PROPERTY A
PUBLICATION
NOW
ISSUE 10
WHAT’S INSIDE 2-3
Federal Budget: What does this mean for property
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Insights: Q&A with Steve Mann, UDIA NSW CEO
6-7 Data: Property continues to flourish in April 8-9 Announcement: PEXA launches PX Ventures 10-11 Security: Simone Herbert-Lowe, Director, Law & Cyber provides her expert tips 12-13 News: Mark Joiner appointed new Chairman of PEXA 14
A message from the CEO: Glenn King discusses the importance of IDAHOBIT
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Around the grounds: The latest sales settlement data from April
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Federal Budget: a property lens By Jarrod McAleese
On Tuesday 11 May, Treasurer Josh Frydenberg delivered the Federal Budget for 2021-22 – undoubtedly one of the most important in Australia’s history, as our nation continues to stabilise in the aftermath of COVID-19. In its budget overview, the Government stated that “our economy has recovered strongly and is set to return to pre-pandemic levels nine months earlier than expected last Budget with the unemployment rate’s recovery set to be five times faster than the 1990s recession. It also noted that while “we are not yet out of the pandemic, we are better placed than most other countries 2
in the world to meet the economic challenges that lie ahead.” Underpinning this rebuild is property – Australia’s most valuable asset class, worth $7 trillion. As widely reported, the market has been red-hot thus far in 2021, with sales settlements up 38% year-on-year, according to the latest analysis from PEXA. Understandably, there was significant interest in the Federal Budget’s
building or purchasing a new home, while only requiring a deposit of 5%. An extra 10,000 places will be available under this scheme to first home buyers in 2021-22. Family Home Guarantee The newly established Family Home Guarantee is designed to enable single parents with dependants to enter or re-enter the housing market. 10,000 places will be made available over four years to eligible applicants, to build a new home or purchase an existing home with a deposit of as little as 2%. First Home Super Saver
commitments to the property sector, on the back of the current momentum within industry.
The First Home Super Saver (FHSS) scheme was introduced by the Australian Government in the Federal Budget 2017–18 and enables consumers to save money for their first home inside their super fund.
Here’s our summary of the budget and the key announcements relating to property.
Beginning 1 July 2022, the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme will increase from $30,000 to $50,000.
HomeBuilder
The year ahead
HomeBuilder provides eligible owneroccupiers (including first home buyers) with a grant of $25,000 to build a new residence or substantially renovate an existing dwelling.
These newly introduced measures, in addition to the expansion of existing schemes, will provide valuable support to Australia’s home buyers and sellers.
New Home Guarantee
And this portfolio of funding within the budget, alongside the continued high-volume of sales settlements nationwide, suggests that the ongoing market rush will remain for the foreseeable future.
The New Home Guarantee initiative supports first homeowners with
A full overview of the Federal Budget for 2021-22 can be accessed here.
The initial six-month construction commencement period has now been extended to 18 months for all existing applicants.
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UDIA NSW CEO Steve Mann reviews the NSW property market By Isabelle Harris
The property sector is booming this year – and understandably, everyone wants to know what’s going to happen next. New South Wales is no exception – sales settlements continue to track strongly, with significant year-on-year growth being recorded throughout 2021.
interest rates and pent up demand, especially post COVID. It’s also been driven by first home buyers utilising Government incentives.
PEXA’s Senior Research Manager Mike Gill spoke to Urban Development Institute of Australia – NSW CEO Steve Mann at the recent PropertyX Connect event in Sydney to answer industry’s burning questions on current market performance, trends, and what we can expect to see in NSW over the coming months.
This segment needed to come back as they’ve been out of the market for some time, in part due to rising actual prices and property affordability.
Mike: How are you seeing the current market and how is this cycle different to other turns we’ve seen? Steve: It’s definitely an exciting market in New South Wales right now. We’re seeing a lot of growth – in Sydney, this is likely largely because of record low 4
On the other hand, the media has reported that housing finance has gone through the roof, but I wouldn’t be so sure. When we look at the annual change it has gone up, but when you look at the change from the peak, most of the markets in Sydney and key regional markets in NSW, they haven’t hit the peak we saw in 2018 despite strong rebounds from the pandemic. Mike: How are the greenfield and the off the plan markets tracking?
Steve: My view is that if we don’t act quickly and stimulate supply, we are going to have a deep housing affordability crisis. If we think about it, when do markets have strong prices? When supply doesn’t meet demand. For example, apartment completions are down 26% from the peak and approvals are down 64%, so there’s less apartments coming on the market. This indicates we’re heading for a crisis which means we could have at minimum a 50% reduction in apartment supply, with the potential flow on effect of jobs being at risk. There’s certainly plenty of demand, but just not enough new supply coming online. Mike: Steve, you sit on an advisory committee to the NSW Government on the impact of the proposed stamp duty changes. What do you think of these changes and what impacts might they have on the NSW property market? Steve: The Treasurer’s Property Tax reform proposal is to move away from Stamp Duty in NSW and provide an annual tax option. UDIA believes this reform would be broadly positive for the housing market, particularly apartments as it is based on the unimproved land value. For an owner occupier, the cross over period to choose Property Tax versus stamp duty for a house is about 11 years and for an apartment is about 33 years. It will help with mobility for homeowners in the long run, where each lot will be given one choice to adopt Property Tax or not. However, there are a lot of other unintended consequences which need to be
though through what will be a 20-30 year transition and it comes at a big price tag $11bn so it is far from a sure bet at this stage. The Treasurer wants the federal government to buy into it, but on the other hand we have Victoria who have just halved their stamp duty and they’re racing ahead of NSW in new land sales. Looking back, I would’ve liked NSW to do a 50% stamp duty discount to start off with, but I think we still jumped into this proposed major reform too close to COVID-19. The decision on whether it will proceed should become clearer next month in the NSW budget. Mike: What are the UDIA’s predictions for price growth over the next 12-24 months? Steve: What we should be looking at here instead is the conversation between APRA (Australian Prudential Regulation Authority) and RBA (Reserve Bank of Australia) – there’s an interesting debate there. The question is whose mandate says they need to think about housing prices? They’re both saying neither. Now the RBA governor is holding interest rates low until 2024, as he wants to wait for unemployment to improve and wages to increase. However, the longer this standoff around who’ll measure house prices and ongoing supply issues, the longer prices will continue to go up. It’s something that really comes into the debate around moderating the housing market and we would be better off with smoother market growth across all stakeholders. 5
New South Wales takes top spot for property settlements By Isabelle Harris
Australia’s property boom is showing no signs of slowing down, with the battle for State of Origin honours going to New South Wales in April. The state recorded the most property sales settlements across the nation, according to the latest analysis by PEXA, Australia’s leading digital settlement platform.
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The ‘Blues’ win reverses the recent trend of Queensland dominance seen throughout quarter one of 2021, even with the ‘Maroons’ posting a 57% yearon-year increase for April. The property market experienced its moderate seasonal Easter decline – witnessing a 4.2% month-on-month, when comparing property sales settlements nationally from March to April.
This traditional slow-down was not enough to halt momentum across the country, with property sales settlements up 38% year-on-year and each mainland state recorded double digit year-on-year growth.
its strong rebound from a restricted 2020 to keep up with its northern and western counterparts.”
Western Australia continued its surge forward, with sales settlements up a healthy 71% year-on-year, and South Australia was not far behind with an annual increase of 43%.
And Gill said that the newly revealed Federal Budget will continue to provide stimulus to the sector.
Mike Gill, PEXA’s Senior Research Manager, said its pleasing to see the sector’s continued growth and resilience. “The property market continues to power ahead – though Easter fell during the month of April, settlement volumes remained well above levels from previous years and the momentum shows no signs of stopping. “The question remains as to whether Victoria can continue
“Additional property initiatives announced in the 2021-22 Federal Budget largely targeted first home buyers with an extension of the HomeBuilder construction commencement period to 18 months for existing applicants of the heavily oversubscribed scheme, as well as the New Home Guarantee and First Home Super Saver Scheme. “We’re expecting that these new measures will continue to see increased demand from First Home Buyers in the first half of the new financial year.”
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PX Ventures poised to drive innovation in property PEXA is proud to launch PX Ventures, a new entity with a mandate to identify, incubate and accelerate entrepreneurial businesses committed to innovation across the property industry ecosystem. It is targeted at start-ups that have identified and developed a product or service that can significantly transform the experience of Australian consumers, businesses or government departments involved in the property sector. Eligible ventures will receive PX Ventures intends to leverage PEXA’s tailored acceleration services worth technological and property industry up to A$100,000 to scale and expertise and entrepreneurial culture in commercialise their game-changing partnership with like-minded innovators. innovations. PX Ventures will offer entrepreneurs These services will include access funding, bespoke services, and to advice and coaching, professional mentoring support to enable continued services and a network of Australian innovation and enhancement of new and international venture investors and and existing products and tools for accelerators that includes the Harvard Australian consumers. Alumni Entrepreneurs organisation. PX Launchpad is a foundational pillar As part of PX Launchpad, PX Ventures within the PX Ventures framework. The new initiative, formed as a separate entity, has been established to build on PEXA’s legacy as a pioneering Australian technology company – one that is now exploring international expansion opportunities.
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is offering scholarships to the Entrepreneur Development Program – a 30-week program for innovators and professionals in the Australian property services ecosystem who have an idea for a new product or service that may have the potential to form a start-up business. PX Ventures has partnered with the Institute of Advanced Business Studies to deliver the program, with an initial round of 10 A$10,000 scholarships to be offered in 2021. PEXA Chief Executive Officer Glenn King said PX Ventures presented an opportunity for the PEXA Group to apply its expertise, experience and entrepreneurial culture to drive innovation throughout the property ecosystem, improving the outcome for home buyers and sellers and all participants in the industry. “PEXA was once a start-up and our success has been a result of the collaboration, support and
backing of an entire sector, including the state-based land registries who had the foresight to digitise property settlements ahead of the rest of the world,” King said. “Through the PX Launchpad, and subsequent initiatives to follow, we plan to replicate that successful model by working with like-minded entrepreneurs and businesses.” PX Ventures Chief Innovation Officer Chris Bodikian said: “We know there is an army of innovators out there with the potential to revolutionise the property industry, just as PEXA has done over the past decade. PX Ventures provides a unique partnership proposition for anyone with a bright idea as we have the ability to invest capital into new ventures, and we have strong connectivity with property market stakeholders.” For more information, visit www.pxventures.com.au.
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Eight reasons why cyber threats are now a key risk for property practices By Simone Herbert-Lowe, Director, Law & Cyber
Professional obligations have always evolved to meet clients’ changing needs. For property professionals including lawyers, conveyancers and real estate agents, a transformation in the way that business is conducted means that managing cyber risk is now a key business and professional risk. Here are eight reasons why. 1. For many years protecting clients against fraud has been part of practitioners’ duty of care
apparent onus on the person paying the money to confirm the accuracy of bank account details.
Legal protections to ensure the integrity of property transactions exist through a range of measures including the witnessing of important legal documents, the use of powers of attorney to protect vulnerable owners, and rules requiring verification of identity procedures for persons in land dealings. Measures designed to prevent electronic funds transfer frauds and to protect the integrity of e-conveyancing continue this theme by adapting business practice to contemporary needs.
Second, widespread use of the internet has enabled scammers to collect information about others, including breached passwords and identity details, to access online accounts that do not have sufficient security protections and to spread malicious software indiscriminately.
2. A combination of three significant changes have led to an increase in funds transfer frauds First, changed payment procedures from cheques to EFTs (electronic fund transfers) have seen the liability of banks for payments made into the wrong bank account replaced by an 10
Third, email is now the preferred means of business communication, despite its shortcomings in security and the ease with which people can be impersonated using spoofed email addresses. While these factors apply throughout the business world, property practitioners’ and their clients are particularly exposed because of the value of property transactions. 3. If cybercrime was a country, it would be the third biggest economy in the world*
Cybercrime is not a niche risk that applies only to some sectors of the economy. According to Cyber Security Ventures*, cybercrime will lead to the biggest transfer of wealth in human history, is increasing at a rate of 15% per annum and by the end of this year will exceed the value of the illicit drugs trade for all major drugs combined. According to another study, the direct costs associated with cybersecurity incidents now cost Australian businesses $29 billion annually.
exposure could be very significant on a large transaction.
4. The value of real property makes property transactions rich targets for cyber criminals
But the good news is that some simple steps will help protect businesses and their clients. Using business quality email, anti-virus and anti-phishing software, replacing unsupported software, and implementing multifactor authentication and strong password policies will go a long way to protecting your business.
In the 2020 December quarter, Australia’s national average price for a house was $852,940. Many property transactions are managed by small businesses without significant technical support and customers, who may only be involved in one or two such transactions in their lifetime, can be unaware of the risks unless they have been proactively advised about them by their property practitioner. 5. Professional bodies have issued repeated warnings about payment redirection fraud
7. Lawyers, conveyancers and real estate agents are all subject to professional duties of confidentiality. 8. Since April 2021 ARNECC (Australian Registrars’ National Electronic Conveyancing Council) has required that that all users of an Electronic Lodgement Network complete cybersecurity awareness training.
Lastly, educating all your employees, particularly about social engineering techniques designed to manipulate their natural tendency to trust, is essential, as many email scams do not involve any computer intrusion and more than 90% of cyberattacks start with an email.
About the author: Simone is the legal practitioner director of Law & Cyber. For several years, lawyers’ and Before founding Law & Cyber, Simone conveyancers’ professional associations was the Senior Claims Solicitor at and insurers have issued warnings Lawcover. L&C’s online education about the risk of fraud making it difficult course Cyber Risk for Law Firms is to argue this risk is not foreseeable. available here. 6. Actions for breach of trust can be difficult to defend, and are generally not covered by limited liability schemes This means that if money has been paid out of trust in error, your financial 11
Mark Joiner appointed new Chairman of PEXA PEXA is pleased to announce the appointment of highly respected finance industry leader Mark Joiner as independent nonexecutive Chairman following the decision of Alan Cameron AO to step down after 11 years of service on the PEXA Board. Joiner said: “It is an honour to be appointed Chairman of PEXA at a pivotal time for the Company’s Joiner joins PEXA as the Company growth trajectory. I am excited by pursues opportunities to take the opportunities that lie ahead as its expertise and experience in the world moves to digital property Australia into new markets, including settlements and look forward jurisdictions with Torrens title property to working with the Board, the systems that largely rely on paperexecutive team, regulators, PEXA based settlement processing, starting members and the community to with the UK next calendar year. continue enhancing the PEXA platform to deliver faster, safer, Joiner brings more than 30 years more efficient and more transparent of corporate and financial services experience, including senior executive digital property settlements for roles in Australia, the UK and the US at users.” National Australia Bank, Citigroup and Over his 11 years as Chairman, the Boston Consulting Group. He is an Cameron oversaw the development independent non-executive director and successful launch of PEXA’s of the newly ASX-listed Latitude highly secure and integrated digital Financial Services and Chairman settlement platform, which today of QBE Australia and New Zealand underpins the stability of the $7 trillion Operations Limited. Australian property industry. The The appointment is effective immediately.
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PEXA platform has completed more than 7.8 million transactions and now handles more than 80 per cent of all property transactions in Australia. It is used by State land titles offices, 9300 practitioner firms such as lawyers and conveyancers, and 150 financial institutions. PEXA Chief Executive Officer Glenn King said Cameron had provided exemplary leadership of PEXA, guiding the Company through its early development and launch and helping it successfully navigate complex relationships with multiple jurisdictions, regulators, partners and other stakeholders.
“The success of PEXA today could not have been achieved without Alan’s support and leadership through its formative years. As we plan and execute the next stage of PEXA’s growth, both here and overseas, we are indebted to Alan for his service to the Company and wish him all the best in his future endeavours,” King said. Cameron said: “The success of PEXA has been due to an extraordinary team effort both inside and outside the company. I thank all of those who have contributed to that success and wish the company and Mark Joiner as its new chair, all the very best in the future.”
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A message from PEXA CEO Glenn King ahead of IDAHOBIT 2021 Monday 17 May denotes an important day in our calendars – International Day Against Homophobia, Biphobia and Transphobia (IDAHOBIT). At PEXA, our mission is to transform property experiences and in doing so we strive to provide a diverse, inclusive, and equitable environment for our people, members, industry and everyone in our community.
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We endeavour to be an organisation that embraces the views, beliefs and values of all – where individuality and innovation can thrive. We recognise and celebrate all sexual and gender diversities. At PEXA, we stand with and support the LGBTQ+ community, not only on 17 May, but every day. I’d like to encourage all of our readers to learn more about IDAHOBIT and see what you can do to raise awareness and become an ally today.
Around the grounds
QUEENSLAND
SOUTH AUSTRALIA
Sales settlements April 2021
19,378
Sales settlements April 2021
5,307
Sales settlements March 2021
20,302
Sales settlements March 2021
5,822
Month-on-month change
12,335
Month-on-month change
3,702
Year-on-year change
(4.6%)
Year-on-year change
(8.8%)
NEW SOUTH WALES
WESTERN AUSTRALIA
Sales settlements April 2021
20,508
Sales settlements April 2021
8,387
Sales settlements March 2021
20,487
Sales settlements March 2021
9,283
Month-on-month change
16,081
Month-on-month change
4,893
Year-on-year change
(9.7%)
Year-on-year change
0.1%
VICTORIA
NATIONAL
Sales settlements April 2021
19,798
Sales settlements April 2021
73,378
Sales settlements March 2021
20,676
Sales settlements March 2021
76,570
Month-on-month change
15,799
Month-on-month change
52,810
Year-on-year change
(4.2%)
Year-on-year change
(4.2%)
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Do you have feedback, a question or a story pitch? Get in touch with us at industry@pexa.com.au
