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Insights: Analysing the 2022-23 Federal Budget
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Consumer: PEXA Key and the modern buyer experience
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Social: Grants confirmed for social and affordable housing
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Security: Beware of ransomware this Easter
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News: PEXA ramps up UK expansion
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Housing affordability in the 2022-23 Federal Budget spotlight Housing affordability in the 2022-23 Federal Budget spotlight In delivering the Federal Budget for 2022-23, Treasurer Josh Frydenberg remarked that “home ownership is fundamental” and that “helping more Australians to own a home is part of our plan for a stronger future”. And with the property market proving incredibly strong over the past 12 months – sales settlement volumes grew by 31.8 per cent in calendar year 2021, hitting over 834,000 – the Federal Government is utilising the budget to address this growth and support those who may otherwise be left behind. Expansion of Home Guarantee Scheme Treasurer Frydenberg confirmed that places within the Home Guarantee Scheme will be doubled – up to 50,000 annually. First homeowner purchase numbers over the past 12 years have averaged just over 100,000 per annum – meaning that the broadening of the Home Guarantee Scheme will see the
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government guaranteeing up to 15% of the value of around half of all first home loans. The revamped scheme includes: • 35,000 guarantees a year (up from the current 10,000) under the existing First Home Guarantee. This helps first-home buyers buy a new or existing home with a deposit as low as 5%. • 10,000 guarantees a year under the new Regional Home Guarantee. This enables first-home buyers and people who have not owned a home for five years to buy a new home in a regional location with a minimum 5% deposit. • 5,000 guarantees a year (doubled from the current 2,500) to expand the Family Home Guarantee announced in last year’s Budget for single parents with children to buy a home. This ensures single parents can build a new home or purchase an existing home with a minimum 2% deposit, with the government guaranteeing up to 18% of the value of the property.
Increase in NHFIC’s lending capacity Additionally, the budget will inject $2 billion into lending capacity for the National Housing Finance and Investment Corporation (NHFIC), which provides low-cost loans to community housing, with the aim of increasing the supply of affordable accommodation. The new cap is now $5.5 billion, up from $3.5 billion. The funding comes on the back off a $500 million boost, supporting 2,500 dwellings, announced in December 2021. This new funding is expected to support around 10,000 more affordable homes for vulnerable people. Interest rates Much has been made of the Reserve Bank of Australia (RBA)’s insistence on maintaining its record low 0.1 per cent cash rate – and it’s now under increased pressure to increase this in order to curb inflationary pressures. This is certainly one to keep an eye on for investors or those carrying significant debt, with rises looming likely in the months ahead.
For further analysis on the 2022-23 Federal Budget, check out PEXA’s deep dive here.
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Settlement day stress no more – the buyer’s perspective It was more than 10 years ago when Patricia Kavanagh purchased her first home. Property settlements can be lifechanging, but they’re inherently complex. It can be a seriously intimidating experience for buyers too – as Patricia recounts.
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“When I bought my first apartment in Sydney, using a traditional paper settlement, the process definitely added more detail, pressure and time – and that was already quite tight with the many checks, balances and significant paperwork required.
“I could not believe the contrast to purchasing a property today compared to my earlier experience. I booked the entire day off work on settlement day, in anticipation of me needing to be available and “manage’ things as per before.
“It all added a layer of complexity to a time when I just wanted to take the keys and head off to my new home. I recall the process of having to take time off work to head to a real estate agent’s office, sign papers and wait for what seemed like forever.
“When settlement day came around and I had the day off, I literally just had to check my PEXA Key app for an update and see that things were in progress, then done. The ease of it all was astounding – there was no cheque, no sitting around in a real estate office and major peace of mind.”
“I remember having to bring a cheque (which I was incredibly nervous about physically holding and literally checking every few minutes to make sure it was still there) and sit around having to complete the exchange and for various document lodgements to happen some days afterwards.” “The other party selling the property was there too – it was quite strange to actually see the people who were selling the property! There was a reasonable amount of sitting around and waiting while cheques were brought to banks and other details were locked in. It proved a bit of a muted finale to the most important transaction of my life at the time.”
Take your time Buying a house can be emotionally taxing. Saving for a deposit, calculating your borrowing capacity, receiving your pre-approval, finding your dream home and then staving off the significant competition being seen in the market today – there’s a lot of weight on the shoulders of consumers. However, with the settlement process now being streamlined, Patricia believes you can now invest your energy into the preparatory work – ensuring you can truly enjoy your special moment on the big day.
“My advice would be to take your time. I spent a year renting after The digital way moving from New South Wales to Queensland, just to get a feel for the Fast forward a decade and having recently re-entered the market, Patricia schools, the local community in the areas we were interested in, commute shares how today’s digitally fuelled time and amenities. It’s important to experience is combating settlement immerse yourself in an area before day hassles. buying there and projecting how it will meet your changing needs.”
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Industry collaboration key to delivering affordable housing across the nation More than 116,000 Australians are homeless on any given night across the country, while another 1.5 million live in serious housing stress. Given PEXA’s role within the property eco-system, it was a seamless progression to team up with Homes for Homes. Homes for Homes is a simple promise that when a home sells, whenever that is, 0.1% of the sale price will be donated – helping build homes for those in need. When there are sufficient funds raised, grant funding rounds are initiated, inviting applications from housing providers who can contribute to the delivery of social and affordable housing. In March, Homes for Homes announced the following initiatives 6
following their 2021 grant funding round for providers in Queensland and Northern Territory: • Venture Housing Company in Johnston, Northern Territory will receive $70,000 to purchase and convert an existing privately rented three-bedroom property into affordable housing for low-income earners who are in housing stress in the private rental market. • City Ventures in Townsville, Queensland will receive $50,300 to upgrade existing accommodation to enable young people in to build their capacity in long-term self-sufficiency and independent living skills as they re-engage in the community.
• Coast2Bay Housing Group in Nambour, Queensland will receive $18,179 increase the standard of living for 10 women over 55 who will benefit from more affordable rental costs. More housing on its way to New South Wales and Western Australia Homelessness is a serious issue in NSW and WA – 46,000 people in these two states alone are estimated to be homeless – making up close to half of the national count. This strain is being felt particularly harshly in NSW at this time – as the recent floods introduce further uncertainty to vulnerable members of the community. But work is being done to help combat this. For the first time ever, an additional grant funding round has now been made available by Homes for Homes, with up to $160,000 available across New South Wales and Western Australia. From Monday 11 April social and affordable housing providers in NSW and WA are encouraged to apply for grant funding. “With PEXA playing a role on the Homes for Homes Housing Advisory Committee, we see firsthand the critical need for programs like this in tackling an important social issue that is only getting worse. Given we are in the business of safely getting Australians into their homes, our remit must extend to those who can’t necessarily afford one,” PEXA Chief Corporate Affairs Officer Jo Waldon said.
Homes for Homes CEO Steven Persson said the organisation is delighted to extend their support to new areas and projects. “Homes for Homes is pleased to continue its expansion across Australia and open up grant funding in new states. We are excited to welcome applications from housing providers and play our part in the creation of social and affordable housing in NSW and WA,” Mr Persson said. “Homes for Homes is dedicated to solving homelessness and helping provide safe, secure housing for all, our success comes from strong community support. We thank all those who have registered their properties with Homes for Homes and those who contributed to the making of this new grant round, in particular our strong partnership with PEXA.” This funding milestone marks the fifth round of grants released to community housing projects by Homes for Homes. Previous grant rounds have seen $1.28 million granted to social and affordable housing providers. Submissions for the current grant funding round close midMay, with participants to be announced towards the end of
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Don’t be held to ransom Ransomware is one of the most significant cyber threats currently facing Australians and Australian organisations. Last financial year, the Australian Cyber Security Centre (ACSC) received almost 500 ransomware cybercrime reports, an increase of almost 15 per cent from the previous financial year. Ransomware is malicious software that makes data, or computer systems unusable until the victim makes a payment, often in the form of hard-totrace cryptocurrencies. These ransom demands can range from hundreds to thousands and millions of dollars. Ransomware requires minimal technical expertise to execute, is low cost, and ransomware-as-a-service means cybercriminals can ‘lease’ their services and execute this type of crime on an industrial scale. Consumers and businesses, including the property industry, are being targeted – less than 12 months ago, real estate giant Domain was hit by an attack.
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Ransomware targets Australian businesses A Victorian design firm received alerts of a breach in their IT systems, and discovered ransomware encrypted files on multiple servers and computers across their organisation, including their backup servers. The ransomware also infected multiple computers used by employees working from home. The design firm did not pay any ransom to unlock the files. Instead, they shut down systems and hired external help to decrypt and recover the computers one by one. While some files were able to be recovered, they were unsure if every file was recovered. On top of the potential data loss, the design firm experienced significant disruption, downtime, and costs to their business, while recovering from the ransomware incident. In New South Wales, a manufacturer discovered a cybercriminal gained access to their servers and encrypted their data, including their most recent backup.
What to do The ACSC does not recommend paying ransom demands, as it does not guarantee a victim’s files will be restored, nor does it prevent the publication of any stolen data, or it being sold for use in other crimes. With ransomware, prevention is much better than the cure. Investing in preventative cyber security measures, such as keeping regular offline backups of critical data, and patching known security vulnerabilities, is more cost effective than the comparative costs incurred when attempting to recover from a ransomware incident. The ACSC regularly publishes alerts, advisories and threat reports, including on ransomware, to help individuals and organisations uplift their cyber hygiene and cyber security, available at www.cyber.gov.au. Additionally, if you encounter something suspicious or have any concerns, please notify security@pexa. com.au immediately. Our team is here to ensure all Australian homebuyers and sellers, as well as their settlement representatives, are supported, safe and secure.
The manufacturer was able to restore some files from an older backup, but lost many weeks of business-critical files generated since the previous backup.
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PEXA develops new payment system and partners with ClearBank to enable new remortgage platform PEXA, Australia’s leading digital property settlement platform, continues to accelerate its expansion into the United Kingdom, announcing the launch of a new payment scheme – PEXA Pay. Following successful testing with a number of lenders, transactions are expected to commence in September, with the Bank of England locked in as the settlement agent. As it ramps up preparations for an Autumn launch, PEXA has also confirmed a new partnership with ClearBank, to allow for the final disbursement of funds to transaction accounts held with lenders not already integrated with PEXA’s own platform, opening the functionality to the wider market. PEXA is endeavouring to streamline the process for all parties involved in the UK refinancing process, reducing the time required and costs, and
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improving consumer outcomes. The first new clearing bank in 250 years at its launch in 2017, ClearBank was recently named as the fastestgrowing UK tech company by Deloitte and secured a £175 million equity investment led by Apax Digital, in March 2022. “As we build momentum within the UK market and gear up for the launch of our refinance platform later this year, I’m thrilled to confirm both the development of a new payment scheme – which will settle at the Bank of England, and our partnership with ClearBank,” said James Bawa, Chief Executive, PEXA UK.
“PEXA’s investment into creating an entirely new payments scheme highlights the scale of our commitment to transforming the UK’s refinancing process, and I am thankful for the support of the Bank of England as we have built it. It is critical to unlocking the true potential of our technology, delivering a much faster and more efficient way for settlement to take place, benefitting lenders, conveyancers and consumers alike.” The property sector is new territory for ClearBank – and Charles McManus Chief Executive, believes there is significant promise in its collaboration with PEXA.
Australian governments, cited by UK Prime Minister Boris Johnson in a call with Australian Prime Minister Scott Morrison following the UK-Australia Free Trade Agreement. And Louise Cantillon, British Consul General Sydney and Deputy Trade Commissioner Asia Pacific (Australia & New Zealand) at Department for International Trade (DIT) is pleased to see the venture gaining strong momentum. “I am really excited to see that Australian unicorn PEXA has found a partner in ClearBank that will enable them to deliver their innovative conveyancing services to the UK market, transforming the refinancing process there. We are very proud to have had the opportunity to assist PEXA in their expansion into the UK, which is testament to the strength of the long-standing trade and investment relationship between Australia and the UK.
“We’re particularly excited to work with a business whose values align so squarely with our own, and who is a fellow pioneer in its field – creating and delivering powerful solutions that help businesses unlock their potential. This is just the first step in our partnership and we look forward to working together with PEXA to further “Myself and my team here at the UK streamline the critical process of Government are very much looking property lodgement and settlement.” forward to our continued relationship with PEXA and supporting them as they PEXA’s investment into the UK has fulfil their potential in the UK markets.” also received endorsement and recognition from both the UK and
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Do you have feedback, a question or a story pitch? Get in touch with us at industry@pexa.com.au
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