PROPERTY A
PUBLICATION
NOW
OCT 2020
Special Federal Budget edition
WHAT’S INSIDE 2-5 Federal budget: Impact on the property market 6-7 Federal budget: $800m committed to digital business 8-11 Introducing PEXA Insights: Essential market trends and data 12-13 Innovation: How can firms bring this to life 14-15 Security: Expert tips from NAB and Retrospect Labs News: PEXA Key and Member teams win at awards 16 17 Around the grounds: PEXA and industry updates 1
Property market details Australians have faced unprecedented challenges throughout 2020 – first enduring the bushfire crisis, before having to adapt to the outbreak of COVID-19.
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The latter has significantly changed the way we live our lives – and is the driving factor behind arguably the world’s worst economic downturn since the Great Depression.
With Australia readying itself to rebuild, all eyes were on Treasurer Josh Frydenberg this month, as he delivered the Federal Budget for 2020-21. It’s not an understatement to suggest that this was one of the most important budgets ever produced in our nation’s history.
Market holding firm The property industry, like most sectors, has been hampered by movement restrictions introduced to combat the spread of the virus. This has affected inspections, auctions and understandably, shaken consumer confidence.
Despite these limitations, the residential property market has proven resilient – this month’s inaugural PEXA Property Mortgage Insights report revealed that after an early dip, property settlements have recovered to be up 8% in 20201. Victoria’s second wave has been navigated and the remainder of the country edges closer to a COVID-normal. As the rebuild continues, what support is on offer to industry within the budget? 3
Assistance for first homeowners In positive news, the First Home Loan Deposit Scheme, a Government initiative introduced in January 2020 to help Australians purchase their first home sooner, has been bolstered as part of the budget. Under the scheme, eligible first-home buyers are only required to place a 5% deposit on a home loan – removing the 20% hurdle needed to avoid lenders’ mortgage insurance (LMI). Up to 15%
The popular incentive has had 10,000 new spaces made available for newly constructed homes, complementing the initial 20,000 released earlier this year. In a further boost, pricing thresholds on newly established homes determining eligibility for the offer have been increased.
Capital city/regional centre purchasing limit (new)
Capital city/ regional centre (previous)
Rest of state purchasing limit (new)
Rest of state purchasing limit (previous)
NSW
$950,000
$700,000
$600,000
$450,000
VIC
$850,000
$600,000
$550,000
$375,000
QLD
$650,000
$475,000
$500,000
$400,000
WA
$550,000
$400,000
$400,000
$300,000
SA
$550,000
$400,000
$400,000
$250,000
TAS
$550,000
$400,000
$400,000
$300,000
ACT
$600,000
$500,000
N/A
N/A
NT
$550,000
$375,000
N/A
N/A
State/ Territory
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of the loan is also guaranteed by the government.
HomeBuilder grants retained Deployed in June 2020 to stimulate the market at the height of the pandemic, 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. Despite previous fears demand was exceeding supply of resources and finance, particularly in Queensland, Western Australia and South Australia, this remains uncapped and within the Federal Budget for 2020-21.
Low cash rate continues and taxes slashed The Reserve Bank of Australia’s (RBA) maintenance of a record low 0.25% cash rate appears set to remain in place for the foreseeable future.
These measures should provide sources of confidence for prospective homebuyers and citizens.
The months ahead The biggest threat to both property and our broader economy is the delayed progression to social and economic status quo, or in a worst-case scenario, a widespread outbreak of coronavirus on par with those seen in Europe and the United States. It remains to be seen how this will progress, particularly in Victoria which has suffered dearly in recent months. But the federal government’s commitment to property, and encouragingly positive market trends, offers hope for a bright financial year ahead.
And in presenting the budget to the House of Representatives, Treasurer Frydenberg shared that more than 11 million Australians will receive a tax cut, backdated to 1 July this year, as part of the Morrison Government’s COVID-19 Economic Recovery Plan. To facilitate this, Stage Two of the Personal Income Tax Plan, slated to begin in 2022, has been fast-tracked by two years and backdated to 1 July 2020.
1 New South Wales, Victoria, South Australia, Queensland, Western Australia: https://www.pexa.com.au/research
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$800m committed to digital businesses COVID-19 has caused significant disruption across the country in 2020, but the well-established digitisation of Australia’s property exchange has provided great resilience to the market, ensuring settlements continue to occur seamlessly. More than 75% of all transfer settlements are processed online via PEXA – uninterrupted by the pandemic throughout the year. This has kept Australia’s $7.1 trillion residential property market mobile despite the challenging circumstances, maintaining vital economic activity and ensuring the key service of buying and selling homes has remained active for Australians. 1
And in a move which will help encourage similar outcomes, the Federal Government has announced it is investing just under $800 million in the 2020-21 Federal Budget, enabling businesses to take advantage of technologies to grow and create jobs.
This has enabled many to transform their operations and continue to trade through the crisis. Many businesses moved online quickly when the pandemic hit, undergoing a decade of change in months, finding new customers or new ways of doing things. “Our JobMaker Digital Business Plan provides significant backing to continue that digital push and expand opportunities for businesses to grow and create more jobs,” the Prime Minister said. The Australian Banking Association (ABA) described the budget as a major step forward that will modernise the way Australians do business and deliver significant benefits to consumers. The ABA is part of a coalition of business groups advocating for the fast tracking of moves to a paperless, contactless digital economy.
In a press release distributed by Prime Minister, Scott Morrison and Treasurer, Josh Frydenberg, the government explained “COVID-19 has highlighted century-old that COVID-19 pandemic has accelerated regulations slowing business down”, said ABA Chief Executive Anna Bligh AC. the adoption of digital resources by Australian businesses and consumers. “These changes will make banking faster and easier”, Ms Bligh said. 6
The full budget includes: • $256.6 million to develop a Digital Identity system to enable more secure and convenient engagement with government services, and in future, the private sector. Digital identity is already being used by over 1.6 million Australians and 1.16 million businesses to access over 70 government services. • A further $419.9 million to enable the full implementation of the Modernising Business Registers (MBR) program, allowing businesses to quickly view, update and maintain their business registry data in one location; • A further $28.5 million to support the rollout of the Consumer Data Right to the banking and energy sectors, which is in addition to the more than $120 million already committed;
• $9.6 million to support fintechs to export financial services and attract inward investment; • $6.9 million for two blockchain pilots directed at reducing business compliance costs; • $5.9 million to boost Australia’s influence on international standards; • $3.6 million towards mandating the adoption of electronic invoicing by 1 July 2022 for all Commonwealth government agencies to encourage greater adoption amongst businesses supplying to government and within their supply chains, and to consult on options for mandatory adoption of e-invoicing by businesses; • $2.5 million to connect workers and small and medium sized businesses to digital skills training;
• $29.2 million to accelerate the rollout • Consulting on making permanent the of 5G, including an initiative to invest temporary reforms to allow companies in 5G commercial trials and testbeds in to hold virtual meetings and execute key industry sectors such as agriculture, documents electronically; mining, logistics and manufacturing. • $22.2 million to support small business operators take advantage of digital technologies through an expansion of the Australian Small Business Advisory Service – Digital Solutions program, a Digital Readiness Assessment tool and a Digital Directors training package; • $11.4 million for a new regulatory technology commercialisation initiative to improve compliance and directly support our digital technology firms;
• Reviewing the regulatory architecture applying to the payments system to ensure it remains fit for purpose and is capable of supporting continued innovation for the benefit both businesses and consumers; and • Reforming the regulation around stored-value facilities to support innovation and competition in line with the recommendations of the Council of Financial Regulators.
1 CoreLogic: CoreLogic Monthly Chart Pack (October 2020)
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Residential property resilient, big banks win market share in COVID-19
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Introducing PEXA Insights PEXA oversees the majority of property transactions in Australia – which provides us with a unique, national view of the market. PEXA Insights is the new hub for property settlement insights and content, giving you a comprehensive view of current and future market and consumer trends. With the impacts of COVID-19 on the economy, it’s now more important than ever to have access to timely, targeted information. As the country’s first digital settlement platform, PEXA Insights combines data from the PEXA platform with other sources to provide readers with unique insights into Australia’s property and mortgage markets. We are pleased to launch our research by giving readers the ability to track the health of the property market with a timely forward look into the level of imminent property and refinance settlements. Exclusive near real-time research1 from PEXA reveals: • After an early fall, property settlements have recovered to be up 8% in 20202 • Refinancing settlements are up 27%, having peaked at 70% growth in June2 • Residential property values are down 9% in NSW and 14% in Victoria • The major banks are regaining mortgage market share
Australia’s residential property market has demonstrated resilience in the face of the COVID-19 pandemic, with property settlements tracking ahead of 2019 levels and households taking advantage of record low interest rates to refinance their mortgages. The first PEXA Property and Mortgage Insights (PEXA PMI) report, also reveals that there has been a marked swing back to the nation’s major banks throughout COVID-19, with the so-called Big Four now winning new mortgage and refinancing business from smaller institutions after several years of surrendering market share. The PEXA PMI report – based on realtime data from the 20,000 property transactions settled on PEXA’s leading digital platform every week – reveals property settlement volumes crashed from 20 per cent year-on-year growth in January to negative territory in May and June during the COVID-19-related lockdowns.
Since then, the insights reveal a steady recovery in settlements, which have remained above 2019 levels through to September 2020, with the trend forecast to continue in October. Total sales settlements for the nine months to September 2020 are up 8 per cent on the same period of 2019. At the same time, refinancing of mortgages soared from approximately 20 per cent growth in January to more than 70 per cent in June, driven by a 9
combination of mortgage stress and mortgagees shopping around for the best deals as interest rates fell to record lows.
and online property searches fell sharply at the outset of the pandemic but have since shown signs of recovery.
This contributed to a 27 per cent increase in total refinances in the first nine months of 2020 compared with the same period in 2019.
“Analysing previous housing cycles and key economic drivers3 suggests that in the medium term, house prices and new loan commitments will decline further,” the PEXA PMI report says. “Even after recovery in the key drivers of housing activity, there is likely to be a lag before any increases in property values and sales emerge.”
The report reveals pressure on property values, which for the first nine months of the year are down 9 per cent in NSW and 14 per cent in Victoria. While NSW values showed a small improvement in the September quarter, values in Victoria declined by almost 5 per cent as the State suffered a second wave of the pandemic. Commercial property has fared worse than residential property, with values down 14 per cent in NSW for the first nine months of the year. Although the outlook remains unclear – and the Victorian lockdown will have a lingering impact on markets – PEXA’s analysis suggests the property sector will remain subdued. Consumer sentiment 10
One of the key findings of the report is the significant lending shift that has occurred from non-major banks to major banks for new mortgages and refinances in most states, with majors entering a ’net win’ refinancing position from May 2020. June was the first month in more than two years in which the major banks outperformed smaller lenders in refinancing.
“The non-majors had been steadily chipping away at the majors’ refinancing share for at least two years but that was lost with the advent of COVID-19,” the PEXA PMI report says. “As is the case for new mortgages, the majors’ growth in refinancing share may be attributable to competitive offerings and responsiveness to market conditions throughout 2020.”
research undertaken by the Melbourne Institute of Applied Economic and Social Research, to identify trends in property sales and financing quickly and comparing them with previous periods.
“Analysis of this data, captured in real time, provides unprecedented early insights into behavioural The PEXA PMI report has been overseen by shifts in the property market, at economist Dr Craig Emerson and is based on national, state and local levels.” Mr analysis of PEXA’s electronic conveyancing King said. transactions to enable the compilation of data in real time, providing early insights into trends in the property market at national, state and even local levels. PEXA Chief Executive Glenn King said PEXA had been able to combine its own data with other data sources, including
Register here to receive a copy of the full report. 1 In conjunction with the Melbourne Institute of Applied Economic and Social Research. 2 New South Wales, Victoria, South Australia, Queensland, Western Australia: https://www.pexa.com.au/research
Graph 1: Estimates are based on statistics from PEXA, NSW Land Registry Services, South Australia Office of Registrar General and QLD Government.
Graph 2: Estimates are based on statistics from PEXA.
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Thinking of innovating? Identify the problem and be clear on your goals By Warwick Walsh, CEO and Founder – Lawcadia
Over the past five years the pace of change in the legal industry has truly accelerated. In 2015 it was rare to find roles that are now becoming commonplace, both within law firms (such as an “Innovation Partner”) and within corporate legal teams (such as “Head of Legal Operations”). Countless legal technology companies have emerged, and universities have now added new courses such as Legal Transformation and Start-Up Law and rapidly developing ways to prepare students for the future of work in the legal industry. While the legal industry has long been criticised for its slow pace of change, this is no longer the case. When COVID-19 hit, there was a risk that innovation in the legal space would be put on hold, such as during previous times of economic upheaval (dot. com crash, 9/11, GFC) where investment in new technology was reduced to conserve cash. However, innovation is still high on the agenda as law firms seek to differentiate themselves while customers, clients and even the courts move to a transformed, digital environment. To be sustainable, law firms must now look at ways to better serve clients, improve client experiences, and ultimately retain and win business. For law firms that are looking to innovate, the most important first step is to accurately identify the problem to be solved, clearly articulate the pain points 12
and then develop and investigate ideas for solutions. At Lawcadia, we utilise design thinking processes and concepts in our own product development as well as with our corporate and law firm clients as we ideate innovative technology solutions. Drawing on our experience we have prepared a 6-step outline to help your firm get started.
Helpful hint: this process works best with a small team or teams of people across different functions. Get creative, have fun, and keep an open mind!
1. Be clear on your goals, what you are trying to achieve. These are some questions to ask: • What are the short and medium terms goals to achieve? • Is there an opportunity to strengthen your client relationships and secure more ongoing work? • Do you need to win more business? • Do you need to reduce costs to compete more effectively with other firms on pricing? • Are you spending time on administrative tasks such as generating monthly reports for clients? • Do you want greater visibility over what your team is doing, to ensure that your clients are being looked after and their timeframes met? 2. Identify the pain points or key problems. For each defined goal, brainstorm all the pain points and problems. For example, if the goal is to win new business, a pain point could be “Business development is hard in a virtual environment”. Hint: Use post-it notes and put one pain point per post-it. 3. Group pain points and identify common themes. This involves looking for commonalities among the pain points and grouping them together and giving the theme a name, eg Strengthen Client Relationships of Improve Internal Workflow. 4. For each ‘theme’ explore possible solutions and shortlist the best options for further investigation. The more creative you can be the better - encourage the group to think outside the square with these types of questions to prompt new perspectives: • How would Google solve the problems? • How would a start-up solve the problem? • How would McDonald’s solve the problem?
This is called creating a ‘roadmap’ which takes a macro view and maps out initiatives over time – short, mid, and even long term. A more detailed action plan is also important with actions captured, responsibilities allocated, and priorities acknowledged. You can access a free PowerPoint template which includes worksheets for each of these steps. Download them here.
5. Prioritise solutions to explore You can use a matrix to assist with this. 6. Capture ideas and next steps. 13
A new era of cyber-criminals There’s been heightened focus on the cybersecurity landscape this year due to COVID-19 and the sudden impact it’s had on our daily lives. With more of us working remotely and increasing our reliance on email, this has provided an open playground for cyber-criminals to manipulate. In fact, the ACCC has reported losses of more than $91 million so far in 2020, as scammers target personal information, leaving businesses and individuals on high alert. Security experts, such as Laura Hartley, Head of Public/Private Partnerships, Enterprise Security, NAB, and Ryan Janosevic, COO and Co-founder, RetrospectLabs, are at the forefront of industry discussion, as they work to enable organisations to protect against potential risks. At the top of their fields, Ryan and Laura give us a glimpse into the profile of a cybercriminal and insights into the most common cyber threats to businesses and individuals today.
“Cyber-criminals aren’t just a bunch of teenagers sitting in their basements anymore, they may have started out that way, but now they’re highly professional, structured and can be hired”, said Ryan. 14
Mirroring Ryan’s sentiment, Laura describes the recruitment process for cyber-criminals, also known as hackers, cyber actors or fraudsters. “Cyber-crime organisations actively target students as they are leaving university – graphic designers, computer programmers, you name it – offering them graduate programs and the opportunity to join their lucrative businesses”. Just as the skillsets of the people within cyber-crime are diversifying, so too are their motives.
There are three types of cyber fraudsters out there: • Hacktivists, who are politically motivated and aligned with a cause; • Cybercriminals, who are financially motivated. They are interested in stealing your data and turning that theft into a financial return; and • Nation state actors, who work for governments to disrupt or compromise other governments, organisations or individuals to gain access to valuable data or intelligence and can create incidents that have international significance.
"It’s important to understand that your data is valuable and is of interest to a broad range of cyber actors, no matter who you are, no matter what your business does. Cyber criminals don’t have a great set of morals, so they’ll leverage anything, even a global pandemic, to get what they want. That’s why it’s vital to understand these types of threats and practise good cyber-hygiene ,” said Ryan. Cyber-crime does not discriminate and is a reality of being online in 2020. Email based scams remain the primary threat targeting businesses today and are becoming more and more comprehensive. In August 2020, the ACCC announced that the number of reported phishing scams is up by 44 per cent compared with the same time last year.
safeguard from this type of fraud is a simple process fix. If you don’t already, always verbally confirm change of account details before actioning the request”, said Laura. Remember the 5 things PEXA will never do when it comes to you and your security. PEXA will never: 1. Email you from unofficial addresses; 2. Send you an email advising you to click a link to log in to the platform; 3. Request files or information from you via a third-party service; 4. Ask for your MFA code; or 5. Call you from unverified phone numbers
“A common email scam we see happen to customers is invoice fraud – a process that involves a cyber-criminal calling your company impersonating a supplier to say their payment details have changed, and providing alternative details for a bank account they control”, shared Laura. “Businesses may action the request to update payment details, not realising that they are not communicating with the real supplier. In some cases, weeks or months of legitimate invoices may be paid into the account controlled by the criminal before the recipient realises something is amiss.
Visit our dedicated security page on the Community to read more. The good news is that there’s many simple things you can do to protect your business from cyber crime and fraud. Visit the Australian Cyber Security Centre’s (ACSC’s) website, ask a question on PEXA’s dedicated Security page or visit the NAB Security Hub. If you’d like to hear more from Laura and Ryan, they recently accompanied PEXA’s GM, IT Security, David Willett, in a webinar to discuss cyber-security and answer attendee questions. Click here to watch.
It’s important to remember that this can happen to any business, any person. To 15
A note from Glenn King, PEXA CEO ER! WINN
Institute of Australia awards, with Lisa Dowie and Ryan de Rosayro winning the Customer Service Executive and Manager of the year awards respectively.
PEXA Key receiving the Best Service Innovation accolade at the 2020 Australian Financial Review BOSS Most Innovative Companies awards, in addition to helping us land second place on the Most Innovative Companies – Technology list, filled me with immense pride. For those not familiar with the app, PEXA Key offers high-level settlement tracking and importantly, a secure way for homebuyers and sellers to exchange bank account details with their lawyer or conveyancer. This helps to mitigate the risk of email phishing – ensuring the most important transaction in one’s life can proceed safely and seamlessly. Since its launch 12 months ago, 35,000 Australians have used PEXA Key at settlement, safeguarding more than $22.5 billion worth of property. I’m also delighted to share PEXA’s recognition at the Customer Service
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Our Member Operations team was also named champions in the Customer Service Organisation of the year – Medium business category. Members are at the heart of everything we do at PEXA – and we’re honoured to be acknowledged for our commitment to delivering superior experiences to our community and Australia’s home buyers and sellers every day.
TECHNOLOGY Company
Staff
Innovation Name
Split Payments
30-99
Instant Account Verification
Property Exchange Australia
100-499 PEXA Key
Nuheara
30-99
InfoTrack
100-499 Video WebVOI
Aicidion Group
100-499 Miya Precision
Citadel Technology Solutions
30-99
LEAP Dev
100-499 LEAP Working From Home Integrations
TrafficGuard
30-99
BGL Corporate Solutions
100-499 BGL SmartDocs
AutoGuru
30-99
2nd place!
IQbuds2 MAX
AVAssist
TrafficGuard Pay-PerClick Protection
Mobility Mechanics - Scale Up and Automation
Around the grounds New South Wales and ACT With the reintroduction of daylight savings time, two additional settlement slots have been made available in New South Wales: 6.00pm and 6.30pm AEDT. Settlements after 5.00pm AEDT will not roll and will need to be re-booked for these times. Elsewhere, we encourage you to check out Law Advisor’s digital contract solution, RapidContracts, available in the PEXA Plus Marketplace. Thanks to this new functionality, you can experience the benefits of ordering your property searches and digital contracts all in one place.
Queensland
PEXA has been hosting a series of industry and stakeholder roundtables across Mackay, Toowoomba, Townsville and the Gold Coast in recent weeks. The Victoria purpose of these sessions is to discuss new opportunities, explore challenges and Per Participation Rule 7.10 of the share insights with network partners to Participation Rules (PR), Subscribers to PEXA are required to certify that they have ensure the benefits of digital settlements retrieved and either securely destroyed or are amplified in these areas and replicated throughout Queensland. made invalid duplicate paper Certificates of Title. All segments of the property industry The Victorian Registrar General is providing affected Subscribers with a partial waiver, in light of COVID-19 restrictions.
have been represented as well as key change makers from all regions and we’re committed to working alongside all of industry to support you moving forward.
South Australia
Western Australia
PEXA has released new functionality enabling a number of Residual Documents to be completed on the platform in South Australia. These are a myriad of infrequently lodged registry documents that previously had to be submitted in paper.
Please note that in Western Australia, the settlement rebooking cut-off time is now 1.00pm AWST – this is in line with the reintroduction of daylight savings on the east coast.
Elsewhere, please welcome Angella Chick to PEXA’s SA team. Angella arrives with a wealth of knowledge and energy – ready to support members through the next phase of the industry’s progression.
Additionally, per the COVID-19 Response and Economic Recovery Omnibus Act 2020 (CRERO Act), the remote witnessing of statutory declarations is enabled for members.
pexa.com.au/propertynow
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The PropertyX Awards, presented annually by PEXA, are an opportunity to celebrate leading organisations within our sector. This year, the theme is innovation — acknowledging those key to the industry’s digitisation and resilience throughout the challenging 2020 we’ve faced. SU B MI T NO M I N ATI O N TO DAY
Innovating to meet client expectations “At Hickey Lawyers, we innovate in many ways. In the current COVID environment, this extension of the PEXA experience for developments meant that we were able to continue to settle in bulk for our developer clients and protect our staff from unnecessary interactions at settlement.” Joe Welch—Partner, Hickey Lawyers
To start using PEXA Projects today, contact Karen.Olsen@pexa.com.au
Do you have feedback, a question or a story pitch? Get in touch with us at industry@pexa.com.au 19
