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ISSUE 14
WHAT’S INSIDE 2-5: Insights: Refinances at record highs as PEXA launches new data index 6-9:
Industry: Why we need diversity in legal-tech
10-11: Social: Bridging the financial inclusion gap 12-13: Innovation: Meet this year’s PropertyX Awards judges 14-15: Security: The scams targeting legal practitioners and buyers and sellers
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PEXA launches Refinance Index as property refinances hit record highs By Stuart Allott
Property refinances hit record highs in Australia during August 2021, surpassing the previous record set in June 2020 following the Reserve Bank of Australia’s rare double rate cut earlier that year, according to analysis published by PEXA. 2
The PEXA Insights team has recently launched its Refinance Index, an interactive online tool that shows market performance within the property refinancing sector. As illustrated in the chart below, refinance activity has been steadily increasing since October 2019, however, it has now reached unprecedented levels. According to PEXA Insight’s Head of Research, Mike Gill: “Whether it is the forced downtime to reassess finances during COVID-19 related lockdowns, or speculation surrounding a potential interest rate rise as early as late 2022,
refinance activity has reached new heights nationally. PEXA’s Refinance Index stood at 187 points for the week ending 29 August 2021, up 46.9% year-on-year.” The Index also provides a state-by-state comparison of Australia’s mainland states, with Queensland leading the country for refinance growth at 217.9 points, up 71.3 points year-on-year. South Australia came in closely behind at 206.2 points (up 70.6 year-on3
Refinance trends: October 2018 – present
year), with New South Wales at 195.5 points (up 50.9 year-on-year), Western Australia at 193.3 points (up 93.3 yearon-year), and Victoria at 164.9 points (up 53.3 year-on-year) all demonstrating strong refinance activity.
Australian consumers to try and get the best deal on their mortgage, and Gill does not believe this trend will end anytime soon.
“We anticipate a dip in property sale transactions as a result of the extended “The growth in Queensland represents COVID-19 led lockdowns in New South Wales and Victoria, however refinance record highs for the Sunshine State activity is expected to remain elevated as property owners continue to take in the near future based on the current advantage of ultra-low interest rates to seek out better deals on their home trendline,” said Gill. loan,” said Gill. About PEXA’s Refinance Index In the 2020-21 financial year, the PEXA is perfectly positioned to market saw approximately 300,000 provide a comprehensive view on refinances completed, up around the market with more than 95% of 10% on the previous year. This refinances completed on the PEXA trend demonstrates a savviness by 4
Exchange. PEXA’s Refinance Index has been developed to provide timely insights into property refinancing across Australia. The Index currently includes more than 2.5 years of data and is updated every Tuesday, displaying the prior week’s results (week ending Sunday). The Index starts at 100 points from 15 October 2018, showing changes in refinance activity from that point. For example, if the index rises from 120 points to 140 points (increase of 20-points), this represents an increase of 20% compared to the starting point of the Index. PEXA has created indexes for volume (number
of refinances) and value (median monetary value of refinances). Insights are available at a national, state and regional level, and users can select multiple states to compare trends. The Index data is represented in two views: • Base - showing weekly changes in refinancing volume or value. • Seasonally adjusted – the base view with seasonal variations smoothed to show underlying trends more clearly. To access the PEXA Refinance Index, visit: www.pexa.com.au/insights.
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Diversity in LegalTech – it’s time for action By Lisa Dowie, Chief Customer Officer, PEXA
Women remain unacceptably underrepresented in key leadership roles – as CEOs or in positions on boards. We know efforts have been underway to encourage more girls to embrace STEM subjects to support diversity in the workforce of tomorrow. But there’s one area that’s been largely overlooked – female entrepreneurs. Until recently.
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Last month I was honoured to engage in a meaningful discussion alongside some incredible people about how we can actively diversify our LegalTech community through the WALTA Think Tank. In Australia, fewer than 31% of entrepreneurs are female, and the legal tech industry is no different. As someone who has spent the majority of their career in technology and now with PEXA, working with the legal profession, this is truly close to my heart. We began as a start-up and I’ve had the opportunity to be involved in capital raises, a trade sale and our recent listing on the Australian Securities Exchange. These experiences have allowed me to
witness challenges and opportunities from all angles – with different perspectives critical in our success. PEXA’s humble beginning was the catalyst for the formation of PX Ventures – designed to offer funding, bespoke services and programs for like-minded entrepreneurs and businesses who have an ambition to set the standard for how we buy or sell property. As an advisor to PX Ventures, I see it as my duty to be the voice that amplifies those of female founders and entrepreneurs and to encourage women to bring their ideas forward. Data outlines the current inequality PEXA recently collaborated with
the Australian Legal Technology Association (ALTA) and Alpha Creates to produce the “Diversity in LegalTech – it’s time for action” report. This report reveals that in 2020, only 11% of funds were raised by companies with a female founder, with 9% going to those with both male and female co-founders and only 2% to female founded start-ups. This trend is far-reaching, as not only do women seem to raise less funding than their male counterparts, but they are also less likely to raise subsequent rounds, retain less equity in their companies – ceding more control to investors. The result? Female led businesses remain smaller than their potential, missing out on 7
the investment required to grow and flourish.
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The change we need to see
With the Australian government stating the economy could grow by as much as $25 billion if more women were empowered and supported to meet their goals, it’s clear that there is a very real missed opportunity. This is especially the case when considering research shows that female influenced start-ups experience lower failure rates, produce more capitalefficient companies, and achieve higher venture capital returns.
With women representing merely 20% of partners in Australia’s 120 venture capital firms, it’s not surprising that it’s harder for female entrepreneurs to access funding. Representation matters. Today, within the LegalTech industry, we have to be more purposeful in our focus to help female entrepreneurs access knowledge, capital and community because formal channels are not working, and long engrained biases will take time to change.
But it’s not just about the dollars and cents. It’s the right thing to do. Greater female participation better reflects the composition of the industry being served.
As the abovementioned report shows, the challenge does not occur in LegalTech alone and is prevalent across all industries, evidenced in similar discussions I’ve had with
The key takeaways were: 1. Funding challenges – Education regarding the types of funding, understanding the implications of funding options, coaching for founder pitches, scan the market for those more likely to fund female founders, establishing a WALTA investment fund, opening our individual networks to the WALTA collective. 2. Being heard – Call out the bias and unacceptable behaviours. Female voices need to be at the decision-making table, consideration for diversity in procurement decisions across law firms.
Fintech and Proptech associations. We need to amplify our voices together, where it makes sense, and harness the power of the collective. This will be critical to draw the attention of Government and to drive meaningful change. PEXA is proud to have partnered with ALTA – currently the only legal technology association that has formalised a women’s chapter with the creation of WALTA, and a leader in commissioning this important research. This is just the beginning. During the WALTA-organised virtual Think Tank it was great to hear from 34 amazing attendees sharing real life stories and presenting such poignant actions for change.
3. Female founders exist – Shine the spotlight on the amazing women we know, be generous with each other, use social media, lobby industry bodies, universities, and corporates alike to work with us in showcasing female founders. There can be no change without discomfort and no growth without conflict. We need to acknowledge and embrace it to prepare the pathway for the next generation. Everyone deserves the opportunity to live their dream and there are so many women out there with the capacity to positively contribute to the world. We should all want to support them in achieving their highest potential.
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Australia is often referred to as “the lucky country”.
The lucky country: bridging the financial inclusion gap By Marielle Yeoh, Chief Marketing, Corporate Affairs & Financial Institutions Officer, PEXA
It’s difficult to dispute that we are very lucky. We’re a developed economy with significant welfare mechanisms, strong financial infrastructure, and low unemployment. We are pretty fortunate, but I often wonder if our “luck” is fairly distributed? In Australia, over 116,000 people experience homelessness every night. A risk we face is the further widening of the gap between those who can and cannot access those systems that promote financial stability. If we want to be truly “lucky”, we need to do more to encourage financial inclusion. And the responsibility for this needs to be distributed across the public and private sectors and our education system. The challenges faced by Australians Having worked in banking for 20 years, I have seen the strength of Australia’s banking infrastructure – and the regulatory regime that underpins it, but still, we are seeing growing inequality in our society. Our property market is a prime example – it’s great if you’re in. It’s daunting if you’re not. Access to finance is paramount to putting a roof over your head, let alone a foot in the door. Unsurprisingly, the PEXA Property and Mortgage Insights Report found that 77.5% of residential property transactions along Australia’s east coast were funded by a loan in FY21. And that foot in the door is a real challenge.
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From a mortgage perspective, we know that lenders require around a 20% deposit to avoid extra fees and insurance, with 10% regarded as the bare minimum for mainstream lenders. In the context of the median house price in NSW rising to $1 million earlier this year, you’ll need to have a spare $100,000 in cash lying around – and that’s the minimum. Compare this with Australia’s median personal income of $49,805 (ABS, 2017-18), and a paradox of the lucky country begins to glare. We have a strong banking infrastructure which has seen Australia survive economic shocks without catastrophe, but the regulatory framework that underpins that strength presents a paradox: young or less wealthy Australians are simply priced out of accessing the stability and wealth creation that comes with home ownership. How do we even begin to bridge that gap? Steps to delivering change There are initiatives such as the Family Home Guarantee, which allows single parents with dependants the opportunity to build or purchase a home with just a 2% deposit, or the First Home Loan Deposit Scheme, which allows first home buyers to purchase or build a home with a 5% deposit, with a short-term guarantee from the Australian Government and no Lenders Mortgage Insurance.
10,000 places are available for each of these initiatives this financial year, and a further 10,000 places over the next four financial years. Increasing capacity of these initiatives would promote greater financial inclusion via property ownership. While government can provide financial support, help educate our society about the effects and prevalence of financial hardship and highlighting avenues of support such as like low-cost loans, the private sector and our education system must play a role to help prepare people for the responsibility of saving and getting ready to service a loan. Companies and the education system can work with employees and students to offer information and opt-in training on the best ways to budget and save, or even provide high-level programs on the type of information a lender is likely to ask for. It sounds basic to many of us, but if employees or students are members of communities that are traditionally marginalised or disadvantaged, then this information can make the world of difference.
Bridging the gap so that more people have the opportunity to access finance is everyone’s responsibility so that we can help to minimise financial stress in our society. We all know that having a roof over your head is a fundamental human need – we need to ensure we’re providing people the These policies - combined with today’s tools to do so. historically low interest rates - go a long way to make buying a home more accessible, but more can be done. Just 11
PROPERTY INNOVATIVE AWARDS 2021
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Meet the judges of this year’s PropertyX Innovate Awards Nominations are in for this year’s fourth annual PropertyX Innovate Awards, which celebrate influential businesses across the sector – including legal practitioners, panel law firms, developers, financial institutions and industry partners. Adjudicating the submissions is an esteemed panel of innovative leaders, with significant experience across a range of industries. We spoke to each of our judges to learn what innovation means to them and garner their expert advice on how to introduce this thinking within your business.
Kylie Davis, Founder & President, Proptech Association Australia “My approach to innovation is to understand what a truly amazing client experience looks like, to map that out within the business and identify the roadblocks preventing us from delivering that. There are three elements in my view: • Pain: there needs to be a problem you’re trying to solve – and it needs to be stronger than your customer’s ability to resist the pain. • Solutions: it’s all about creating a fix. • Persistence: as much as we all love unicorns, it takes blood, sweat, tears and time to achieve our goals.” Karen Finch, CEO of Legally Yours, Vice President of the Australian Legal Tech Association “Casting an eye to my domain, I think that innovation is going to be the driving force behind creating greater accessibility to legal services – both pro-bono and in paid work. In turn, more lawyers will live a healthier and more sustainable life having shifted away from billable hours. In simple terms, innovation is about shifting from ‘yes, but…’ to ‘yes, and…’ and removing those barriers.”
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Ayala Domani, General Manager, Future Business, AGL “Innovation is either incremental or disruptive. Incremental innovation happens everywhere in the organisation – it can be optimisation, process improvement, or enhancing user experience. On the other hand, disruptive innovation typically requires a dedicated focus and specialised resources that generally results in the creation of new businesses rather than new features or products.
Geoff Rohrsheim, Co-Founder, Hatch Creations “It’s really important that any business at any stage of life is considering innovation. We’re seeing so much change at the moment because increasingly, the consumer is at the centre. Machine learning and AI used to be too expensive for most people to take advantage of, but now you can rent those services from cloud providers and use them to look at your data to come up with usable insights.
It’s very early days of this kind of tech, but To me, it’s all about identifying those pain points and conceptualising how we can make we’re probably going to see more of that it easier for our customers to do something.” appearing, because it’s no longer just the realm of the big guys.” Ben Ross, Co-Founder, James Foster, Chief Propel Ventures Executive Officer, Ezypay “People can overestimate “We see partnerships as what is required to get being fundamentally critical innovation out to market. to driving innovation. They I look at these concepts as either a hop, really allow innovative capabilities to be skip or a jump. A lot of people think about progressed through larger partners who can innovation as something sizeable or far advanced – like robotics, artificial intelligence help generate the change required. or machine learning.” Everything that exists today was at one stage a piece of innovation - even basic things, like That would be a ‘jump’, but innovation direct debit, we take for granted as being exists even in the smallest things with obvious now. organisations – and those ‘hops’ and ‘skips’ are just as important and can deliver great At its heart, it’s not about building something value both internally and externally.” and hoping people will use the product or service, it’s about seeking out issues and Tom Dreyfus, Co-Founder solving them.” & Chief Executive Officer, Josef “Innovation is about listening to your customers. When we listen to their feedback and understand the problems they’re trying to solve, it enables us to best understand how to innovate.
Finalists for the PropertyX Innovate Awards will be announced on Monday 20 September, with winners to be crowned at a virtual gala ceremony on Monday 18 October.
There’s always a temptation to rely on your intuition, but when you do this, you’re only really listening to yourself and your internal drivers. The best solutions stem from ideas shared by your customers.”
For more information, visit propertyx. pexa.com.au.
PROPERTY INNOVATIVE AWARDS 2021
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The perils of using email to exchange sensitive information By David Willett, Chief Information Security Officer, PEXA
In early September, I came across an article in the Sydney Morning Herald titled “Sydney couple buying property scammed out of almost $1 million”. This cautionary tale outlined that during the final stages of the settlement process, all that was left to do was transfer approximately $1 million to their lawyer’s trust account to finalise the sale. A day before the transfer, the couple allegedly received what appeared to be a legitimate email from their lawyer asking them to deposit the funds into a different account. As the story points out, it is alleged that scammers were impersonating the couple’s lawyer – a scam known as a business email compromise (BEC) scam. BECs were the subject of a recent alert sent out by the Australian Cyber Security Centre (ACSC), noting the current prevalence of these scams, with lawyers and conveyancers, as well as homebuyers and sellers, being targeted by cyber-criminals. The ACSC noted: “Cybercriminals are 14
targeting all parties involved in the real estate sector, with a particular focus on impersonating conveyancing lawyers and communicating with their clients.” Scammers are clever and deliberate, setting out to trick people into transferring funds or disclosing sensitive information. Cyber-criminals prey on our trusting nature. It’s what they do – it’s their profession. But what we all need to remember is that email is not a safe channel for the communication of sensitive information. When dealing in our digital world, my advice is to always remain vigilant and always verify, and this is especially the case for parties to a property settlement transaction. Protecting yourself, your business and your clients against BEC scams is vital and we strongly recommend the use of PEXA Key as a secure method for practitioners and homebuyers or sellers to share financial account details, mitigating the risks associated with email. PEXA Key uses encryption to safeguard the communication of account details. This ensures confidential information, like bank and trust account details, cannot
be intercepted by cyber criminals, keeping transactions safe from this type of fraud. Additionally, the PEXA Key Secure Communication Guarantee provides protection to buyers and sellers if the communication of bank account details between the buyer/seller and their practitioner’s PEXA workspace is corrupted within PEXA or intercepted due to fraud – up to $2 million. While BECs are difficult to detect at first glance, you can help protect yourself, your business and your clients by remaining vigilant and verifying when unsure. Better yet, the use of the secure, encrypted PEXA Key is your best defence in mitigating the potential significant harm caused by BECs. We can all take steps to mitigate the prevalence of BECs – ensuring we’re vigilant when sharing sensitive information is the key to this process.
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Did you know that Australia’s 2.2 million small businesses employed over 5 million Australians last year? These businesses are the heart and soul of local communities. PEXA’s partnership with Small Business Australia now extends to providing you with a special offer to utilise Business Advantage – an online membership portal designed to save you time and money running your business. With Business Advantage you can access: • Business advice from experienced coaches • Training videos and resources to improve business and management skills • Preferential member offers that save you time and money on major expenses (over $5,000 worth) • Member-exclusive webinars - on topics members suggest All for only $200 for an annual subscription (usually $500). Use the code PEXA200 for your discount.
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