PROPERTY A
PUBLICATION
NOW
NOV 2020
WHAT’S INSIDE 2-5: Property: Regional migration soars in June quarter 6-7: Analysis: Impact of reduced interest rates on consumers 8-9: Research: Industry bolstered by digitisation 10-13: PEXA reaches 10 years in operation 14: Around the grounds: PEXA and industry updates 1
City or country? The great debate ignited by COVID-19 For many Australians, COVID-19 has been a time to reflect and review – particularly on lifestyle, both now and in the future.
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Previously, proximity to central business districts was deemed paramount, to adequately balance work and home commitments.
And the Regional Internal Migration Estimates figures, published by the Australian Bureau of Statistics (ABS), provided further evidence of this exodus.
However, after a year of intermittent lockdowns and a gradual shift away from centralised workplaces appearing likely, are buyers seeking fresh pastures?
The data found that in the June 2020 quarter, there was a net loss of 10,500 people from Australia’s capital cities as a result of migration to other regions domestically – a record high and more than double that of the June 2019 quarter (-4,300)2.
Latest migration numbers According to Corelogic’s November 2020 report, internal migration from cities to regional Australia reached a record high in the June quarter 20201.
Victorians on the move Victoria endured the most difficult lockdowns as a result of its lengthy second wave of coronavirus, which contributed to notable migration numbers.
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Analysing the June 2020 quarter, ABS data revealed that: • Victoria had the largest change in net migration and its first since the June 2008 quarter. • Additionally, it was the largest loss since the March 1996 quarter. • Melbourne alone saw a net loss of 8,000 - its largest on record3.
Where are they heading?
REIV President Leah Calnan, told Property Victoria’s greatest loss of citizens was to Now that this market Queensland, which additionally gained the growth has been most residents of any other state in the consistent for an country. extended period. Victoria had a net loss of people to New “This trend’s really been happening for South Wales for the first time since the the last six months. We saw it initially start June 1997 quarter. in the first lockdown that Victoria entered But buyers aren’t just snapping up interstate properties – there’s significant interest in regional Victoria as well.
– there was an increase in interest and demand for property in regional Victoria and that was likely for a combination of reasons; re-evaluation of lifestyle, affordability and space.”
The Real Estate Institute of Victoria confirmed in a release that median Discussing the hottest current locales, house prices in regional Victoria set Calnan noted the ‘sea change’ was fronta new quarterly record at $442,500 of-mind for consumers. in September, which included growth of 5.1% for the quarter and 4.9% over the last 12 months.
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“The Mornington Peninsula is certainly very popular and has been trending that way for the past 5-10 years. In this area, rental vacancy rates dramatically reduced, indicating there’s a ‘try before you buy’ at the moment in that region. “There’s also the Bellarine Peninsula – again there’s a really big push there. The affordability and lifestyle are attractive and potentially, people may be identifying an opportunity to buy a second dwelling, if they feel they won’t be travelling overseas in the coming years.” But the ‘tree change’ is also firming as an attractive prospect. “Every regional town – Bendigo and Ballarat have always traditionally been areas with strong growth, but we’re seeing spikes in interest in Horsham, Bright and right up to Mildura.”
lows, Calnan believes that the financial gap between covering rent and paying a mortgage is closing. “Money is so cheap – we’ve never seen rates this low, which does give people the opportunity to buy.”
“It does feel like Victorians are looking for that quarter acre block. That’s trended the opposite way for the past 10-15 years, where land has become so expensive, but that’s what regional Victoria offers – something you can’t get as easily in metropolitan Melbourne.” It remains to be seen how Victoria’s transition to a COVID-normal will affect consumer sentiment in the long-term, but it’s clear that the old-fashioned ‘Australian dream’ is making a comeback – at least temporarily. 1 Corelogic Monthly Chart Pack, November 2020 2 Australian Bureau of Statistics: Regional internal migration estimates, provisional, June 2020 3 Australian Bureau of Statistics: Regional internal migration estimates, provisional, June 2020
With the Reserve Bank of Australia (RBA) having recently slashed rates to record
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Reduced interest rates causing behavioural shifts in the property market On 3 November 2020, the Reserve Bank of Australia (RBA) announced additional measures to safeguard the economy from the impacts of COVID-19 – including a new record low cash rate of 0.1 per cent1. RBA Governor Philip Lowe said these measures will help quicken the pace of economic recovery, and that they are “prepared to do more if necessary”2. The RBA has deployed contingency conditions throughout 2020. The initial cut to the cash rate, 0.25 per cent3, came in March of this year and was at the time a record low. In response to this, lenders across the country have been passing on reductions to their customers by lowering their interest rates, benefiting consumers. 6
According to the Australian Bureau of Statistics report in September4, these unprecedented market conditions have spurred dormant homebuyers into action, with a 5.9% increase in new loan commitments for housing and 8.5% for personal fixed term loans reported, respectively.
Similarly, we saw property owners take advantage of this period by searching the market for better deals on their current loan repayments. Nationally, refinancing of mortgages soared from approximately 20 per cent growth in January to more than 70 per cent in June, according to PEXA’s inaugural Property and Mortgage Insights report5. As people seek to benefit from these unique market conditions, clear behavioural shifts are being identified.
Buying vs. renting For prospective homebuyers, the reduction in interest rates to this new all-time low could be seen as an opportune time to purchase their first property or add to a growing portfolio. In fact, according to CoreLogic’s November report6, the country has seen a 5.2% increase in investor lending, scaling up from a low unseen since 20027. For lenders that do pass-on the RBA’s cash rate, the new average for interest rates will be 3.19% p.a. (down from 3.34% p.a.), which would equate to savings of $33 a month for an owner occupier making P&I (principal and interest) repayments on a $400,000 loan8. At the right price, depending on the individual’s financial situation, homebuyers could also end up paying less in monthly loan repayments than they would in paying rent.
Antonia Mercorella, CEO at the Real Estate Institute Queensland, recently stated9, “with a diverse range of housing options on the [QLD] market, if you shop around you may actually be better off financially owning a property rather than renting one.” With this in mind, there are also a number of factors to consider before deep diving into the frenzy of lower interest rates.
What to consider Buying a new home is an extremely exciting time in a person’s life and one of the most significant financial commitments they’ll ever make. Although interest rates are low at the moment, and could remain so for the near future, this may not be the case over the course of a 20-30 year mortgage. Property buyers should evaluate their ability to make loan repayments when interest rates increase again and ensure they aren’t over stretching themselves financially by making a commitment today, for fear of missing out on the current market conditions. Before making this big life decision, it’s recommended to seek the advice of professionals in the industry – from a financial advisor, bank, broker or lawyer/conveyancer. 1 https://www.rba.gov.au/media-releases/2020/mr-20-28.html 2 https://mozo.com.au/reserve-bank-interest-rates 3 https://www.rba.gov.au/media-releases/2020/mr-20-06.html 4 https://www.abs.gov.au/statistics/economy/finance/lending-indicators/ latest-release 5 https://www.pexa.com.au/property-and-mortgage-insights 6 CoreLogic, Monthly Chart Pack November 2020 7 https://www.ratecity.com.au/home-loans/mortgage-news/recordrebound-home-loan-borrowing-investor-loans-struggle-recover 8 https://mozo.com.au/reserve-bank-interest-rates 9 https://www.reiq.com/articles/rba-cash-rate-cut/
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Electronic conveyancing key to sustaining property market during COVID-19, research finds The spotlight has been on technology more than ever as a result of COVID-19, as Australia’s key sectors have battled to maintain operational continuity.
Australia’s residential property market is the nation’s most valuable asset class, worth $7.1 trillion1, making it a vital cog in the economic resistance and future rebuild in response to the pandemic. And a recent study has found that while major countries such as the United States and the United Kingdom reported significant declines in property settlements during COVID-19 lockdowns, Australia’s market remained fully operational.
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Digitisation keeping Australians online The Digital Transformation in the Australian Property Industry report, compiled by the University of Melbourne, confirmed it was the establishment of electronic conveyancing that enabled property exchange to proceed seamlessly, despite significant movement restrictions and lockdowns. While many industries and the economy more broadly experienced disruption, this digitisation of Australia’s property industry has provided key resilience to the sector, ensuring that homebuyers and sellers retain access to the critical service offered by their lawyer or conveyancer.
The research noted that during May and August this year, the height of the national outbreak, more than $230 billion2 worth of property settlement value was processed on Property Exchange Australia (PEXA), the country’s leading electronic conveyancing platform. Having recently surpassed 10 years in operation, today, more than 75 per cent of all property transfer settlements in Australia are handled digitally – among the highest of any nation in the world. There are now positive signs of a recovery too – per PEXA’s first Property and Mortgage Insights report, property settlements are presently tracking ahead of 2019 levels.3
Benefits delivered The study also noted that taxpayers have also been winners as a result of PEXA’s growth story – with the privatisation of PEXA delivering net benefits of approximately $400 million from gains on investment to state governments. The availability of electronic conveyancing had also contributed to the conditions for the privatisation of four land registries, with significant value generated.4 In analysing the benefits delivered to both industries and citizens, it was found that PEXA has been able to contribute substantially to the following: • Cost and time savings at banks, financial institutions, legal firms and conveyancing companies, as well as end consumers. • Settlements have become more secure and are now conducted in a more transparent and timely fashion. • Buyers are now generally registered on title nearly instantly. • Sellers receive any proceeds as cleared funds generally within an hour. 1 Corelogic Monthly Chart Pack, November 2020 2 Research Findings: Digital Transformation in Australian Property Industry, Dr Niharika Garud and Professor Daniel Samson, Department of Management & Marketing, Faculty of Business and Economics, The University of Melbourne 3 PEXA Property and Mortgage Insights, Year to Sept 2020 4 Research Findings: Digital Transformation in Australian Property Industry, Dr Niharika Garud and Professor Daniel Samson, Department of Management & Marketing, Faculty of Business and Economics, The University of Melbourne
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PEXA reaches 10 years in operation A letter from Alan Cameron AO, Chair, PEXA Property Exchange Australia, or PEXA, is one of the great Australian success stories. While it may not enjoy the global fame of wi-fi and the black box flight recorder, or the romance of the Hills Hoist and R M Williams boot, PEXA is a home-grown innovation that all Australians can be proud of.
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PEXA was conceived 10 years ago as the outcome of a Council of Australian Governments meeting between the Commonwealth and the States and Territories, who agreed to create a national electronic e-Conveyancing platform for the Australian property industry. Just four years later, in 2014, the first full property settlement was executed over PEXA’s robust and reliable purpose-built platform – and the shift away from paperbased conveyancing had begun. Today, more than 75 per cent of all property transfer settlements in Australia are handled digitally – among the highest of any nation in the world – and the figure continues to grow as more States and Territories transition to electronic conveyancing. In States that moved early, up to 98 per cent of settlements are now processed entirely electronically. The benefits are clear. Electronic conveyancing is fast, safe, more efficient and more transparent. And there are meaningful cost savings for conveyancers, legal firms, and, most importantly, Australians buying and selling their homes. Critically, we were able to provide enormous support to the $7.1 trillion property industry and subsequently our nation’s economy when it was needed most – during the COVID-19 lockdowns. While countries such as the US and the UK experienced significant declines in property settlements, Australia remained resilient, with $230 billion worth of
settlements processed through the PEXA platform over the past six months alone. PEXA is enormously proud of its 10 year journey from inception to the operator of a nationwide platform that underpins the entire property industry and helps 20,000 Australian families settle on their homes every single week. We could never have reached this milestone without the support of the Commonwealth, State and Territory governments, our committed shareholders, our dedicated and talented employees, industry bodies, regulators and our 9,000+ members – the law firms, conveyancers and banks who use the platform every single day. Like all successful Australian companies, we won’t be resting on our laurels. We were born of innovation and continuous improvement is in our DNA. Thanks to government foresight 10 years ago – and the subsequent years of development and delivery – Australians enjoy a truly world-leading property settlement system. It is PEXA’s mission to ensure that remains the case for the next 10 years and beyond.
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Reflecting on 10 years A PEXA member retrospective The first transaction Pioneering digital settlements for our industry, Carolyn Booth, Smart Choice Conveyancing, and Paul Denny, Paul Denny Conveyancing, completed the first electronic transfer transaction on PEXA in 2014. We caught up with Paul and Carolyn to hear their account of this landmark transaction – kick-starting a digital transformation like no other.
A solution for everyone Our members are incredibly special. Together, we’ve been able to drive change, innovate, and provide opportunities that weren’t possible 10 years ago. And on this journey, we’ve come across some truly remarkable stories. Meet Howard, now into his 80s, a trailblazing Victorian conveyancer, who adapted to the industry’s digitisation and today settles property online, from his own home.
Flexibility and transformation Our members are at the heart of everything we do. We are always proud to hear how they’re using PEXA to drive positive change. From time to time, we hear stories that stop us in our tracks – stories that are truly remarkable. We wanted to share with you a personal story from Carol Taylor, a practitioner from the Gold Coast. our members, and fortunate to be part of We are so proud to have Carol as one of her extraordinary journey. 12
Settle from anywhere Together, we built a world-first proptech solution, that has enabled people to ‘settle from anywhere’. That was truly taken to the next level when PEXA member, Mark Blair, decided he would take his laptop and digital certificate to Mount Everest. Hear from Mark as he shares his settlement experience from the skies.
Reliability during life’s unexpected moments Buying and selling your property are some of life’s biggest moments. Together, we revolutionised the settlement process, providing clarity, security and peace of mind for industry. We asked Frances McCauley at Suncorp to share a unique story with us – how, through the power of technology, she was able to help a 37week pregnant mother urgently settle her property, all in one day.
Accelerated transformation to digital settlements And lastly, we wanted to finish on a story that has particular significance in 2020. In the face of a global pandemic, we were able to provide our members with the tools and support to keep their businesses open – to continue to settle property for Australians. We caught up with South Australia’s Ben McDonald from Fentons Conveyancing to hear their story. 13
Around the grounds Western Australia The deployment of the new Survivorship document has been delayed. Per Landgate’s Customer Information Bulletin, when lodging electronically, evidence to support the application must be obtained, uploaded and attached to the survivorship application prior to lodgement. We look forward to releasing this in the new year.
South Australia An extensive list of Residual Documents is coming to South Australia, as the state continues to drive towards a 100% digital property portfolio. Keep an eye out for our revised release date. Elsewhere, if you require support during the end of year rush, reach out to one of our expert local team.
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Queensland The Department of Natural Resources, Mines and Energy (DNMRE) and subsequently, the Queensland Land Registry, has confirmed its holiday closure period as Friday 25 December 2020 to Sunday 3 January 2021, inclusive. We’re pleased to share with members that settlement will remain available during this period. It’s important to note however that while settlement will proceed, lodgement and registration will not be confirmed until the Land Registry’s return date of Monday 4 January 2021.
New South Wales and ACT With transaction volumes surging in the run-in to Christmas, please remain vigilant regarding cyber-security at this time. To help safeguard transactions, PEXA Key is a valuable tool that mitigates the threat of email phishing for industry.
Victoria As noted in Land Use Victoria’s November bulletin, its registration and call centre services will be unavailable during the end of year holiday period, from 4.00pm on Thursday 24 December 2020 to 8.30am on Monday 4 January 2021. Online services including electronic lodgement will remain available. PEXA’s friendly staff will remain online and ready to assist you from Monday to Friday, 8.30am – 8.00pm AEDT. Please note however that the Support Centre is closed on national public holidays and weekends. 15
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