Australian Broker 15.11

JUNE 2018 ISSUE 15.11

Breaking the mould Leading lenders explain how brokers can go beyond resi /16

Movers and shakers Westpac’s Tony MacRae swaps brokers for retail banking in new role /24

ANJA PANNEK The CEO of PLAN Australia explains why the aggregator’s business model is built on vision, transformation and partnerships /14

So long, Sydney The price declines tempting investors out of the city /26

ALSO IN THIS ISSUE …

Big deal The deal that saved a client’s business – and family home /20 Opinion Brokers’ key role as Australia catches up with open banking /22 In the hot seat Award-winning broker Mardee Blackwood on beating stress /30

NEWS

IN THIS SECTION

Lenders Major lender to support ‘inactive’ brokers /04

Associations Low awareness of mentorship among female brokers /06

Technology New challenger enters electronic settlement market /10

Regulators O’Dwyer confirms ‘game changing’ regulatory body /12

Market ACT forges ahead with dwelling approvals /08

www.brokernews.com.au JUNE 2O18 EDITORIAL

SALES & MARKETING

News Editor Rebecca Pike

Sales Manager Simon Kerslake

Journalist Nicola Middlemiss Production Editor Roslyn Meredith

DATES TO WATCH

Upcoming can’t-miss events

ART & PRODUCTION Designer Martin Cosme Production Manager Alicia Chin

25 – 26 JUNE

29 JUNE

9 – 1 0 J U LY

Training: From specialist to leader

Australian Mortgage Awards: Nominations close

Melbourne Money and Finance Conference

The first part of Informa’s nationwide training series concludes in Melbourne with a two-day course on the leadership skills that make a difference. Teaching how to transition from a specialist into a leader, the course will highlight emotional intelligence, respectful influence, and how to deliver on organisational and personal objectives

Returning for the 17th year on 19 October, the Australian Mortgage Awards is the leading independent awards event for the mortgage industry, recognising excellence and highlighting the outstanding achievements of those in the business, across 31 categories. To be in with a chance of winning, nominations must be submitted before 29 June

This invitation-only conference covers business funding, corporate debt market updates, lease finance developments, and syndicated lending. Stephen King, commissioner of the Productivity Commission, will deliver a keynote address during dinner on the evening of day one, and will be joined over the two days by a line-up of finance experts

Traffic Coordinator Freya Demegilio

Marketing and Communications Manager Michelle Lam

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Publisher Simon Kerslake Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

Rebecca Pike +61 2 8437 4784 Rebecca.Pike@keymedia.com

SUBSCRIPTION ENQUIRIES

tel: +61 2 8O11 4992 fax: +61 2 9439 4599 subscriptions@keymedia.com.au

1 9 – 2 6 J U LY

2 5 – 2 6 J U LY

2 6 J U LY

FBAA’s Industry Commercial Masterclass

The Summit 2018, Melbourne

Networking lunch with Bankwest

Taking place in Brisbane (19 July), Melbourne (24 July) and Sydney (26 July), the FBAA Industry Commercial Masterclass will include six interactive presentations on best practice commercial lending, opportunity development and customised solutions, with speakers from Thinktank, CoreLogic, ING, Suncorp, Macquarie and St. George

Organised by the Financial Services Council, The Summit covers high-level policy issues shaping the financial services sector, including key challenges it faces. The Summit will discuss issues related to wealth management, with concurrent sessions delving deeper into the details of advice, superannuation, investment, tax and life insurance

Hosted by not-for profit organisation Finsia, this lunch-time networking opportunity will provide attendees with the chance to hear from – and meet – Rowan Munchenberg, managing director of Bankwest. Munchenberg will speak about tech and innovation at the bank, as well as Perth’s economic opportunities and the royal commission

ADVERTISING ENQUIRIES

Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au

Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Bengaluru

2 6 J U LY MFAA National Excellence Awards Taking place in Melbourne, the MFAA National Excellence Awards will bring together the best of the best from the State Excellence Awards and feature a number of additional categories, including the Aggregator Award and the Support Service Provider Award, in addition to four member voting awards

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7 – 14 AUGUST

23 AUGUST

Regtech 2018

Australian Business Banking Awards

Taking place in Adelaide (7 August), Perth (8 August) and Melbourne (14 August), Regtech will showcase products from banking, financial services and insurance that deliver the latest developments in regulatory and compliance technology – a sector hotly tipped to become ‘the next fintech’

RFi Group’s dedicated awards for small and medium business banking recognises the economic influence of sound business banking in a ceremony taking place at the Hyatt Regency Sydney. Across 13 categories, the awards will highlight excellence in relationship management, digital platforms, trade finance and channel strategy

This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss. Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008.

The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.

NEWS

LENDERS NON-MAJOR LAUNCHES BUDGET FACILITY

Source: CoreLogic, RBA, ABS, UBS

Tighter credit likely to trigger reduction in residential lending and house prices

% YOY

TROUBLED

MYSTATE ANNOUNCES ‘DIFFICULT’ RATE INCREASE from 29 May 2018, MyState Bank has increased interest rates for variable residential and investment loans by nine basis points for both new and existing loans. The decision was put down to “changing dynamics in the financial services industry”.

Calling it a “difficult” decision, head of broker sales Paul Herbert said, “While our interest rates will rise, they are extremely low by historic standards and remain highly competitive in the market.”

Chris Andrews Chief investment officer, La Trobe Financial

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72

21

63

18

54

15

45

12

36

9

27

6

18

3

9

0

0

-3

-9

-6

-18

-9 97

99

01

RBA rate cut cycles

03

05

07

Dwelling prices YOY (LHS)*

09

11

13

E-learning course introduced to support brokers after royal commission hears that 710 brokers received letters of de-accreditation Commonwealth Bank of Australia has announced it is to offer a training course to help brokers who have not settled a loan with the bank in the last 12 months.

The move is designed to help brokers keep up with CBA’s products and criteria and will replace the lender’s policy of de-accrediting brokers who it deems to be “inactive”.

During the first round of royal commission public hearings in March, CBA was accused of shutting out brokers who did not write enough loans for the bank after findings confirmed that it had sent 710 letters of de-accreditation to brokers across the country.

CBA’s executive general manager

15

17

Home loans (RHS, advanced 5 months)**

MAJOR LENDER TO SUPPORT ‘INACTIVE’ BROKERS

THE

-27

*CoreLogic national dwelling prices; latest estimated **Total home loans excluding refinancing; latest estimated by UBS for Apr 2018 vs Apr 2017 based on Canstar

-12

EFFECTIVE

“We are delighted to have our flagship product on the IOOF Pursuit investment platform. We have taken this step on the back of significant demand”

24

of home buying, Daniel Huggins, has announced that the lender will now offer courses instead of de-accrediting brokers.

“We want to support our brokers and their clients through every step of the homebuying experience,” Huggins said.

“At CBA, we and our customers need to be confident that the brokers we partner with have the ability to provide homebuyers with the right guidance on our products and services. To do this, it is important that our brokers understand their regulatory obligations, as well as our policies, systems and processes.

“In the past we have seen that brokers who write very little volume are unfamiliar with our

19

% YOY (3-month average)

lender AMP has introduced a new budgeting facility on its app, which even tracks accounts held with other financial institutions.

Money Manager, available through the My AMP app, is designed to give Australians a clearer view of their spending and saving habits. The tool allows customers to connect and view all financial accounts in one place, including those held with other financial institutions, and track where their money is going.

t RESIDENTIAL LENDING SET TO DIP

-36 21

Credit-tightening scenario

systems and processes. This can lead to poor customer experiences and outcomes, as applications often require more time and effort to review to ensure they meet our regulatory obligations and standards.”

Despite the findings that emerged during royal commission hearings, CBA confirmed there was no requirement for brokers to write a minimum number of loans in order to retain their accreditation with the bank.

“At CBA, we understand there are many reasons why a broker may not have submitted loans to us,” Huggins said.

“We understand that a broker’s role is to provide their clients with a loan that suits their needs and objectives. And, in some cases, a CBA product may not be the ideal solution for the customer’s unique financial needs.”

He added that CBA’s new e-learning training was “another example of our commitment to driving good consumer outcomes”.

NEWS

A S S O C I AT I O N S AFSA DETAILS PERSONAL INSOLVENCIES released by the Australian Financial Security Authority (AFSA) confirms that more than 61% of people who entered personal insolvencies in the March quarter were located in greater capital city areas. Specifically, there were 1,390 debtors in Greater Sydney and a further 1,005 debtors in the rest of NSW. Elsewhere, 1,090 new insolvencies were recorded in Greater Brisbane, compared to 1,228 in the rest of Queensland. The nationwide total reached 8,043.

DATA

PHONE SCAMS ON THE RISE, SAYS ACCC from the ACCC claims that phone scams have cost victims more than $4.7m over the last year. Every year, 33,000 Australians are targeted by scammers in this way, with callers pretending to represent banks and other financial institutions.

“We’ve seen a concerning rise in the number of people falsely claiming to be from the ABA, preying on unsuspecting victims and asking for them personal financial details,” said executive director of consumer policy Christine Cupitt.

RESEARCH

LOW AWARENESS OF MENTORSHIP AMONG FEMALE BROKERS Survey conducted by the MFAA shows that female and male brokers have different perceptions of the level of support on offer lack of awareness about support and mentoring available in the industry is perceived as a barrier to entry for new female brokers.

In a survey conducted by the MFAA, only 31.5% of female brokers said there were sufficient sponsor and mentorship schemes for women, compared to 56% of men.

The survey revealed a distinct difference in the level of awareness of support available to both new and existing brokers. Generally, any broker entering the industry with less than two years’ experience must engage with a mentor.

Alphabroker Mentoring founder Therese O’Neill says, A

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“I think everybody feels isolated; it’s not just females specifically.

Brokers just need to reach out.

We always have space for brokers, and 85% of the brokers that we mentor are start-ups, but we’ve got about half a dozen that started with us this year that are existing brokers who just want some targeted help.

“It’s actually really smart to recognise that you need some help, otherwise nothing’s going to change. I think what men will do unapologetically, which is what I see, is if they’re an entrepreneur they will have no qualms about picking up the phone and asking, ‘Can I spend a day with you?’

Women are a little more timid

around that. I think – and I’m guilty of it as well – women will sit there and think, ‘They wouldn’t want to spend a day with me’.”

Nancy Youssef from Classic Finance explains that there are multiple mentoring avenues, such as working alongside an experienced broker, through an aggregator, or doing the type of structured program that she provides.

“I feel that the word ‘mentoring’ itself doesn’t truly reflect the different models that are out there,” Youssef says.

“Some of them tend to be more one-on-one buddying up with a mortgage broker, whereas others are very much training academics, and then there are others that provide a structured approach across both the technical and business-building aspects of building a mortgage broking business. I think that’s where the confusion lies with new entrants comparing mentoring providers.”

“People are ready to switch to a customer-owned alternative where customer interests are not in conflict with shareholder interests” Michael Lawrence CEO, Customer Owned Banking Association

NEWS

MARKET UNPLANNED HOLIDAY EXPENSES COST $4.6BN from CBA shows customers lose track of daily expenses but poorly budget their holidays, costing $4.6bn annually in unplanned expenses.

The research revealed that relaxed attitudes to travel budgeting is causing money mishaps, with more than a quarter of Aussies revealing they don’t save any spending money before they go away. One in five people travel without a holiday budget at all, and, on average, poor budgeting can put expenses out of sync by $1,554 per trip.

RESEARCH

RISING US BOND YIELDS COULD IMPACT AUSTRALIA have warned that rising US bond yields could have an impact on the Australian mortgage market. If they continue to climb, interest rates on many Australian mortgages are likely to rise too. Speaking on RN Breakfast last month, UBS Australia’s head of fixed income, Anne Anderson, said, “It’s almost taking us all the way back to where we were in 2007 before the global financial crisis, so it’s a bit of a marker.”

ECONOMISTS

“If a major economic shock were to originate from China over the coming years, its origin is most likely to be in the Chinese financial system” Philip Lowe Governor, RBA 6

ACT FORGES AHEAD WITH HIGHEST GROWTH IN DWELLING APPROVALS The ACT has recorded a 14% increase in approvals in April, compared to a 0.1% national average decline number of dwellings approved in Australia fell by 0.1% in April, according to the latest data from the ABS. The state with the highest rise in approvals was the ACT, with a 14.8% hike since the previous month. Approvals rose by 6.7% in the NT, 1.7% in SA, 0.9% in NSW and Queensland by 0.7%.

Tasmania saw the biggest fall in approvals at 3.7%, followed by Victoria at 2.3% and WA at 2.2%.

In seasonally adjusted terms, total dwellings fell by 5% in April, driven by a decrease of 11.5% in private sector dwellings, excluding houses. Private sector houses rose 0.1% in seasonally adjusted terms.

The value of total buildings THE

approved fell 0.7% in April, in trend terms, and was in decline during the previous six months.

The value of residential construction fell 0.5%, while non-residential construction fell 1%. NSW saw a huge drop of 31% in the value of non-residential construction.

“The total dwellings series has been relatively stable for the past eight months, with around 19,000 dwellings approved per month,” said Justin Lokhorst, director of construction statistics at the ABS. “The strength in approvals for houses is being offset by weakness in semi-detached and attached dwelling approvals.”

According to the Urban Taskforce, this is cause for

concern in relation to the jobs that flow from construction.

CEO Chris Johnson said, “There are concerns that the current slowdown in sales could mean some projects will be delayed, therefore reducing the job potential from residential construction. It is also clear that housing sales are slowing with the recent announcement by the NSW Treasurer of a drop in sales tax returns to the state government from the sale of new and existing homes.

“The NSW government will need to carefully watch the slowing amount of activity in the building construction sector, which will impact on the 400,000 jobs currently generated. There are a number of levies applied by the state government and by councils that are impacting on the cost of housing that could be modified to help boost the supply of much-needed housing, particularly in Sydney.”

NATIONAL HOUSING FINANCE COMMITMENTS Source: CoreLogic, ABS

Monthly value of national housing finance commitments $25 Owner-occupier

Investor

Billions

$20 $15 $10 $5 $0 Feb-88

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Feb-93

Feb-98

Feb-03

Feb-08

Feb-13

Feb-18

DIVERSIFICATION UPDATE

YEAR-ON-YEAR DWELLING APPROVALS Source: ABS

Dwelling units approved 24,000

No. of units

22,000

REBECCA MORGAN ADDS A NEW INCOME STREAM TO HER BUSINESS John Manciameli talks to Rebecca Morgan, mortgage broker, Sattout Accounting Services

20,000

18,000

16,000

14,000 Jan 2017 Apr 2017 Jul 2017 Oct 2017 Jan 2018 Apr 2018 Trend

Seasonally adjusted Rebecca Morgan

John Manciameli

Private sector houses approved

10,500

No. of units

What first inspired you to help your clients with their investment property aspirations?

I’ve been interested in property A investment on a personal level since I was 18 years old, and I bought a couple of investment properties in Western Sydney before buying my own home in Leichhardt.

My dad’s a broker and accountant, so I was around his business from a young age. He worked with a number of clients who were interested in property investment.

The majority of our accounting clients are also property owners, and many see the potential for growth through investing.

Q

11,000

10,000

9,500

9,000

8,500 Jan 2017 Apr 2017 Jul 2017 Oct 2017 Jan 2018 Apr 2018 Trend

Seasonally adjusted

Why did you choose to work with Slipstream?

The Slipstream team has an A outstanding due diligence process.

Being a small business and so timepoor, I needed to be able to rely on a business model that verified all the buyers’ agents and investment property research houses independently so I could refer my clients to them with confidence.

Q

What are the key benefits of working with Slipstream?

One of the main benefits is A working with like-minded brokers to bounce ideas off. As well as that, the ongoing mentoring and training with an investment property expert like John means you have access to the best brains in the business whenever you need it.

Another benefit is the access to the wide range of marketing tools I can now leverage to position my business in the right way and ensure we’re attracting clients who are interested in investing in property.

In addition to this, as we’re working

Q

PREMIUM HOUSING MARKET SOFTENS premium housing market has softened more than the market for affordable properties, according to the CoreLogic Decile Report. Based on data to the end of April 2018, the most premium decile nationwide was properties valued at over $1,212,486. The most affordable group had a value of $256,786 or lower. All other valuation deciles saw positive growth over the 12 months to April 2018.

CoreLogic research analyst Cameron Kusher said, “The more affordable end of the market is the strongest across Sydney, Melbourne and Brisbane, whereas Perth is showing the strongest performance at the premium end of the property market.”

THE

with a range of investment property research houses presenting intricate data and insights from across the country, it’s opened my eyes to the investment opportunities that exist on a national level instead of perhaps simply focusing on the city I live in.

What feedback have you received from clients you’ve worked with?

I’ve had excellent feedback so far A from my clients, and they all want to know more. Many of my clients are motivated to build wealth through an investment property portfolio, sometimes using the funds in their superannuation, with the aim of leaving something behind for their children.

Q

How much has Slipstream impacted the bottom line of your day-to-day business?

It’s early days yet, but so far it’s A helped us to set goals around the number of referrals we want to achieve and to expand our business offering.

I believe it’s an easy way to add an additional income stream to our business and investment property referral and is a natural fit with our current business.

Q

What’s the most important piece of advice you could share with other brokers?

We all rely on strong referral A networks, and being educated and well informed about the industry you’re operating in is a crucial part of that process.

By continually educating myself in this space, I’m hoping it will help me stand out from the crowd and attract new clients looking to build their property portfolios and be tax efficient at the same time.

Q

NEWS

TECHNOLOGY

FINTECH CALLS FOR EXPENDITURE GUIDANCE firm Moneysoft has urged brokers to help customers get to grips with their household expenses – and save more.

CEO Peter Malekas said, “Cash flow management and budgeting are within the top unmet advice needs of everyday Australians; however, many financial planners are still concerned about turning that demand into a sustainable and scalable service.”

Australia’s household debt-to-income ratio now stands at a record 188.6%, with mortgage holders and high earners most likely to overspend.

FINTECH

NEW CHALLENGER ENTERS ELECTRONIC SETTLEMENT MARKET A new player is joining the electronic property settlement market, going head to head with PEXA

Australia Pty Ltd has applied to become an electronic lodgement network operator (ELNO) with the Australian Registrars’ National Electronic Conveyancing Council.

Sympli is the product of a partnership between ASX Limited and Australian Technology Innovators Pty Limited (ATI). ATI is the parent company of InfoTrack, a provider of e-conveyancing technology and services.

The two groups came together after seeing an opportunity to deliver a market-leading electronic property settlement service by combining their experience and expertise, with ASX being a provider of secure, electronic financial market settlements and InfoTrack offering SYMPLI

property settlement technology and processes.

Sympli will offer lawyers, conveyancers and financial institutions a streamlined and comprehensive technology solution to integrate with clients’ existing practices and systems. It is hoped that the service will improve efficiencies and support Australia’s transition to full electronic conveyancing and settlement.

Property Exchange Australia is already aiming for a completely paperless mortgage process. In April it announced that it had processed a total of one million property transactions. Ninety-eight per cent of Australia’s mortgage lending market and over half of all legal and conveyancing firms

nationwide are already on the PEXA platform.

Subject to regulatory approvals, Sympli expects to begin operations towards the end of 2018. ASX plans to invest approximately $30m in the new venture over the current and subsequent two financial years. This will comprise approximately $7m in 2018, with further investments in 2019 and 2020. ASX estimates that Sympli will break even in the 2021 financial year.

“Entering the electronic property settlement market is a natural evolution for ASX,” said Dominic Stevens, ASX managing director and CEO. “We already settle approximately $70bn in transactions electronically every day and have been the central settlement venue for the Australian financial market for decades.

InfoTrack is the ideal partner as the market leader in legal and property search. It has 18 years’ experience and offers a deep understanding of and connectivity to the property conveyancing industry.”

CRYPTOCURRENCY SCAMS IN AUSTRALIA Source: ACCC: Targeting Scams: Report of the ACCC on Scams Activity 2017

$2.1m was lost by Australian consumers to cryptocurrency scams in 2017

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The biggest scams involved fraudulent ICOs, pyramid schemes and ransomware payments

$100,000 was lost each month from January to September 2017

Scams peaked in the last quarter of the year

Losses soared to more than $7,00,000 in December 2017

DIGITAL PROPERTY TRANSACTIONS UP 25% property transactions jumped 25% last month, as more than 100,000 transactions were completed through Property Exchange Australia. May figures were nine times higher than for the same period last year as PEXA continues its drive to make transactions 100% digital throughout Australia. In April the company also announced that more than one million transactions had been settled digitally on the PEXA platform.

DIGITAL

NEWS

R E G U L AT O R S

CDPP PROCEEDS WITH ANZ CARTEL CHARGES Commonwealth Director of Public Prosecutions (CDPP) has advised ANZ that it intends to commence proceedings against the bank and its group treasurer, Rick Moscati, for being knowingly involved in cartel conduct. The offences were allegedly committed by the joint lead managers of the bank’s underwritten Institutional Equity Placement of approximately 80.8 million shares in August 2015. ANZ chief risk officer Kevin Corbally said, “The bank intends to defend both the company and our employee.”

THE

O’DWYER CONFIRMS SET-UP OF ‘GAME-CHANGING’ REGULATORY BODY Largest regulatory body of its kind established to manage fallout from BBSW manipulation

new body will be established to manage and distribute the $40m paid by major lenders ANZ and NAB as a result of the manipulation of the Bank Bill Swap Rate (BBSW).

The government announced it was setting up the group to boost the advancement of financial capability across Australia. The not-for-profit public company will distribute the money paid in community benefit payments that form part of the settlement agreements between the lenders and ASIC. It will also receive the $10m committed by the government in the federal budget to developing women’s financial capability.

The Minister for Revenue and Financial Services, Kelly O’Dwyer, A

CBA FACES FINES UP TO $1BN is expected to pay nearly $1bn in civil penalties and legal costs, according to an agreement made with AUSTRAC following anti-money laundering and counterterrorism proceedings. AUSTRAC started civil proceedings against the bank in 2017 after CBA allowed large, unmonitored cash deposits through its Intelligent Deposit Machines.

As part of the agreement, which remains subject to court approval.

CBA will pay a civil penalty of $700m, as well as AUSTRAC’s legal costs of $2.5m.

said, “Financial literacy and capability is critical for economic empowerment, including for Australian women and young and older Australians.

“This new body will be a game changer, a lasting institution that will support consumers and build financial capability for all Australians no matter what their circumstances.”

The body will administer grants and improve the capabilities of Australians in the area of financial products and services. It is expected that this body will be the largest of its kind in the country and seek deductible gift recipient status in order to enable it to receive tax-deductible donations from the public.

The new body is independent of government and will be overseen by a board chaired by Paul Clitheroe AM, one of Australia’s leading voices and advocates for financial literacy. He will be joined

by Elaine Henry OAM and air commodore Robert Brown AM. O’Dwyer added, “It will become Australia’s peak body in championing financial literacy and capability amongst Australians. It will use funds received as a result of corporate wrongdoing to educate and empower Australian consumers of financial products and advice.”

Where ASIC accepts enforceable undertakings in the future, it may agree to further community benefit payments being paid to the company.

Last month, Westpac was found to have engaged in unconscionable conduct under s12CC of the Australian Securities and Investments Commission Act 2001 (Cth) as a result of its involvement in setting the BBSW on four occasions.

DROP IN RESIDENTIAL REAL ESTATE APPROVALS FOR FOREIGN INVESTORS

CBA

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Source: Australian Foreign Review Board

Value of approvals for foreign investment in Australia’s housing market tumbled in the last financial year $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0

2006-07 2007-08 2008-09 2009-10 2010-11

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2012-13

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FE AT URES

SPECIAL REPORT

PARTNERED FOR PROGRESS The CEO of PLAN Australia, Anja Pannek, explains why partnerships are a core component of the aggregator’s business model, and how strategic goal-setting can transform broker and customer outcomes

KEY BUSINESS METRICS

1,650

Number of member brokers in PLAN Australia network

~ $70BN

Approx. value of total loan book

+26

Net Promoter Score underlines strong member satisfaction

$8.8BN

Total broker volumes for six months to March 2018 (increase of 5.7%)

$990M

Commercial and asset finance volumes for six months to March 2018 (20% growth)

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is well established in the world of business that an enterprise looks after its customers by looking after its staff.

For brokers, the ability to put customers first in order to drive outcomes and satisfaction is an essential part of business and a cornerstone of the findings of the Combined Industry Forum.

For aggregators, the development, progression and ultimate success of brokers is crucial.

Adopting the tagline ‘Your partner in progress’, PLAN Australia knows about the importance of teamwork in achieving outcomes, and although the business is built on three pillars – vision, partnership and transformation – it is partnership that drives operations.

“What we have learned from talking to our brokers and members is that the thing they value most is partnership and how we work together to achieve outcomes for them,” says CEO Anja Pannek.

PLAN has one of the largest partnership manager workforces, with 21 PMs across all states providing personalised support and business advice.

“Partnership is key, and there are many elements to how you run a partnership: we are both in it together, we want to see our members succeed, we are in it for the long term,” Pannek adds.

In partnering with brokers to achieve these goals, PLAN has grown to become one of Australia’s largest aggregator groups, boasting a network of 1,650 member brokers. In the six months to the end of March 2018, broker IT

originations increased 5.7%.

With a total loan book value close to $70bn, the aggregator has also seen an uplift of 20% in commercial and asset finance volumes, reaching $990m over the same period.

“As a business, one of the things we have been talking about recently is what a successful broker is and what a successful broker will be in the future,” Pannek says.

As a result of those conversations Pannek and her team identified

to running a successful broking business.

“Compliance should be at the forefront for everyone, and what we know is that successful brokers always put their customers first. That’s what we see in our membership base. Customercentricity is so important in the broking industry and will continue to be into the future,” she says.

Ongoing education Professional development is a key component of PLAN’s broker support strategy and has received a significant boost over recent months – not to mention multiple awards.

This year, PLAN’s national, face-to-face professional development series was turned on its head, according to Pannek, to drive higher engagement and

“It’s incredibly powerful for all individuals, regardless of size or scale of business, to be very clear on their goals” four criteria, dubbed the four C’s: customer first, compliance focused, commercially oriented, and committed to the industry.

“The concept of the four C’s is something we will be talking about much more into the future,” Pannek says.

While some appear selfexplanatory, each element is part of the holistic approach to driving outcomes, regardless of how much regulation exists. At PLAN, compliance is a springboard for exploring how the industry could adapt in the future and what brokers will need to do to keep ahead of those changes.

As Pannek explains, “In my mind, legal requirements are really just a minimum standard when it comes

stronger outcomes for participants.

“People’s time is very valuable, so as part of our focus for 2018 we really wanted to deliver content that is relevant to our members so that they could walk away immediately and say, ‘Yes, I’ve got it,’” Pannek says.

Each broker was guided through the process of business – and succession – planning, encouraged to road-map their business aims and take time to think about aspirations, hurdles and goals.

“The feedback was that brokers understood the importance of planning, of sitting down and thinking about where they are going. Now we are using that as an opportunity to go back and re-engage with those members

In partnership with

Anja Pannek, CEO, PLAN Australia

on how we can tailor and deliver content that really meets their needs,” Pannek says.

Over in New Zealand, PLAN put a spin on its annual highperformers conference, providing the opportunity for a delegation of Australian brokers to experience the contrasts and complementary features of both markets. The brokers also had a chance to participate in a business simulation delivered in collaboration with business growth and start-up incubator The Icehouse.

“It was a lot of fun, very engaging, and it opened our eyes to a real demand for development and education that opens people’s

thinking not only as brokers but as business operators.”

Taking brokers further afield, last year PLAN offered them the chance to study on a six-month strategic leadership program, inclusive of a week-long visit to Stanford University in California, hosted in early 2018.

During the trip the brokers attended the Stanford Graduate School of Business and heard from experts across the finance industry.

The curriculum covered business innovation, strategies for scaling a growing business, and effective leadership. Back in Australia, the participants also visited successful businesses to see the

program concepts in practice.

Described by Pannek as a “standout moment” of the last year, the scheme will repeat in 2019, offering another opportunity for brokers to forge ahead with their professional goals.

“We think there is real demand for education at that level, so we have made it very accessible for people to attend a world-class university that typically would be very hard to access. It was an incredible experience and one I think is very timely for brokers in this market,” she says.

Planning for the future Celebrating the aggregator’s 20th

anniversary in 2019, PLAN – and Pannek – have many developments in the pipeline, as a result of both organic growth and the continued development opportunities provided for brokers.

“We have continued to see growth in our membership and aggregate lending, measured across both commercial and residential, yearon-year. In terms of supporting brokers to deliver a holistic customer offering, commercial has been a huge success for us. Year-onyear we are up about 20%, and the residential part of our portfolio has traditionally grown above system for the last few years,” Pannek says.

In a challenging environment, brokers now find themselves competing with each other and going head to head with their peers in order to stand out to their customers, adding an element of competition that didn’t exist previously.

Challenging brokers to identify how they stand out, as well as helping them to tap PLAN’s extensive networks in accounting, real estate, property and key referral sources, Pannek advises all brokers to formulate – and stick to – a business plan.

“It’s incredibly powerful for all individuals, regardless of size or scale of business, to be very clear on their goals. If you don’t write it down, you’re not going to get there,” she says.

Almost two years into the role, Pannek’s own road map for PLAN includes supporting brokers in navigating the industry at a time of “tremendous change”, facilitating development, diversification and, above all, the four C’s.

She says, “The last C is around commitment to the industry. Our industry is an important one, and it will continue to morph and change over time. Brokers have a big role to play in delivering good customer outcomes, and, as an aggregator, our role is to support our members in doing that.” AB www.brokernews.com.au

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FE AT URES

BUSINESS PROFILE

BREAKING THE MOULD

that means SMSF lending will also remain an important part of any broker’s business.”

As customers seek new or alternative credit and investment opportunities, brokers have an unparalleled chance to shift their business beyond residential finance. Three leading lenders explain the concept behind the products changing the marketplace

super funds are the largest superannuation fund sector in Australia. Over the five years to 2017 the number of SMSFs increased from 473,000 to 597,000, representing 26% growth. Over the same period, assets grew by 65% to reach a value of $274.3bn, according to data published by the ATO. This high-level growth is underpinned by the flexibility of superannuation investments, with people now able to leverage their funds to invest in shared term deposits, managed funds and commercial and residential property.

Crucially, member limits have now been lifted from four to six, and this is expected to drive further interest in the product.

“Over the last two years, we’ve seen more and more people choose to take control of their retirement by managing their own super fund,” says John Mohnacheff, national sales manager at Liberty Financial. “Most brokers would be aware of the various changes within SMSF lending over recent years, which has created a more robust SMSF market with increasing demand for solutions like Liberty’s SuperCredit.”

Liberty SuperCredit is available up to an LVR of 80% for residential and 75% for commercial property. It is not necessarily limited by the existing balance of the SMSF, nor by minimum contribution requirements. To ensure its products are at the forefront of the industry, Liberty Financial has increased the loan term on SuperCredit from 15 to 30 years.

An SMSF provides greater control over investment decisions, including how much exposure a fund has to SELF-MANAGED

16

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different asset classes over the long term. Given that the minimum funds needed to purchase property are substantially higher than other asset classes, borrowing within an SMSF

help customers obtain finance in order for their super fund to invest in either residential or commercial property,” Mohnacheff says. “We expect that demand for

“We expect that demand for SMSF lending will continue to match or exceed the overall mortgage market, all else being equal” John Mohnacheff, national sales manager, Liberty Financial can be an attractive option for many people.

“Our SuperCredit product provides the flexibility that SMSF borrowers are looking for. It allows brokers to

SMSF lending will continue to match or exceed the overall mortgage market, all else being equal. As more Australians investigate making their super work for them in different ways,

Crystal-clear solution Major lenders have made a series of changes to how they assess loan applications over recent months, and the changes aren’t restricted to residential lending. Further, these changes coincide with a steady rise in the number of borrowers with blemished credit histories, and the end result is a band of potential borrowers who cannot be serviced by traditional bank lenders.

Royden D’Vaz, head of sales and marketing at Bluestone Mortgages, says: “A groundswell of PAYG borrowers with a clear credit history who qualified for a loan only a few months ago are now being declined for a mainstream loan. This has emerged as a consequence of the tightened lending criteria of traditional lenders.”

In response, the alternative lender has introduced a new product for near-prime borrowers, Crystal Blue.

Designed to specifically address the growing market demand from borrowers who need fully verified and alt-doc loans with highly competitive rates, take-up of Crystal Blue has doubled over the last two months.

This coincides with the company’s mass rate cuts of up to 225 basis points across its entire product range.

Crystal Blue aligns with the increased need for flexible alternative funding for established self-employed borrowers who can demonstrate more than 24 months of trading history.

THE BROKER’S GUIDE TO

LIBERTY SUPERCREDIT

Liberty’s approach to SMSF lending is designed to reduce stress by increasing access to BDMs. Liberty accepts both residential and commercial property as security, and the lender’s range of loan terms will give clients greater choice.

“To make the most of SMSF lending, brokers should realise that it is not harder or longer than other forms of lending,” says John Mohnacheff, national sales manager, Liberty Financial. “Provided your customers obtain the right financial advice, SMSF lending can be clear, straightforward and highly valued.”

John Mohnacheff, national sales manager, Liberty Financial

Specifically, it supports borrowers who are in short-term, casual and part-time employment; have light credit impairment, tax or business debt; or are receiving workers’ compensation, with the latter assessed on a case-by-case basis.

Royden D’Vaz, head of sales and marketing, Bluestone Mortgages

Further, the lender is preparing for the “exponential” take-up of Crystal Blue in the short to mid term, as it is expected that borrowers who have an investment loan with interest-only terms will increasingly require a solution to transition beyond their

“It’s imperative that brokers recognise the changing lending landscape and actively embrace a diverse cross-section of borrowers” Royden D’Vaz, head of sales and marketing at Bluestone Mortgages D’Vaz says, “Unlike big banks, Bluestone doesn’t have credit scorecards, which means every borrower is assessed based on their merits and individual circumstances. Similarly, nonstandard types of income are considered and no formula for income calculation from BAS and bank statements is applied. This customised approach is increasingly appreciated.

Bluestone has aggressive growth projections and initiatives to fast-track its near-prime market penetration.

interest-only period.

“It’s imperative that brokers recognise the changing lending landscape and actively embrace a diverse cross-section of borrowers to remain viable in a highly competitive market,” D’Vaz says.

Tackling affordability Faced with rapidly escalating property prices and flat wage growth over recent years, first home buyers have had a well-documented struggle to get on the housing ladder. With CEDA

Cory Bannister, chief lending officer, La Trobe Financial

THE BROKER’S GUIDE TO

CRYSTAL BLUE Bluestone understands that all borrowers are different, and therefore considers non-standard income for the Crystal Blue product. Borrowers with short-term, casual and part-time employment, light credit impairment, or those who currently receive workers’ compensation, can now obtain a financial solution that fulfils their needs and objectives.

“Brokers can access an 85% alt-doc loan for their borrowers by providing BAS, bank and personal statements,” says Royden D’Vaz, head of sales and marketing at Bluestone Mortgages.

Crystal Blue is often utilised to pay out ATO debts, payday lenders and other personal or business debt.

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FE AT URES

predicting the trend will continue for “another 40 years”, it’s little wonder the bank of mum and dad will unofficially remain Australia’s fifth-largest lender for the foreseeable future.

Historically, parents have routinely acted as guarantors or gifted money to their first home buyer children, but those options are not without risk.

Cory Bannister, chief lending officer at La Trobe Financial, says, “The affordability gap for FHBs is the main driver for the number of parents around the country trying to assist their children onto the property ladder.”

In response, La Trobe Financial has developed a workable solution for all parties, while removing the risk of guarantees and addressing ambiguity around gifted money. The lender’s P2C product protects wealth transfer and prevents future loss in the event of a marital breakdown. With P2C, funds are protected under the Family Law Act as the money is not considered to be a gift and therefore is not divided in the event of a marital breakdown.

Additionally, large financial gains are made when using P2C, which can

housing is well documented. However, add to that the net immigration numbers of around 300,000 people per annum and, over the long term, it isn’t unrealistic to predict that property valuations close to major cities will remain well supported, albeit with more moderate growth

“Low interest rates also help with affordability, and we believe rates will be lower for longer” Cory Bannister, chief lending officer, La Trobe Financial generate between $30,000 and $43,000 for the borrowers through stamp duty concessions, first home buyer grants and the nonrequirement of LMI. Bannister adds, “The affordability gap is not going away. We are now seeing demand from builders assisting homebuyers through financing the final 5% or 10% required to complete the purchase and as a result are generating healthy returns on those invested funds secured by property they ultimately know well and trust.”

Australia’s chronic undersupply of 18

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than that witnessed over recent years.

Bannister says, “Clearly property is more expensive than in the past, and salaries have not necessarily kept up with valuations. This has been exacerbated by low interest rates and is a global phenomenon, but low interest rates also help with affordability, and we believe rates will be lower for longer.

“With a P2C loan, parents can assist by setting their own low interest rate and economically transferring wealth to their children, thereby helping with affordability in a protected way.” AB

THE BROKER’S GUIDE TO

P2C

P2C® assists first home buyers in generating the purchasing power they need at the right time. With no dollar limit on the P2C amount, it is the only product on the market currently that formalises and protects parents’ financial assistance without putting their own credit files at risk, or requiring personal guarantees.

“Prior to this option, parents who wanted to help their children with purchasing a property had to guarantee the child’s loan or co-purchase the home with the child and in essence place their own home and retirement savings at risk,” says Cory Bannister, chief lending officer at La Trobe Financial.

THE CHOICE IS YOURS

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FOR MORE INFORMATION, PLEASE EMAIL EDITOR@BROKERNEWS.COM.AU www.brokernews.com.au

19

PEOPLE

Have an interesting deal?

Had a particularly difficult or interesting deal? Why not share it with us? Email:

rebecca.pike@keymedia.com

A BIG DEAL

Approached by a business owner with multiple debts, defaults and late payments, Deanna Wittey, consultant and broker at Jim’s Finance, brokered a multimillion-dollar loan package to save her client’s business, reputation and family home THE FACTS

manageable repayments. I then separated his business banking from his personal assets.

The second mortgage was crucial in providing breathing space – and reducing stress after his health issues – and I was able to break the loans up into dollar-for-dollar refinances, while meeting NCCP criteria. This also achieved a workable rate, which was an added bonus.

To mitigate any future issues, I referred him to trusted professionals who could mentor him with business and accounting advice, as well as estate and succession planning.

THE TAKEAWAY

Loan size and term $4.2m for 30 years

Client Small business owner with multiple properties

Goal To fix financial complications resulting from a period of ill health

Location Prahran, Victoria

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Aggregator AFG

any more funds, and at more than $4m the sheer value of the loan required made refinancing with another lender incredibly difficult. As if that wasn’t challenging enough, the loan would also have to be low-doc.

THE SCENARIO

Times of ill health can be stressful enough, but for those who own and operate their own businesses they can cause some real challenges, especially if there are no systems in place to keep things ticking over.

This is exactly what happened to a client who approached me. He was a small business owner who had accrued eight properties over many years of hard work, then last year he was hospitalised for some months, and without good systems and structures in place he started to miss loan repayments.

He approached me to help manage the situation and bring him out of the red; however, he wasn’t entirely up front about the scale of the problems, and it wasn’t until I started to work with him that I realised the severity of the situation. Each time I questioned him on the details of one loan, another came to light.

As the late repayments snowballed, so too did the judgments and defaults. To make things worse, his entire financial portfolio was with one (major) bank, including the mortgage on his family home, and all were cross-collateralised.

There was mounting debt, including a sizeable ATO debt, and the bank was calling upon the client’s personal guarantees. He really was at risk of losing everything, and many peers I spoke to told me a deal would be impossible.

The bank was not prepared to advance

Lender Liberty, Pepper Money and La Trobe Financial

It was a happy ending but a stressful process. From a professional perspective, the lack of compassion from the bank was surprising, as this major often speaks about how much they like to help small business owners.

There were also challenges in the client’s willingness to face up to the scale of the problem, and you can’t help someone without knowing the full picture: big, small and ugly.

There were many considerations as well as learning curves in this deal.

For example, second mortgages are expensive so you need pre-approvals in

There was mounting debt, including a sizeable ATO debt, and the bank was calling upon the client’s personal guarantees.

He really was at risk of losing everything THE SOLUTION

Deanna Wittey Consultant and broker at Jim’s Finance

Despite the large and growing number of problems, not to mention the apparently impossible situation, the client’s bank statements and BAS proved business was strong, and I truly wanted to help.

I started to work on a two-pronged attack: firstly, I consolidated all of his debt into a second mortgage in order to pay off the ATO and his creditors, dialling back the initial heat.

Most low-doc lenders won’t go above $2m, so this added further complications. To overcome these, we lodged successful applications with Liberty, Pepper Money and La Trobe Financial. Then I refinanced all his debt, including a second mortgage, and split all lending between these three institutions to create more

place from the start, and you need to be prepared to do a quick refinance out to other lenders, otherwise the client will go broke waiting for an approval.

If a broker thrives on high-level energy and stress, I would recommend looking at deals like this, as there are a lot of potential clients out there in very similar situations. However, before taking it on, there are some key points to remember: communicate with everybody on a daily basis, including accountants, lawyers, and of course the client, even if you have no updates, as they need constant reassurance.

Next, make sure you have all the information, put a strategic plan into place that leaves nothing to chance, and get all the figures up front before you start. Finally, hold on to your seat, as the road can get very bumpy. AB

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OPINION

OPEN BANKING: A CHANCE TO SHINE Delivering a global snapshot of the open banking revolution, Bill Kalpouzanis, co-founder and CEO of Lodex, highlights the key role that brokers can play as Australia catches up with the rest of the world

multibillion-dollar rollout of open banking promises to improve customer experience, generate new revenue streams for the financial services industry, and create a sustainable service model for underserved communities. It puts the power into the hands of consumers to shop around, directly and through brokers, if they feel in any way neglected by their banks.

We hope open banking might be the halfway house that will get people comfortable with the idea of using their data, and enable them to think more broadly about the value of their personal information. If we look at China, we can see rapid developments in the way technology is changing how creditworthiness is assessed. For example, algorithms employed by Alibaba Group use 20,000 data points on retail customers (including transactional data) in order to offer them small loans. This is a clear demonstration of the power of

non-bank data and the fact that there is more to creditworthiness than just what a bank can tell consumers and brokers alike.

At the moment, brokers may struggle to efficiently assess applications from

THE

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mention making the process simpler for brokers. Lodex, for example, has already pioneered the use of social scoring (alongside other non-bank data points): it is a tool with the power to unshackle the estimated three million Australians who simply don’t have enough of a credit footprint to secure a loan.

Lodex uses Lenddo technology to harness members’ unique data and give financial service providers a greater understanding of their customers. While it’s a first in Australia, it’s been tried and tested overseas: LenddoEFL has already successfully rolled out a social-scoring model in 20 countries. In India alone, this technology is providing a financial lifeline to the estimated 350 million people with insufficient banking data.

Back in Australia this should also mean a bigger pool of consumers who could benefit from financial advice when navigating their options.

So what’s the hold-up here in Australia? It’s evident that some banks are fuelling unease by discouraging customers from sharing passwords and other evidence of their digital footprint.

Also, local banks here are yet to take the plunge and use alternative types of credit-scoring technology.

Resistance is a problem, but banks have a huge amount to gain from open data. Open banking will force banks to invest in technology, with a knock-on effect on innovation. And some banks are forward-thinking. In recent weeks, ANZ has taken an equity stake in Data Republic and will soon begin using the data exchange platform to develop insights on its customers. NAB also recently announced it is to implement DocuSign technology.

Rich insights can drive innovation in product development, and will likely save time and money in the long run. This also means better products for brokers to offer their clients.

In India alone, social-scoring technology is providing a financial lifeline to the estimated 350 million people with insufficient banking data Bill Kalpouzanis Co-founder and CEO of Lodex

immigrants and other clients with a thin banking file and credit history but quite decent fundamentals. But if Australia follows global trends, then we too can expect non-traditional data to complement existing bank data, with significant societal benefits – not to

In three to four years, the banks will have to adapt to the maturation of new technologies and challengers entering the local marketplace. As this happens, brokers will have an important role to play in reassuring clients that their data empowers rather than exposes them. AB

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23

PEOPLE

MOVERS AND SHAKERS

MACRAE LEAVES BROKER CHANNEL

Westpac’s group GM of third party distribution, Tony MacRae, takes on new role in retail home ownership distribution

RESOLVE FINANCE APPOINTS NEW STATE MANAGERS has appointed new state managers for WA and Victoria, with a remit to grow the broking firm’s footprint in both states. In Victoria, Maria Robinson will leverage 22 years of leadership experience across banking, non-banking and franchises.

In WA, Clara Sciaretta will draw on 20 years’ experience to grow business opportunities and boost brokers and franchisee recruitment. MD Don Crellin (pictured) said both brought “extensive industry experience and unique expertise to our already highly knowledgeable team”.

RESOLVE FINANCE

Tony MacRae

group GM of third party distribution Tony MacRae is to leave the broker channel to take on a new role at the bank.

The news, confirmed in early June, will see Warren Shaw, previously head of broker distribution, take on MacRae’s third party role in an acting capacity for the foreseeable future.

Westpac has confirmed that MacRae will now take responsibility for its first party home lending as the national GM of retail home ownership distribution.

Bernadette Inglis, group GM, Westpac retail and premium bank, said, “We are delighted to have Tony MacRae join the Westpac retail lending team.

With extensive experience across business and lending, he will be a WESTPAC

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valuable addition as we continue to help more Australians with home ownership.

“I know our third party team will enjoy working under Warren Shaw’s leadership, and we’ll also continue to play an active role in the ongoing industry collaboration to strengthen good customer outcomes and the industry as a whole.”

Previously, Shaw was CEO of Banksia Financial Group and held a number of senior positions at NAB, including executive GM for NAB retail.

He joined Westpac in February 2016 as national head of broker distribution, his first role in terms of third party origination on the consumer side. For the last two years he has reported to MacRae following his promotion in July 2015 to oversee third party

distribution for the entire group.

Speaking to MPA shortly after he joined Westpac, Shaw said, “The banks offer choice across lots of different channels, but in terms of pure acquisition and net customer growth, the third party space is clearly where the action is, and from my perspective I’m very interested in playing a role and shaping Westpac’s presence there.

“I want to see us becoming famous for being connected, consistent and transparent – they’re the things that I’m passionate about. I’m passionate about people and creating environments for them to be the best they can be, in particular our BDMs, connecting them as closely as we can with the broking community to help them build their businesses.” AB

BUYERS CHOICE APPOINTS NEW BDM has boosted its team by appointing Eilis O’Callaghan to the new role of national BDM. O’Callaghan previously held compliance, coaching and operational roles at PLAN Australia and AFG. She is now responsible for supporting Buyers Choice brokers and onboarding new members. Director Brett Mansfield said, “Eilis brings with her a range of skills which complement our current structure, including five years in a compliance-focused role where she gained invaluable insights into the processes, tools and resources used by successful brokers.”

BUYERS CHOICE

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DATA

VICTORIA

NSW SPOTLIGHT

Melbourne's $1m houses follow in Sydney’s footsteps Like Sydney, Melbourne continues to suffer the fallout of being too expensive for first home buyers, while investors are backing off.

“Today, one in three Melbourne suburbs have a median house price of at least $1m, with 90% of suburbs within 10km of the CBD having a million-dollar median house price and almost 50% of suburbs in the middle ring also in the million-dollar club,” says Dona James-Wells, buyer’s agent at Metropole Property Strategists.

Nevertheless, Melbourne’s outer-ring suburbs have felt the spillover effect of the inner city’s highly priced market. Regional hubs like Geelong have benefited as well. “Moving forward, it is likely that the more affluent middle-ring suburbs going through gentrification will exhibit the best property price growth,” James-Wells predicts.

“As Melbourne residents trade their backyards for balconies and courtyards, villa units with renovation potential and townhouses will make the best investments."

Area

Type Median value

Quarterly

12-month

growth

growth

Melbourne

H

$720,000

-6.1%

13.1%

Vic country

H

$350,000

0.0%

7.3%

Melbourne

U

$525,000

-2.8%

6.3%

Vic country

U

$272,000

-3.0%

4.2%

QUEENSLAND

Interstate relocations turn Sydney’s stagnation into Qld’s opportunity Pockets of Queensland are turning around as the state becomes the recipient of migrants from overpriced NSW. “We’re seeing strong first-time buyer demand in Queensland – that’s finally starting to come through in larger numbers now, and Queensland seems to be the main beneficiary of [price] increases in NSW,” says Angie Zigomanis, senior manager of residential property at BIS Oxford Economics.

The housing markets of the Sunshine Coast and Gold Coast continue to enjoy the most attention from prospective buyers. The preparations for the Commonwealth Games put both regions in a strong economic position, and supply and demand is more balanced in these areas than in Brisbane.

“Given the lifestyle market in the Gold Coast and Sunshine Coast, [buyers] could be saving themselves $100,000–$200,000 on the purchase price while still having a lifestyle on the weekends with their young families or outdoor activities,” says Damien Lee, head of acquisitions at Caifu Property.

Area

Type Median value

Quarterly

12-month

growth

growth

SO LONG, SYDNEY The nation’s once-top performer could be entering a period of stagnation as buyers swap a high-priced urban life for affordable regional areas declines in Sydney and a lack of growth throughout NSW are starting to affect investor perception. “Weaker price growth means you’ve got fewer investors in the market because many go into the market with the expectation of capital gain – if they’re not seeing this, they start retreating,” explains Angie Zigomanis, senior manager of residential property at BIS Oxford Economics.

“Sydney has a lot more exposure to investors – they make up a bigger part of the market compared to Melbourne, and so that drop-off in investor demand has had more impact.”

Affordability is another factor stifling the demand for houses, given that the stamp duty concession for first home buyers is limited to $750,000. As a result, residents are leaving for greener – and lower-priced – pastures.

“People are leaving the city for regional or interstate areas. It’s a net loss for Sydney, so it’s probably losing more population as well,” Zigomanis says.

With the majority of houses in the city being so high-priced, many first home buyers are turning to the apartment market. “The stronger performance from the unit sector may suggest that buyer demand is becoming more concentrated in the medium- to high-density sector where entry prices are lower and commuting times are often more convenient when compared with the detached housing markets around the outer fringes of the city,” says Tim Lawless, head of research at CoreLogic.

However, he thinks the worst may already be over, noting that the rate of price drops has been easing since a fall of 3.9% back in July 2017.

“If the trend towards an improving rate of decline persists, the Sydney housing market may have already moved through its peak rate of decline,” Lawless says. AB PRICE

H

$525,000

-3.1%

2.7%

Median price (houses)

QLD country

H

$435,000

-1.1%

1.7%

$600,776

Brisbane

U

$400,000

-3.4%

-1.9%

QLD country

U

$385,000

-1.3%

2.6%

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First home buyers back in force and patient investors can enjoy strong returns First home buyers are back, baby!

All joking aside, it’s been an interesting time for property investors no matter where they are located, and Sydney is no different.

While parts of the Sydney and NSW markets in general are slowing – and some suburbs have plateaued or perhaps even declined a little – rents are still steady. Those looking to sell may be feeling some pain; however, if you are an investor who’s holding, then things are still on track.

In my experience, Sydney property investors may have stopped investing in their own town or state, but that hasn’t stopped them from going interstate or in some cases overseas. I had a Sydney-based client recently who purchased three investment properties in Queensland over the course of three weeks.

This has provided opportunities for first home buyers, specifically those who thought they could not afford to purchase for six months or longer.

Robert Seton Head of sales and business development, Hopes and Dreams Finance

SUBURB TO WATCH: ROSEMEADOW

Brisbane

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BROKER PERSPECTIVE

Median price (units) $503,631

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

6.3%

43.4%

86.6%

3.6%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

10.6%

56.8%

87.6%

3.9%

AUSTRALIAN CAPITAL TERRITORY

Canberra remains one of the most expensive capitals OPPORTUNITIES AND KEY INFRASTRUCTURE

Buyer demand

Price drops

Investors

First home buyers

Apartments are in great demand – prices rose by 10.6% in the year to March 2018

The rate of price drops has been easing since a fall of 3.9% back in July 2017

Sentiment is down as prices and growth stagnate

Stamp duty concession for first home buyers is limited to $750,000

HIGHEST-YIELD SUBURBS IN NORTHERN TERRITORY Suburb

Type

Median price

12-month growth

Gross rental yield

Broken Hill

H

$100,000

-7%

13%

Malua Bay

H

$520,000

13%

10%

Gilgandra

H

$152,500

-10%

10%

Sussex Inlet

H

$535,000

24%

9%

Narooma

U

$255,000

-2%

9%

In Canberra, median rent per week is $528, compared to $582 in Sydney, and, as of March, it was the second-priciest rental market in the country.

According to CoreLogic, the strict regulation of new supply in Canberra is a factor pushing growth, since the recently limited supply has pushed demand. Propertyology research also indicates that over the past 20 years Canberra’s rental growth has been the highest among all the capital cities.

“Canberra’s 169% increase in rents was higher than Sydney’s 155% and third-placed Hobart’s (153%),” reports Simon Pressley, managing director of Propertyology. This is likely spurred by Canberra’s increase in population in the past couple of years – its 1.7% population growth has been the second highest in the country, only topped by Melbourne’s.

Canberra’s house prices have, for the most part, risen steadily during this time; by contrast, a high supply of apartments is dampening the unit market.

Area

Type Median value

Quarterly

12-month

growth

growth

Canberra

H

$690,000

-1.4%

7.9%

Canberra

U

$430,000

-3.4%

0.0%

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DATA

SOUTH AUSTRALIA

12-month

growth

growth

Adelaide

H

$467,500

5.6%

2,5%

SA country

H

$286,000

-1.4%

1.8%

Adelaide

U

$390,900

4.2%

7.0%

SA country

U

$176,000

6.0%

-7.7%

WESTERN AUSTRALIA

MEDIAN HOUSE AND UNIT PRICES

The once-flailing market of Perth is beginning to build itself back up

$1,000,000

Type Median value

Quarterly

12-month

growth

growth

Perth

H

$500,000

-2.9%

-1.9%

WA country

H

$335,000

-4.3%

-4.2%

Perth

U

$383,000

-6.6%

-3.0%

WA country

U

$265,000

10.4%

-4.9%

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Total auctions

118

Cleared

42

Uncleared

31

Clearance rate

57.5%

PERTH Total auctions

46

Cleared

7

Uncleared

22

Clearance rate

24.1%

Houses

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

$495,500

$452,000

$350,750

$0

$383,000

$100,000

$511,500

$200,000

$317,500

$300,000

$452,000

$500,000 $400,000

$555,075

$600,000

$741,000

$700,000

$680,000

$800,000

$900,000

$900,000

According to Shane Kempton, COO of Professionals Real Estate WA and NT, the cities of Melbourne, Sydney and Brisbane all recorded drops in the number of settled sales over March 2018. By contrast, this figure rose in Perth.

“Sales volume trends are generally a good forward indicator of the property market in a specific market, and this trend is now on an upward trajectory in Perth,” Kempton says.

This is in part due to Perth’s affordability following several years of downslide. Interested buyers on a budget have come in to capitalise on the low prices now that the market seems to have bottomed out. Professionals have also found the rental market is tightening both in Perth and Darwin, which will lead to higher rents.

“This will also encourage more people who are currently renting in these two cities to consider buying a home, especially with interest rates now at record lows,” Kempton says.

Area

ADELAIDE

Darwin

Units

$416,650

Quarterly

$395,000

Type Median value

There were 2,089 homes taken to auction across the combined capital cities this week, returning a preliminary auction clearance rate of 60.3%. Last week, 2,279 auctions were held and the final clearance rate dropped to 58.2%, the lowest rate since December 2015. Over the same week last year, auction volumes were higher, with 2,824 homes going under the hammer across the combined capital cities, returning a clearance rate of 73.1%.

In Melbourne, Australia’s largest auction market, a preliminary auction clearance rate of 64.2% was recorded across 1,028 auctions this week, up from 59.8% across 1,099 auctions last week – the lowest clearance rate the city has seen since Easter 2014. One year ago, the clearance rate was a stronger 77.9% across 1,326 auctions. There were 669 auctions held in Sydney this week, returning a preliminary auction clearance rate of 60.8%, compared to 57.5% across 787 auctions last week, and 74.0% across 1,075 auctions one year ago.

$540,500

Area

WEEK ENDING 20 MAY 2018

$621,000

CoreLogic’s April 2018 Property Pulse report indicates that in SA the number of first home buyer housing finance commitments has increased 17.8% compared to 12 months ago. “It’s great to see young South Australians entering the market, and it’s likely due to lower median house prices,” says Gregg Harris, general manager of NAB Retail.

NAB’s Q1 2018 Residential Property Survey showed that first home buyers have become the most active group of buyers in the state, accounting for around 50% of established dwellings and 45% of new properties sold. Meanwhile, 15% of new homes were snapped by investors, suggesting that investor interest is trickling in, perhaps due to rising expectations.

That said, growth projections in the short term don’t exactly inspire huge confidence. “The expert panel of survey respondents forecast South Australia to see 2.5% house price growth in the next two years,” Harris says. Bowden in the inner north of Adelaide has been pinpointed as a suburb that should see above-average growth in the near future.

CAPITAL CITY AUCTION CLEARANCE RATES

$387,000

First home buyers leverage increased affordability

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

0.0%

-0.2%

-2.2%

-3.9%

-0.2%

-0.4%

-1.1%

2.9%

Brisbane

0.0%

-0.2%

-0.1%

0.7%

Adelaide

0.1%

0.2%

-0.1%

0.7%

Perth

0.0%

0.0%

-0.3%

-2.0%

0.0%

-0.2%

-1.3%

-0.9%

Sydney Melbourne

Combined 5 capitals

*The monthly change is the change over the past 28 days

BRISBANE CANBERRA Total auctions

79

Cleared

49

Uncleared

25

Clearance rate

Total auctions

146

Cleared

45

Uncleared

67

Clearance rate

40.2%

66.2%

SYDNEY Total auctions

669

Cleared

292

Uncleared

188

Clearance rate

TASMANIA

MELBOURNE Total auctions

60.8%

1,028

Total auctions

3

Cleared

547

Cleared

1

Uncleared

305

Uncleared

0

Clearance rate

Clearance rate

64.2%

TASMANIA

Area

Hobart’s hot streak continues and demand spills over Hobart is on a roll and is racking up the accolades as its remarkable run continues at breakneck speed. “Hobart is going through a bit of a profitable patch economically,” says Angie Zigomanis, senior manager of residential property at BIS Oxford Economics. “The low dollar means that things like agriculture are doing well, so there are a lot of positives now in the Tasmanian economy compared to recent years. Because people go there in increasing numbers, it’s experiencing a net interstate migration inflow.”

Hobart continues to absorb the majority of this influx as Tasmania’s most populated city, but the demand is soon expected to spill over to other hubs.

“If you look at population growth in Hobart relative to the rest of the state, much of that seems to be going into Hobart, moreso than Launceston or northwest Tasmania,” Zigomanis says.

N/A

Type

Median value

Quarterly growth

12-month growth

Hobart

H

$431,000

2.2%

7.1%

TAS country

H

$285,000

0.8%

6.5%

Hobart

U

$340,000

6.3%

3.8%

TAS country

U

$234,000

-4.3%

2.3%

All data sourced from CoreLogic.com.au

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29

PEOPLE

Aggregator Connective

IN THE HOT SEAT As one of the longest-serving brokers at 1st Street Financial, award-winning Mardee Blackwood knows all about handling stress. Here she tells Australian Broker about the trick for balancing deadlines and downtime What do you wish you’d known when you started out as a broker?

Work-life balance is important. Having a good work-life A balance has been my biggest challenge, particularly as a working mum. Like most mortgage brokers I could spend days and hours doing this job, but it’s recognising when to call it a day that can sometimes be the difficult part. It’s important to spend quality time with your family and not get consumed by the workload. Learn to recognise the difference between deadlines and downtime, as well as the ability to delegate; try to back away from having total control all the time – although I know that’s easier said than done.

Q

What are your top survival tips for working in finance?

I always advise others to never promise what they can’t A deliver; to learn to say no and ask for help when necessary.

On a more personal level, sleep is key for having mental clarity and focus, as well as taking regular alone time to exercise and practise mindfulness, meditation and breathing techniques.

I also find it incredibly helpful to talk to someone about my stresses on a regular basis, and whenever work stress gets the better of me, I remind myself of what’s truly important in life.

Always live in the present; don’t agonise over the past and don’t fret about the future. Lastly, persistence truly is a virtue!

Be consistent with your efforts, persevere, and your hard work will pay off.

Q

What’s one thing, personal or professional, that you hope to achieve before the end of the year?

To stop comparing myself to others. I think we are all so A hard on ourselves these days. One of the most detrimental things we can ever do to jeopardise our chances for success is to compare ourselves to others. To accomplish our goals and dreams, we need to take our eyes and focus off others, direct our attention towards our pursuits, and embrace the fact that we are all on separate journeys – leading to different, individual destinations.

Q

If you won $1m, what would you do with it?

Everything I do is normally quite sensible. So I would love to A do something outrageous – perhaps buy a bigger boat, have a holiday in Hawaii, and just travel, travel, travel! AB

Q

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