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P U L S E
N O V E M B E R
M A R K E T
C21
PUBLISHER Century 21 Australia Pty Ltd
CONTRIBUTORS Chris Gray Tim Lawless Bradley Beer On The Move
EDITORIAL ENQUIRIES Century 21 Australia (02) 8295 0600
ADVERTISING ENQUIRIES Century 21 Australia (02) 8295 0600
WELCOME TO THE
NOVEMBER 2020 ISSUE OF
C21 MARKET PULSE
DISCLAIMER We have in preparing this information used our best endeavours to ensure that the information contained therein is true and accurate, but accept no responsibility and disclaim all liability in respect of any errors, inaccuracies or misstatements contained herein. Prospective buyers and sellers should make their own enquiries to verify the information contained herein. All information contained in the CENTURY 21 Australia Pty Ltd website is provided as a convenience to clients. All links to property prices displayed on the website are current at the time of issue, but may change at any time and are subject to availability. For more information on our Privacy Policy please refer to: www.century21.com.au/privacy
C O N T E N T S N O V E M B E R
NO EXCUSES
02-03
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DEPRECIATION & NEGATIVE GEARING
What's stopping you now?
Understand how depreciation works with
Your Empire CEO, Chris Gray
negative gearing.
06-07
BMT Tax Depreciation, Bradley Beer
PROPERTY MARKET UPDATE
05
MOVE SMARTER
Australian housing values move into recovery mode.
Ways to keep your property cool this summer.
Corelogic Head of Research, Tim Lawless
On The Move
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NO EXCUSES
WHAT'S STOPPING YOU NOW? B Y C H R I S G R A Y, C E O, YO U R E M P I R E
The pain of making a poor financial decision often outweighs the pleasure of making a positive one and that’s why most people sit on the fence waiting for the perfect environment, before making a decision to buy or sell a property.
• Market rise
Whilst rents are low, it’s actually
• Global pandemic
the difference between the rent
• Falling rents
and the mortgage that you need
• Falling interest rates
to worry about if you are highly
• USA election
geared. In 2000 rents were 5% and
I don’t think I could add anymore to that list and that’s exactly my point. If you’re waiting for the perfect storm, then it’s just not going to happen. I’ve been investing for almost 30 years now and I’ve never
To be fair, in the last few years we
seen it or expect to see it.
have had a number of national and
Whilst COVID is not completely
global events that has led to more
behind us, I do think that things can’t
uncertainty than normal. Uncertainty
get much better and we’re seeing
can be an excuse for some, but for
that in the consumer confidence
others it leads to opportunity.
index which is 13% higher than it was
Just in case the last few months of home detention has distorted your memory, we’ve had a: • Market peak • Credit crunch • Banking Royal Commission • Market fall • Australian election
six months prior to the pandemic and at a seven year high. Economic factors do have an influence on the price of property, but I believe that consumer confidence has a bigger impact. (https://www.abc. net.au/news/2020-11-11/consumerconfidence-christmas-shoppingcoronavirus/12866990)
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the mortgage rates around 7-9% meaning you were losing 2-4% gross. Now rents are around 3-4% and mortgage 2-4% and so you might be cash neutral or even 1-2% positive which is fantastic. There’s never going to be the perfect time to buy and that’s why I always suggest buying (1) When you can get a mortgage from the bank, (2) When you can buy the right property for a reasonable price and (3) When you have enough cash buffer to cover any short-term emergencies Often the real rise in the property market comes in the New Year. People have had a break from work, couples have often had the time to catch up together and chat, they’ve set some goals and the new year is
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nice and fresh. This happened earlier
and so I think they’ll be a lot of
this year – we had the election in
agents wanting to make that money
2019, the market started to increase
back. I think they’ll take a couple of
the day after, but it was then Jan/
weeks off and travel interstate and
Feb when it really started to pump.
then get back on the tools pretty
It was just COVID that put an end
early in January.
ABOUT THE CONTRIBUTOR
I haven’t got a crystal ball and I’m not
Chris Gray is CEO of Your Empire, a buyers’
to it in March.
agency that buys homes and investments for
I think that the upswing will happen
an expert at predicting the future,
again in 2021. Everyone is over 2020.
but what I do know is that property is
They want it behind them, and they
a long-term game and historically it
behalf. Chris has spent over 10 years as the
want to start afresh.
has always risen, as long as you can
host of ‘Your Property Empire’ on Sky News
Normally nothing happens in our markets till after Australia Day in late January, but next year maybe different. Agents and buyers/sellers won’t be sunning themselves in Europe for 4-6 weeks and many people’s income dropped in 2020
hold on long enough. I’ve spoken to hundreds, if not thousands of people who have regretted not taking action
time-poor people – searching, negotiating, renovating and managing property on their
Business channel, where he’s interviewed various heads of property research companies and major industry figures. Chris is a qualified accountant, buyer’s agent and
in the past and I’ve learnt from that.
mortgage broker. For more information visit
No matter what happens in the
www.yourempire.com.au,
future, if you’ve got a piece of the action, you’ve got some chance of getting the result you want.
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www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire.
EXPANDING NETWORK
NEW C21 OFFICE OPENS IN BURWOOD NSW An experienced team of real estate professionals have opened an agency in Sydney’s inner west under the Century 21 brand. Directors Eugene Ganke, Jada Vi, Betty Lu, and Ricky Kong are a team that are passionate about property. Together they will operate the Burwood real estate business after having worked together in different roles across independent and franchise agencies. “We are incredibly excited to be partnering with the bold and dynamic Century 21 brand whose vision and values really resonated with us,” said Mr Ganke who has over 10 years of industry experience. “It’s great to have received so
Fellow Director Jada Vi offers six
Century 21 Chairman and Owner
years of real estate experience
Charles Tarbey is pleased to have
said each member of the team
this young team come together
brought a wealth of knowledge
under the C21 brand and is
and skills that complement each
confident of their success.
area of real estate.
“The passion and drive that these
“Our combined focus will be to
individuals have for real estate
ensure that the sale or management
is inspiring. By leveraging the
of our customers most valuable
strength of the C21 brand, training
assets are given the highest priority
and technology, I am sure they will
and utmost care.”
achieve their immediate goal of
The new team believes there is a gap in the local market for
The new office will benefit from
agents which they will aim to fill.
the continued partnership that
They will offer sales, property management and
“Our combined focus will be to ensure that the sale or management of our customers most valuable assets are given the highest priority and utmost care.”
our own agency. We look forward to growing with this global brand for many years to come and leveraging their processes and platforms to deliver a level of service and care that is unmatched”.
Mr Tarbey said.
Cantonese and Mandarin speaking
project marketing
much support to start
being the best agency in Burwood,”
services with an emphasis on delivering exceptional service.
Century 21 have with Bauer Media across the Home Beautiful website and magazine. With the majority of that audience owning or paying off their own home, having ownership in sight or looking to invest, the initiative not only showcases C21 properties
The office
to consumers with an interest in
will be
property, it also generates strong
rounded out by Betty
buyer and seller leads for the network.
Lu who has
experience in real estate and running her own business, and rising star Ricky Kong who in his first year with a major franchise made the Top 100 agents list on GCI.
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The story New C21 office opens in Burwood NSW, first appeared on Elite Agent. Article Link: https://eliteagent.com/new-c21-officeopens-in-burwood-nsw/
P R O P E R T Y M A R K E T U P DAT E
AUSTRALIAN HOUSING VALUES MOVE INTO RECOVERY MODE
BY T I M L AW L E S S , CO R E LO G I C H E A D O F R E S E A R C H
Following five months of consistent declines in residential property values, CoreLogic’s national home value index moved back into positive month-on-month growth through October, posting a 0.4% rise. The lift in home values was broad based, with every capital city apart from Melbourne posting a rise in values over the month. Over the month dwelling values increased by more than 1% in each of the smallest four capital cities with Brisbane, Adelaide, Hobart and Canberra housing values reaching new record highs. Although values were lower across Melbourne through October, the trend rate of decline has been easing since mid-September. With a drop of 0.2%, this was the smallest month on month drop in values since the COVID-19 related downturn commenced in April.
clearance rates have lifted and
under-perform relative to houses
buyer activity is recovering. Based
over the medium term” he said.
on this recent trend in housing values and activity, it seems likely we will see Melbourne follow the other capital cities towards a recovery over the coming month.
Regional housing markets continued to outperform the capital cities. Broadly, CoreLogic’s combined regional index has held relatively firm through the worst
According to CoreLogic’s Head of
of the COVID-related downturn.
Research, Tim Lawless, the October
According to Mr Lawless, “the
results show early evidence of a
past two months have reversed
divergence between house and unit
the previous mild falls across the
market performance.
combined regional areas. In the
“The rise in capital city housing values over the month was entirely attributable to a 0.4% lift in house values which offset the 0.2% fall in
seven months since March, regional dwelling values are up 1.7% while values across the combined capitals index have fallen by 2.3%.”
unit values. Through the COVID
“The new found popularity of
period so far, unit values have
working from home is only one
actually shown a smaller decline in
factor helping to support regional
values than houses, but this is likely
home prices. More affordable price
to change.”
points, lower densities and lifestyle
“Almost two thirds of Australian units are rented, and rental conditions have weakened, especially in the key inner city
factors, are also under-pinning the relative strength across many regional areas of the country,” Mr Lawless added.
precincts of Melbourne and Sydney. These areas have a higher concentration of unit stock, and historic exposure to demand from
Since the announcement that
overseas migration. Low levels of
private home inspections were once
investment activity, relatively high
again permitted across Melbourne,
supply of unit stock in inner-cities
new property listings have surged,
and international border closures are key factors that imply units will
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Click here to read the full article
D E P R E C I AT I O N & N E G AT I V E G E A R I N G
UNDERSTAND HOW DEPRECIATION WORKS WITH NEGATIVE GEARING Negative gearing is a heavily debated topic throughout the property industry and is often in the headlines at election time. As one of the major draw cards to investing in property, investors must factor it into their ongoing strategy.
BY BRADLEY BEER, B M T TA X D E P R E C I AT I O N
the loss from a negatively geared
Benefits of negatively geared
property is deducted from the
property
investor’s income.
Many investors hold on to their
What is depreciation?
negatively geared investment
Property depreciation is the natural wear and tear of a building’s structure and assets. Property
gearing and depreciation
market with the aim of having a negatively geared property.
investors can claim this as a tax
But we know negative gearing
deduction each financial year. A
means they are making a loss, so
bonus of depreciation is that it’s a
why would they want to do this?
non-cash deduction, so investors Before exploring the negative
properties. Some even enter the
don’t need to spend any money to claim it.
The answer can be complex and there are many factors to be considered as everyone’s financial
relationship, let’s cover the
Depreciation can be claimed under
situation is different. However,
essentials first.
two categories. The first being
there are two key benefits of
capital works deductions on the
negative gearing.
What is negative gearing? An investment property is negatively geared when the return, or rental income, is less than the property’s expenses. This essentially means that the investment property is making a loss. Just like any other property expense such as interest
structural component such as walls, windows and sinks. The second category is plant and equipment deductions on the easily removable assets like carpet, ceiling fans and hot water systems.
The first is long-term capital gain. Many investors hold onto their properties as part of a long-term wealth creation strategy. Their aim is to sell it in later years at a profit as the property market fluctuates,
The two broad categories mean that
or to use the property to fund
investors can claim depreciation on
their retirement.
almost anything.
The second benefit is the reduction to taxable income. Property is a
repayments and insurance,
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tangible asset and if it’s making
In practice: Depreciation and
By including depreciation, Kim can
a loss, it reduces the investor’s
negative gearing
claim capital works and plant and
taxable income and they pay less tax. This can prove to be beneficial in the short-term and early stages of growing a portfolio. Depreciation and negative gearing
Kim earns $80,000 a year and pays approximately $17,500 in tax. Kim receives $25,000 in rental income. Her property’s tax deductible expenses include
equipment deductions totalling $6,000 for the financial year. This changes the previously positively geared property to be negatively geared, with a $3,000 loss. Kim’s tax liability decreases to
Given that depreciation is a non-
interest repayments, maintenance
cash deduction, it can turn a
costs, insurance, council rates and
positively geared property into
property management fees that
a negatively geared one, without
come to $22,000 for the financial
making a further cash loss. Let’s see
year. Her property is positively
To learn more about depreciation,
how this works.
geared with a $3,000 return.
contact BMT on 1300 728 726
approximately $16,500 rather than increasing to approximately $18,500 when positively geared.
ABOUT THE CONTRIBUTOR Article provided by BMT Tax Depreciation. Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.
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MOVE SMARTER
WAYS TO KEEP YOUR PROPERTY COOL THIS SUMMER The days are getting longer and we’re starting to think about getting ready for summer. We start to stock up on sunscreen – the Australian kind, designed with the highest UV protector on earth.
BY ON THE MOVE
MAKE SURE YOU HAVE ADEQUATE INSULATION Ensuring that your home is properly insulated will go a long way to reducing the amount of energy needed to cool your home. If your home is lacking in adequate insulation, it’ll be a hotbox come summer! Good quality roof insulation is a must if you want
But take a moment to think about the needs of your house too. Some
to save on energy bills, while wall insulation will keep your house cool.
rental properties may have air conditioning, but there is still the cost of electricity to consider. Here are some energy saving tips for the hotter months.
temperature eases up in the evening, open them back up – right in time for a beautiful late Spring sunset.
KEEP THE HEAT OUT On hot days, the last thing you want is more heat in your house or apartment. That may mean staying out of the kitchen. Using ovens and stoves to cook meals raises the temperature in your home. Having a BBQ is a favourite Aussie pastime but best of all it keeps the
CLOSE OFF ROOMS THAT YOU ARE NOT USING
heat outside.
Closing doors is a simple way to retain cool air and reduce costs and
POP YOUR AIR CONDITIONER ON A TIMER We can get a bit comfortable with popping the air conditioner on and
power consumption. It’s also a good idea to shut off any air conditioning systems in the unused rooms, such as spare bedrooms, if your system allows you to do this.
then letting it run for the evening. But the truth is, it can often be shut
ABOUT THE CONTRIBUTOR
CLOSE UP THOSE HEAVY CURTAINS DURING THE DAY
On the Move is Australia’s leading service connections
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down hours before we normally do it. And this is especially true in Spring
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