrases you would use. Get into the mind of your audience: think about the jargon it uses as well as its problems, interests, associates, locations, education level and more.

If you’re having trouble getting into that headspace, Google can help. Begin typing your search terms into the search box, and let the search engine recommend some long-tail variations:

Now that we know how and why SEO is important, how can financial advisers put it into practice? The number one way to increase your SEO strategy is to start a blog. Blogging helps advisers establish online credibility by sharing high-quality information that both search engines and your target audience love.

In fact, companies that blog receive about 55% more website traffic than companies that don’t blog, in part because of the huge impact blogging has on high search engine ranking. In our next article we’ll outline more benefits of creating and maintaining a financial blog and its relationship with SEO.

LIFESTYLE / FAVOURITES

MPAMAGAZINE.COM.AU

Favourite things Alison Keating, business development manager WA, nMB

Alison Keating

Vacation spot: London, you just can’t beat it... It has everything from awesome West End shows to tons of heritage and history. My hubby and I love it so much we will never go to the northern hemisphere without a few nights’ stopover in London.

Music: I’m very fickle when it comes to music; I like a bit of everything.

The flavour of month at the moment is Imagine Dragons.

Sport: In the seven years I’ve lived in Australia, I have fallen madly in love with AFL. I’m passionate about the Fremantle Dockers and try to get to as many games as possible. I can’t wait for the season to start!

Books: I’m a big fan of Jodi Picoult. I think I’ve read almost everything she has written but really enjoyed My Sister’s Keeper and The Pact. I have just discovered Jo Nesbo and I’m currently reading The Bat.

Drink: This is a tricky one... On a hot summer’s day it’s very hard to pass up an icy cold Corona with fresh lime, but on a cold winter’s night a warming Shiraz is far too tempting!

Movie: I don’t watch a lot of films, but I do always enjoy a good James Bond.

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Place to be in Australia: After driving around Australia for three months in a converted troop carrier, it’s so hard to pick just one place, so here’s my top five: Barossa Valley, Karumba, Fraser Island, Mataranka Hot Springs and the Gibb River Road.

MOTIVATION / PROBLEM SOLVING

MPAMAGAZINE.COM.AU

Turning problems into

POSITIVES

Sometimes clients have so many objections, and many of these don’t make any sense. Banging your head against the objections may not be so smart.

Try using them to your advantage. Here’s how:

1

It is precisely because of that that this works The client believes what they say and doesn’t believe what you say.

So when they say, “I’m bored”, you counter with: “It’s precisely because you are bored that this works”. When they say, “I’m special; I have special needs”, you say, “It is precisely because you have special needs that this works for you”, and show them how. They say, “I’m too busy”; you say, “Exactly! Because you’re busy, this is what you need”.

Try changing the words to fit your client’s objection and see how it works.

2

Find out what they are comparing it to The second strategy uses what the client says to get more information from them and understand what they are really saying.

Whenever you hear the word ‘too’ (too old, too expensive, too big), you need to find out what they are comparing your offer to.

They say, “This is too expensive”; you ask, “Expensive compared to what?” You discover they are comparing apples to oranges and help them understand the difference. This will get you valuable information so you can understand what they truly want.

Sometimes just by asking this question you discover how to counter the objection. For example, if the client is comparing your blue-chip service with an online questionnaire, then you can find cheaper options or justify the option you’re offering.

3

Stop thinking of it as countering objections If you think of the sales process as a struggle, then so it shall be. Consider it instead an opportunity to uncover ways to better serve the customer.

Is it just possible that you have better products to help them with? Or are you the wrong broker for them? It is only by treating what the client says as a conversation or a fact-finding mission that you can find out whether it’s true or not.

4

Let the client speak Instead of trying to convince the client how right you are, stop selling and start listening.

Ask them what they need in a home loan or refinancing package. Ask them why that’s important to them. Ask what they will do when they have it.

How will it change their life? When you know what’s important to them and why they want it, then you can structure a package that meets their needs rather than countering the objection.

5

Get creative Sometimes clients’ objections are real; for example, “I can’t meet you in the morning because I have to go to work”. Recently I worked with a business that could not offer after-hours appointments because the building had no afterhours access or air conditioning. The business owner got creative: he relocated his receptionist to the ground floor of the building after hours, and bought a portable air-conditioner. His business took off because he was offering something no one else was.

Which of your clients’ objections can you accommodate to create a unique service?

Cindy Tonkin is the Consultants’ Consultant. She is the author of the AIM bestseller The Australian Consultant’s Guide: Setting Up Your Consultancy Business Profitably and Painlessly.

Find out more at politicalacumen.com.au

MARCH 2014 | 63

MPAMAGAZINE.COM.AU

THE DATA / YOUR MORTGAGE INDEX

BUYER TRENDS

Key stats from borrowers making enquiries at Yourmortgage.com.au

$399,542

PURPOSE OF MORTGAGE

LOAN AMOUNT THE AVERAGE MORTGAGE $414,000 SIZE REQUIRED Average loan amount

15.4% To buy an

$403,000

55.26%

$392,000

The percentage of enquiries from first home buyers

$370,000

investment property

$381,000 Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

55.3% First home buyer

TYPE OF MORTGAGE

13.3%

40%

33.71%

Move home

30% 20%

1.3%

10% The percentage of borrowers looking for a standard variable rate product

0%

Give my home a makeover

Feb

Mar

Apr

INTRODUCTORY

May

Jun

Jul

STANDARD VARIABLE

Aug

Sep

Oct

BASIC VARIABLE

Nov

Dec

Jan

FIXED INTEREST

Visit www.mpamagazine.com.au/consumer-borrowing-data for all the latest borrower trends

64 | MARCH 2014

14.2%

Refinance to get a better deal

0.4%

I want some spending money

It’s the Oscars of the Mortgage Industry -Neville Anitelea, Westpac Banking Corporation

save the date Friday 17th October 2014 Sydney Town Hall