Australian Broker 15.23

DECEMBER 2018 ISSUE 15.23

The essentials of SMSF lending La Trobe Financial’s Cory Bannister on leveraging the benefits of SMSFs /16

Leadership for a new era Smartline CEO Sam Boer on his new role and 2019 outlook /18

DANIEL CARDE Resimac’s GM of third party distribution talks about the non-bank’s new brand and the growth in specialist lending /14

A big deal How one broker helped a divorced client keep the family home /20

ALSO IN THIS ISSUE… Caught on camera The highlights of Finsure’s trip to Queenstown /22 Housing market data Fighting the downturn in Victoria /26 In the hot seat Ray Hair on fostering a client-first attitude /30

NEWS

IN THIS SECTION

Lenders Third major changes commission structure /04

Associations Education initiative launched in north Queensland /06

Market Short-term rentals cause longterm headache for investors /08

Technology Bank partners with digital platform for express service /10

Regulators Broker groups respond to royal commission disclosures /12

www.brokernews.com.au DECEMBER 2O18 EDITORIAL Editor Melanie Mingas News Editor Rebecca Pike Production Editor Roslyn Meredith

DATES TO WATCH

Upcoming can’t-miss events

5 & 13 DECEMBER

7 D E C E M B E R

Vow Financial webinars

FBAA Social Melbourne

Vow’s last webinar sessions of 2018 will take place in December. Covering the latest professional development topics, they will cap off a year-long program that has seen such partners as Suncorp and NAB deliver sessions and updates on key topics.

Registration starts at 8.45am and the summit will commence at 9am. Morning tea will be provided and the event is due to conclude at 12.30pm. The Melbourne social will be preceded by a Sydney event on 30 November. Further details of both events are available on the FBAA website.

1 0 – 1 3 D E C E M B E R MFAA Queensland PD and Networking This event will tour Rockhampton, Mackay, Townsville and Cairns. Registration starts at 2pm and be followed by a seminar worth 2.5 CPD hours. Each event will conclude with a networking session that provides a chance to meet representatives from Suncorp, Auswide, Bank Australia, Bankwest, Pepper Money and Westpac, among others.

SALES & MARKETING Sales Manager Simon Kerslake Marketing Manager Danica Mendoza

CORPORATE

ART & PRODUCTION

Chief Executive Officer Mike Shipley

Designer Martin Cosme

Chief Operating Officer George Walmsley

Production Manager Alicia Chin Traffic Coordinator Freya Demegilio

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

1 FEBRUARY

22 FEBRUARY

26 – 27 FEBRUARY

Royal commission final report due

Managing Mental Health in the Workplace

Effectively Managing People and Teams

Following 10 months of hearings that have seen the bank’s top executives answer to Commissioner Hayne, the royal commission’s final report is due to be submitted to the Governor-General by 1 February 2019, outlining the recommendations for the future of banking, finance and superannuation in Australia.

Leaders from all industries and sectors are invited to attend this one-day training course designed to provide the knowledge and skills to build confidence when tackling the rising issue of mental health in the workplace. Organised by Informa, it takes place in Melbourne.

This two-day course will be delivered in Brisbane, followed by sessions in Sydney, Perth and Melbourne in March and October.

Delegates will learn about the unique responsibilities of managers and how to set tangible, accountable and manageable expectations for team members.

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

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

4 – 5 MARCH Responsible Lending and Borrowing Summit Informa’s third responsible lending summit will welcome ABA director Christine Cupitt, Ombudsman Philip Field and ANZ customer advocate Jo McKinstray to an open forum reflecting on the lessons learned from the royal commission and exploring the opportunities to improve the industry for the future.

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6 – 7 M A R C H Real Estate Investment Forum Taking place in Melbourne, this biannual event is organised by the Centre for Investor Education. The 2018 edition is set to showcase tried and tested strategies to navigate the opportunities and challenges in domestic and international real estate investment.

13 – 15 MARCH Conference of Major Super Funds Taking place at the Gold Coast Convention Centre, this two-day event is organised by the Australian Institute of Superannuation Trustees. The agenda will tackle such topics as improving financial inclusion for Indigenous Australians, training in financial literacy, and assisting the financial services sector in enhancing its products.

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.

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NEWS

LENDERS LENDER EXTENDS MARKETING SUPPORT has extended its alternative lending marketing toolkit with a new module on social media.

Aimed at beginners and pros alike, the module covers page set-up, profile optimisation and automating posts, and includes ready-to-go content for Facebook, LinkedIn and Twitter. Pepper Money chief marketing officer Jo Thrift said, “Developing a social media presence and finding the content to post regularly doesn’t need to be daunting.”

Sep-06 VALUE OF FINANCE COMMITMENTS BY TYPE, NATIONAL MONTHLY Source: ABS housing finance data, September 2018

$25bn

PEPPER MONEY

Owner-occupier Investor

$20bn

$15bn

$10bn

$5bn

NON-BANK ISSUES $750M RMBS Portfolio Company La Trobe Financial has priced its seventh residential mortgage-backed securities (RMBS) issue at $750m. Since 2014, La Trobe Financial has issued $2.9bn of RMBS to a range of Australian and overseas institutional investors. CIO Chris Andrews said, “The pricing and high level of oversubscription reflects a strong endorsement of the high-quality assets, expertise and long consistent track record as Australia’s oldest non-bank lender.”

BLACKSTONE

“The $2bn fund [for SMEs] has the potential to make access to finance a reality for the SME sector” Peter Langham CEO, Scottish Pacific

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$0bn Sept 1998

Sept 2002

Sept 2006

Sept 2010

THIRD MAJOR CHANGES COMMISSION STRUCTURE CBA confirms it will adjust how upfront commissions for brokers are calculated, following similar moves by NAB and Westpac has become the third of the big four banks to change how it calculates upfront commissions for brokers. The move follows ASIC’s review of mortgage broking remuneration, the Sedgwick review, and ongoing collaboration with the Combined Industry Forum.

Effective from 24 November 2018, the changes mean upfront broker commission will be calculated based on the drawn-down loan balance, net of offset and redraw facility.

“As one of Australia’s leading home lenders we recognise mortgage brokers as a key channel for customers who are looking to purchase a home. We are committed to supporting our brokers and driving good customer outcomes,” CBA

said CBA’s executive GM of home buying, Daniel Huggins.

“Since ASIC’s review of mortgage broking remuneration and the Sedgwick review, we have been working with the Combined Industry Forum to ensure we continue to drive and deliver good customer outcomes. As part of our work implementing the principles developed by the Combined Industry Forum, we are making changes to the way we calculate mortgage broker commission payments.”

According to CBA, the majority of customers draw down their funds within 14 days of settlement.

In September, NAB became the first of the big four banks to change how it calculated broker commissions, with changes also

Sept 2014

Sept 2018

applicable from November.

The following month, Westpac announced its changes would come into effect in January.

At the time, NAB’s executive GM of broker partnerships, Anthony Waldron, who is also chair of the CIF, said, “As an industry, we are working together to make changes that are focused on doing the right thing, and to improve consumer trust.”

The CIF released its reform package in December 2017 – six principles that members are committed to implementing to ensure better consumer outcomes, preserve and promote competition and consumer choice, and improve standards of conduct and culture in mortgage broking.

The industry has also proposed a standard definition of ‘good customer outcomes’, which considers the size and structure of the loan, affordability, responsible lending requirements and individual customer needs.

CBA has said it will continue to review remunerations.

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NEWS

A S S O C I AT I O N S MENTAL HEALTH PILOT A SUCCESS MFAA has confirmed it is to run a new mental health training program following successful pilot events last month.

Held in conjunction with Lifeline Harbour to Hawkesbury and sponsored by Connective, the sessions covered depression, suicide and domestic violence. The half-day pilot events were designed to give brokers a snapshot of what they could do as ‘accidental councillors’ in terms of identifying an issue, responding and then referring to the appropriate professionals.

THE

SMALLER BANKS COULD BE ‘SQUEEZED OUT’ Customer Owned Banking Association has warned smaller banks could be “squeezed out” of the market following the royal commission, with profound implications for consumers. The statement follows a survey by Grant Thornton of 26 banks and mutuals with asset sizes ranging from less than $1bn to more than $5bn.

“It is essential reading for regulators and governing bodies looking to make industry-wide changes,” said Madeleine Mattera, Grant Thornton’s head of financial services.

THE

EDUCATION INITIATIVE LAUNCHED IN NORTH QUEENSLAND Financial literacy classes are being held at NRL Cowboys House in Townsville to support Aboriginal and Torres Strait Island youth from some of north Queensland’s most remote Aboriginal and Torres Strait Islander communities have taken part in their first workshop on money management as part of an initiative of a broker and the MFAA. Meeting at the NRL Cowboys House in Townsville, the teenage boys were given lessons on basic financial skills such as saving, budgeting, online banking and understanding payslips.

NRL Cowboys House opened in 2017 and now houses 50 teenage boys from those remote communities while they finish studying at schools in Townsville.

The workshops were held by finance broker Mhairi MacLeod, STUDENTS

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founder and principal of Astute Ability Finance Group. In conjunction with the MFAA, MacLeod established the School Entrepreneurs Program to improve the life skills and financial literacy of Australian teenagers.

She said, “It was a fabulous experience working with the boys at NRL Cowboys House, and they were all very engaged and interested to know more about improving their financial knowledge.

“The feedback I received was very positive. One of the boys said it was important to save ‘because that way you can get rich’. I hope the message will cut through.”

NRL Cowboys House manager Gary Cook said the financial skills workshop was a “fantastic” addition

to the centre’s holistic program to provide life-changing opportunities for the students, who come from some of the most remote communities in the country.

“The financial skills workshop is the kind of stuff that is essential for these young men who come from communities that are so remote,” Cook said.

“Learning about how to save and better manage your money helps gives the boys aspirations, and some of the older boys are in part-time employment. We’re about closing the gap by providing them with an education and preparing them for their careers.

“These boys are kicking goals at the moment. They have come so far in the past two years. They are a credit to their families and their communities.”

NRL Cowboys House Girls Campus will welcome the first intake of 25 young women into its care in January 2019, with an additional 25 students expected in 2020.

“Our new team [of state presidents] consists of champions and advocates of the finance broking sector, inspiring brokers around the country” Peter White Managing director, FBAA

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NEWS

MARKET NEW LENDING LOWEST IN FOUR YEARS lending has dropped to its lowest level since August 2014. The value of owner-occupier loans is at its lowest level since July 2015, after a seasonally adjusted drop of 4.2%. The number of loans for the construction of dwellings dropped by 3.5%, and investor lending is now at the lowest level it’s been since 2013, having declined by 18% over the past 12 months alone, according to Master Builders Australia’s chief economist, Shane Garrett.

NEW

FIXED RATE LOAN DEMAND ON THE RISE for fixed rate loans is growing, according to new home loan approval data released by Mortgage Choice.

October figures for fixed rate loans accounted for more than 24% of all loans written, 3% above the 12-month average. Across the country, borrowers in New South Wales were the most likely to fix their interest rate, with almost 30% opting for a fixed rate home loan, up almost 4% on the month prior.

DEMAND

“Three dollars in every $10 of Victorian state revenue come from this highly inefficient [stamp duty] on people buying a home” Fiona Nield Executive director Victoria, HIA

SHORT-TERM RENTALS A LONG-TERM HEADACHE FOR INVESTORS

Airbnb is reshaping the market for investment properties in Australia.

“For example, real estate agents have been cited claiming investors will pay a 2% to 3% premium for properties that show a higheryielding Airbnb income stream.

“Similarly, Airbnb property managers told us their businesses have been growing rapidly, as some investors are achieving better returns on short-term letting than long-term rental.”

Compared to other markets, Sydney and Melbourne have relatively unrestrictive short-term letting regulations.

The AHURI report recommended that Melbourne and Sydney take on a “notificatory approach”, where short-term letting is mostly allowed as long as the host first notifies an authority.

This would give hosts an identification number allowing local and state governments to check compliance with limits on days let and restrictions on listing multiple properties.

Airbnb properties account for between 11.2% and 14.8% of all rental housing stock in some Sydney suburbs and up to 15.3% in Melbourne suburbs research has suggested that housing affordability is being affected by short-term letting, facilitated by sites such as Airbnb.

The report from the Australian Housing and Urban Research Institute (AHURI) said this was “reshaping the market” for investors, and that people were willing to pay more for homes that had the potential for short-term letting.

Properties listed on Airbnb account for nearly one in seven rentals in popular Sydney and Melbourne suburbs, the report said.

The research identified that commercial Airbnb listings, whole dwellings available for more than 90 days each year in both Sydney and Melbourne, are concentrated in inner-city and beachside suburbs.

NEW

This reduces the availability of long-term rentals and creates further affordability pressure in areas that are generally well connected by public transport and within access to employment hubs, essential services and amenities.

In Sydney, commercial Airbnb listings are concentrated in the eastern suburbs, Darlinghurst and Manly. In these suburbs Airbnb accounts for between 11.2% and 14.8% of all rental housing stock.

In Melbourne, commercial Airbnb listings cluster in Central Melbourne, Docklands, Southbank, Fitzroy and St Kilda, accounting for 8.6%–15.3% of rental housing stock.

Laura Crommelin from the University of New South Wales said, “We found some evidence that

TOTAL FHB OWNER-OCCUPIER COMMITMENTS Source: CoreLogic

No. of owner-occupier first home buyers vs first home buyer share 35%

Number

Percentage

20,000

30% 15,000

25% 20%

10,000

15% 10%

5,000

5% 0% Sept 1998

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Sept 2002

Sept 2006

Sept 2010

Sept 2014

0 Sept 2018

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NEWS

TECHNOLOGY

LOAN MARKET LAUNCHES THE HIVE has developed a digital meeting place that brings together almost 200 Loan Market customer service managers across Australia.

The Hive allows the group to collaboratively upskill, share resources and better support brokers. National manager for productivity and performance Kristy Bartlett said, “A lot of brokers would like to put on a support staffer, but they don’t know how to train them and worry what impact it will have on their own schedules.”

LOAN MARKET

BANK PARTNERS WITH DIGITAL PLATFORM FOR EXPRESS SERVICE White label collaboration will see Bendigo Bank use Tic:Toc’s proprietary technology to offer the Bendigo Bank Express instant home loan white label partnership will pave the way for Bendigo Bank to be the first Australian lender offering a digital home loan application and assessment process under its own brand, accelerated by Tic:Toc technology.

After launching instant home loans in 2017, Tic:Toc is now starting to collaborate with financial institutions to offer its platform as a service. As a result, Bendigo Bank Express will be available to customers in early 2019.

As well as offering fast responses, the platform aims to meet responsible lending standards via inbuilt regtech and digital validation of income and expenses.

Announcing the agreement, Tic:Toc founder and CEO Anthony A

Baum said, “Tic:Toc is changing the customer experience when it comes to home loans. It’s no longer necessary to wait weeks for home loan approval when it can be done digitally and conveniently.

“There’s actually not much difference between home loan options. But there can be a big difference in how that home loan is delivered, and the experience for the customer.

“Our automated assessment and approval technology also creates dramatic cost efficiencies for lenders.

“Our partner, Bendigo and Adelaide Bank, shares our passion for great customer outcomes, so we’re delighted the bank has chosen Tic:Toc to offer its customers a truly digital experience, if they want it.”

Bendigo and Adelaide Bank managing director Marnie Baker said, “Our partnership with Tic:Toc is another example of Bendigo and Adelaide Bank investing in innovative technologies to offer Australian consumers more choice, and, ultimately, better digital experiences.

“Our strategy means we can provide the best solution to customers by selecting the right partner to offer the right services to meet our customers’ needs and make it easier for them to do business with us. Fintech disruption, combined with banking innovation, is helping us drive better outcomes, and we consider relationships with fintechs, such as Tic:Toc, as a mutually beneficial strategy.

“We believe we can grow our business through our vision of being Australia’s bank of choice, and we will do this by providing new and existing customers with valued and relevant products and services, all while investing in new capability and innovation.”

SMES ON COMPREHENSIVE CREDIT REPORTING Source: OnDeck, MYOB

10

93%

53%

48%

44%

42%

of small business owners don’t know their credit score

of SME owners who knew their credit score had checked it within the last year

of SME owners knew about CCR

unsure how CCR can benefit their business

knew the actual purpose of a credit score

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DELOITTE NAMES TOP FINTECHS Deloitte Fast 50 has highlighted Prospa, Lendi, Get Capital and Afterpay as among the leading 50 fintechs for performance and revenue growth.

With average gains of 592%, these fintechs posted growth of 308%, 100%, 239% and 8,134% respectively over the last three years, with Afterpay topping the list. Deloitte’s Joshua Tanchel said, “Each year we are inspired to see the sheer quality, capacity and determination of our entrants.”

THE

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NEWS

R E G U L AT O R S

CREDIT CHANGES PROVIDE OPPORTUNITY card changes coming into force in 2019 will give brokers more opportunity to add value for customers. Stuart Stoyan, founder and CEO of MoneyPlace, says borrowers are too easily applying and reapplying for cards, and becoming dependent on balance transfers. Stoyan said, “When the music stops people are going to be caught holding a balance transfer. While you have previously been able to move to a new balance easily, now they might get stuck.”

CREDIT

BROKER GROUPS RESPOND TO ROYAL COMMISSION DISCLOSURES Submissions released by the royal commission shed light on misconduct across 94 broker groups, including harassment, bullying and homophobia broker groups have reinforced their commitment to zero tolerance workplace policies after the royal commission released more than 200 original submissions from 94 groups, dating back 10 years.

While most, if not all, broker groups detailed incidents of falsifying documents and fraud, it has been revealed that some of the behaviour at Aussie Home Loans included sexual harassment, offensive behaviour and homophobia.

In response, the group has pledged to enforce its zero tolerance policy for “unacceptable behaviour”.

Out of 182 total incidents across all groups, there were 29 listed as misconduct relating to false documents and/or declarations SEVERAL

RECORD PENALTY FOR MISLEADING CLAIMS Federal Court has imposed THE $18m in penalties against We Buy Houses Pty Ltd and its sole director Rick Otton, following ACCC action. The fines were levied for making false or misleading representations on how to create wealth through real estate. The Federal Court also banned Otton from managing corporations for 10 years in Australia, permanently restraining him and We Buy Houses from further involvement in real property transactions or investment.

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and/or misleading information.

There were 19 incidents listed in relation to NCCP breaches, including lack of reasonable care, failing to make the right enquiries, and encouraging customers not to disclose the purpose of the loan.

Other incidents included, but were not limited to, sexual harassment at a work event and sexual harassment outside of work; accessing customers’ personal details; numerous counts of unprofessional language and tone; and impersonating customers.

AFG submitted 12 items detailing incidents, which included brokers providing false documents, making administrative errors, breaching the privacy of clients, failing to comply with NCCP obligations, and

creating false approval letters.

Loan Market also made a submission that detailed 33 incidents of misconduct. These included creating false documents, tampering with documentation, inappropriate use of social media, overstated consumer income, and copy and pasting signatures.

Mortgage Choice listed 10 incidents, including more than one case of falsifying signatures, providing false loan approval letters, misstating customer financial positions, and falsifying documents. The broker group also listed three cases of failing to provide a Statement of Advice to customers.

Smartline listed incidents of altered valuation reports, failure to make reasonable enquiries about a customer’s financial circumstances, and inaccurate information on loan applications. It also detailed an “isolated incident” relating to theft from a customer that ended with the broker’s licence being revoked and the sale of their franchise.

DWELLING SIZES DECLINE Source: ABS, CommSec

All new homes built in 2017/18: Average floor area

Queensland

NSW

190.5

162.8

5.8%

-10.5%

Square metres % change in metres

ACT

Victoria Australia 186.3 -1.6%

Western Australia

201.8

151.5

1.5

-0.8%

211.5 1.0%

South Australia 182.3

-9.3%

Tasmania 173.5

-7.1%

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SPECIAL REPORT

JOINING FORCES

Resimac’s GM of third party distribution, Daniel Carde, explains how Homeloans and Resimac have combined the best of both brands to capitalise on a growing demand for specialist lending

KEY BUSINESS METRICS

$12.1BN

loan book

50,000+

home loan customers

$4.3BN

value of total settlements FY18

19.4%

year-on-year increase in total settlements FY18

$8.6BN

value of principally funded loan book

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last two years have seen record merger and acquisition activity across all sectors globally. In 2016, Deloitte reported the “busiest year ever” as the value of global deals exceeded $4.7trn, with the banking and securities sector the second busiest.

In 2017, the value of M&A deals reached a six-year high in Australia, and in 2018 KPMG predicts activity will increase by a further 10% by year end, following a “ground shift” in the financial services sector that has resulted in a “very buoyant M&A environment”. What’s more, KPMG expects that, within financial services, the trend will continue well into 2019.

One of many deals contributing to the statistics was the merger of Homeloans and Resimac Limited.

Finalised in 2016, the merger formed one of Australia’s largest non-bank lenders, with a combined loan portfolio of more than $12bn.

However, until this month the two brands continued to exist side by side – in the marketplace and on aggregator panels. Behind the scenes, policies, procedures and processes have been aligned since 2016, while the market- and brokerfacing side of the business continued to operate under two separate names.

Now Homeloans and Resimac are to be unified under a refreshed Resimac brand for all Australia and New Zealand operations, with effect from 3 December.

In part, the Resimac name was chosen to continue market association with the lender’s specialist products, an area of the business that has been active since THE

2007 and that will remain a key focus area moving forward. Coupled with Homeloans’ wide-reaching distribution, it’s tipped to be a recipe for success.

Calling the rebrand a “natural evolution” of the merger, joint CEO Scott McWilliam says, “We have turned our attention to developing a simpler, single-brand platform from which to serve our customers and distributors and continue our strong growth.”

While there is no material change for customers, one of the benefits of operating under a single brand

about who we are and what we do.”

A highlight of that range is the non-bank’s ongoing commitment to specialist lending, an area that has seen a resurgence over recent months thanks to tightening lending criteria among the major banks.

In August, ABC published data confirming a 40% spike in failed refinance applications and further increases in the number of first home buyer, investor and owner-occupier loan rejections. In November, new lending declined to the lowest level since August 2014, driven by major banks rejecting applications from borrowers who only a year ago were considered prime.

Specifically, year-on-year figures for September 2018 showed total finance was down 7.7% on average, with owner-occupier loans down 18.1% and investor finance down 11.5%.

However, the trend is good news for the non-bank lenders, particularly those in the specialist space.

Data calculated by ANZ shows non-bank housing credit is up 13%

“The biggest opportunity for us is that Resimac has been known as a specialist lender in the past so we are looking to capitalise on that” is that it will make things easier for brokers through streamlined and targeted marketing and simpler customer interaction.

GM of third party distribution Daniel Carde says, “As part of the process we did consider new brands, old brands. We engaged with an external brand consultancy group and, after considering all our options, the decision was made to run with the Resimac brand.

“The consolidation of the brands provides an opportunity in how we market to brokers, and it provides an opportunity for brokers – and the wider market – to better understand the complete product range that we offer, and remove any confusion

year-on-year, with further data from AFG showing a 30% increase in total market share for the non-banks in the last two years.

“The biggest opportunity for us is that Resimac has been known as a specialist lender in the past so we are looking to capitalise on that and reach a broader market through what was traditionally our Homeloans distribution,” says Carde.

“It’s about putting the best of both together – the Homeloans distribution with the Resimac funding, supported by our other long-term funding partners.”

The right questions In part, Carde attributes Resimac’s

In partnership with

put it forward to us so we can make an informed decision.”

For Carde, there is only one rule for these conversations: nothing is off-limits.

“The simple rule is that if something doesn’t stand out or you’re not clear on something, just ask further questions and make sure you convey that to the lender.

Anything that is relevant should always be put forward to the lender,” he says.

Daniel Carde, GM of third party distribution, Resimac

market strength to an extensive credit policy, which has contributed to the lender’s reputation for catering to “the broadest possible market”. For example, impaired and alt-doc borrowers can borrow up to 90% of the value of the property, and an unlimited number of defaults and arrears can be considered.

“There has been quite a bit of uncertainty about the residential market, and investors seem to be looking for alternative options,” he says. “I certainly believe this has contributed to the growth in business lending. Also, with cash rates at historical lows, investors are looking for better returns. Finally,

brokers seem to be picking up a larger slice of the commercial pie.

I think the last point is the main reason.”

In November, Resimac introduced an 85% LVR residential mortgage product with no LMI requirement or risk fee and a maximum loan amount of $1.1m.

“We fund right the way from the prime 80% owner-occupier loans, all the way to the creditimpaired, alt-doc loans. We fund all those ourselves through our own platform, as well as our other funding partners, and, importantly, we have been funding loans for over 30 years,” he says.

At times, products have even

been introduced and amended to meet market needs. For example, a rise in interest from self-employed borrowers is met through a range of alt-doc solutions, including higher-LVR options.

This has also allowed Resimac to cater to a broader section of the self-employed market. Likewise, when it comes to credit-impaired borrowers, similar demands can also be met – providing brokers are asking the right questions during client meetings.

“It all comes down to the story, and that is where brokers come into play,” Carde says. “When they talk to the borrowers they need to get as much information as possible and

Growth strategy With brokers driving more than 85% of Resimac’s mortgage originations, the lender’s third party strategy will remain unchanged for the time being, retaining a focus on exclusive broker distribution of Resimac-branded mortgages.

The focus for Carde is the current market conditions and the “great opportunity” they provide for brokers to diversify into specialist lending. He believes these opportunities will multiply as comprehensive credit reporting is rolled out.

“CCR will certainly change the way in which lenders accept applications because there will be a lot more data available when making a credit decision. What is a prime loan today may not be a prime loan tomorrow,” Carde says.

“As more and more data becomes available, brokers will need to consider diversification outside of that prime category and look to lenders such as Resimac which offer both near prime and specialist lending solutions to borrowers who potentially fall outside of the traditional lending guidelines.”

With access to more than 85% of the broker market through its aggregator partnerships, Resimac enjoyed a strong FY18. Total settlements reached $4.3bn, up 19.4% on the previous year, and assets under management reached values of $12.1bn, up 18.6% on the previous year. Further, the principally funded loan book reached values of $8.6bn, an increase of 30.3% year-on-year, and the future looks equally bright.

Carde says, “It’s now time to focus on exactly what we are good at.” AB www.brokernews.com.au

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BUSINESS PROFILE

THE ESSENTIALS OF SMSF LENDING

What are the underlying factors that have allowed La Trobe Financial to continue offering its SMSF products as the majors pull away?

Q

We have been offering SMSF commercial and residential security mortgages since 2009, and our SMSF portfolio has demonstrated stellar performance outcomes with these high-quality super prime borrowers, who are saving and investing for long-term retirement purposes, proving to be low risk – contrary to some press reporting.

Our SMSF lending continues to be strong, and we expect it to get even stronger now that the majors have pulled out of the market.

Competition in the market will of course become more limited, and we believe that a number of non-bank lenders will continue to support this type of specialist lending. La Trobe Financial’s broader product range continues to support brokers in the SMSF and other underserved markets.

A

The major banks may have withdrawn from SMSF lending, but Australians continue to take control of their funds. La Trobe Financial’s chief lending officer, Cory Bannister, explains how the sector could shape up

In the five years to 2017, SMSF-lending-based property assets (as a proportion of total assets) increased from 3.51% to 21.17%. According to your observations, what is driving this trend?

Q

With more than one million Australians having turned to taking more control of their own super, the SMSF sector continues to grow. SMSFs continue to have a significant influence on the overall growth of the $2.7trn Australian superannuation industry, with SMSF assets increasing by $274.3bn or 65% in the five years to 2017. So with this in mind we can expect this sector to continue to be important in asset allocation debates in the retirement industry.

The majority of SMSFs are formed by self-employed business people who are astute and understand investment risk, having run their own businesses.

They have a bias towards asset classes with low volatility and assets that have longer-term investment horizons of 10 or more years. To this end, property is imminently recognisable and understandable for SMSF investors.

A

How do you believe the trend will play out over the next five years?

Q

Looking at growth in the number of SMSFs, it is on an upward trajectory, growing on average 5% year-on-year (over the five years to 2017), from 473,000

A

16

www.brokernews.com.au

SMSFs to 597,000.

With a notable increase in the younger entrants, particularly in the 35 to 50 age bracket, and a gender shift in the SMSF landscape, combined with Australia’s penchant for DIY, we expect the numbers will continue to rise but at a lower annual rate than previously.

Has the withdrawal of Q major banks from SMSF lending caused any reputational damage among consumers?

A

We believe that the reason why the banks may be

withdrawing from SMSF lending is simply to streamline their product range and concentrate more on the individual home loan type product. This will also assist the banks in the processing of simpler prime-type home loans, where automation is the key for them.

The SMSF loan product is a bit more complex in structure and more difficult to fit into their automated credit model. We also believe that the banks may be required to hold higher capital levels for these types of loans compared to a prime standard home loan for individuals.

In terms of the residential and commercial SMSF products on offer from La Trobe Financial, what are the pros and cons that brokers need to outline to their clients?

Q

A

We would suggest that clients have an SMSF in place

SMSF PRODUCTS BY LA TROBE FINANCIAL Product details

SMSF Residential

SMSF Commercial

5.99%

5.99%

Residential security

Commercial security

Purchase and refinance of investment

Purchase and refinance of investment

80% rental income. SMSF contribution statement. Income deemed at 3.9%

80% rental income. SMSF contribution statement. Income deemed at 3.9%

Business/investment only

Business/investment only

Minimum loan amount

$100,000

$100,00

Maximum loan amount

$1,25m (80% LVR)

$2M (70%LVR), $10M(65% LVR)

No

No

30 years

25 years

Principal and interest

Principal and interest/interest only

n/a

5 years

Current rate Security Loan purpose Verification Personal or business/investment purposes

LMI required Maximum term Repayment type Maximum interest-only term

GROWTH OF SUPERANNUATION ASSETS BY FUND TYPE 2012–17 Source: ATO

Growth of total superannuation assets over 5 years – $941.5bn

Cory Bannister, chief lending officer, La Trobe Financial

35 $287.5bn

adequate funds in their superannuation to allow them to borrow funds to purchase a business premises through an SMSF, it might make commercial sense for them to purchase their

“It might make commercial sense for them to purchase their business premises, as they can use cash flows from their business to pay their mortgage” Cory Bannister, chief lending officer, La Trobe Financial receive independent advice from an appropriate adviser first.

An example of when it may be appropriate to recommend that your client seek advice about setting up an SMSF is where they are self-employed and currently leasing their place of business. If they hold

business premises, as they can use cash flows from their business to pay their mortgage, as opposed to paying someone else’s by way of rent.

It is a discussion your client might wish to have with their financial adviser. AB

30

$274.3bn

30.5%

29.1%

25 Proportion of growth (%)

already, unless they are coming to a broker with advice from an adviser and are in the process of establishing their SMSF. Clients should not be encouraged to establish SMSFs unless they

$207.8bn 22.1%

20

15 $104.3bn

10

11.1% $56.1bn

5

6.0% $11.5bn

0

1.2% Corporate Industry

Public sector

Retail

SMSFs

Other

Fund type

www.brokernews.com.au

17

FE AT URES

IN THE NE WS

LEADERSHIP FOR A NEW ERA Following its acquisition by REA Group and additions to the leadership line-up, Smartline is now preparing to welcome as many as 30 new franchisees by mid-2019. Australian Broker catches up with CEO Sam Boer and think how do we differentiate ourselves and how far do we go in setting the standards for ourselves and our business?”

Sam Boer, CEO, Smartline

been a busy 18 months for Smartline. In July 2017, real estate heavyweight REA Group bought an 80% share of the business, strengthening its presence in Australia’s $400bn home loan market.

REA isn’t the first or only company to combine property and finance.

However, recognising brokers as a key inroad, the Smartline deal was a smart move indeed, giving access to a nationwide network of 400 loan writers and over 300 franchisees.

In July, a re-energised Smartline announced that CBA’s former GM of broker distribution had been appointed CEO, effective from August.

A specialist in broker distribution, Sam Boer’s remit is to “lead Smartline into a new era of broking”, one that will be shaped by the royal commission, new lending policies and a heavier focus on using technology to promote efficiency and productivity.

“We are already in the new era. We have to be more accountable for what we do, and clearly the one thing that has come out of the royal commission is that, first and foremost, we have IT’S

18

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obligations to our clients as well as to the suppliers we use,” Boer says.

In part, Boer will focus on increasing efficiency in processes and identifying where time – and money – can be saved through outsourcing and automation. Elsewhere, he will examine how the quality of broker and client relationships can be improved.

“At the end of the day, there will be some form of legislative benchmark change ahead but, from my view, that’s the minimum baseline for us,” Boer says. “We then look at that

A case of compliance Hand in hand, investments are being made in an internal compliance program combining technology, culture, leadership and training, as well as processes. This will be spearheaded by a new team, soon to be recruited.

While the backdrop of new owners and new leadership has clearly influenced the current strategy, the impact of the royal commission cannot be underestimated.

In November, Boer attended his first PD day as CEO, and his message to brokers was clear: “Now is the time to get your house in order. While the market is a little softer, do your spring cleaning, make sure your processes are solid, and then formulate a plan for the future.” he said.

“Let’s not get stuck and let fear hold us back, which I think is the natural response when there is so much uncertainty. Let’s use this to stay above the line and ask the question of how do we capitalise and how do we set up? So when the market returns and improves we are really fit to do good business.”

Time for growth Preparations for that time also include a franchise network expansion

building on the current network with an additional 30 franchisees by the end of June 2019.

Opportunities will exist for both new and established brokers, with support available in loan writing, marketing and lead gen, internal mentoring and coaching schemes.

“We are in the business of producing successful franchisees – they win, we win. So we don’t rack, stack and pack with just throwing anyone in and hoping they succeed.

We bring people in who are very selectively chosen to ensure they succeed,” says Boer. “I have the opportunity now to take that forward.

That’s the exciting part for me.”

Boer is also reviewing the lending panel with a view to expanding the line-up to support broker diversification into such areas as asset finance and personal lending.

As if that wasn’t enough, 2019 marks Smartline’s 20th anniversary.

“I think 2019 will be a great year.

It’ll be about acknowledging the whole legacy of Smartline, our history and culture. Everyone here has such a strong sense of belonging, and it’s a fantastic environment; that means people stay with us,” Boer says.

“I’m looking forward to next year in terms of how we recognise that and how we preserve it as we move forward, while leveraging the assets and strengths that being part of REA will undoubtedly bring to the party.” AB

SMARTLINE AT A GLANCE

1999

80%

300+

400+

+30

Smartline established

share purchased by REA in 2017

current franchisees

loan writers across the business

franchisees to be recruited by mid-2019

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

THE SOLUTION

Paul Sealey, mortgage adviser at uno Home Loans, shares the lessons he learned when he was called on to help a client navigate the financial fallout from her divorce and keep the family home Location: Queensland

THE FACTS

20

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Client and goal Female in her 30s; removal of ex-husband from home loan and title

Lender Liberty

Aggregator uno Home Loans

Remaining in the family home of 10 years was a critical step to help the two children through the divorce, and she was worried they would not be able to do so.

To maximise my chances of finding a solution for the client, we started with a thorough fact-find. I spent a long time talking to her to understand her situation and objectives. We talked through her

THE SCENARIO

Divorce is a stressful and upsetting experience for all involved, and the additional worry of splitting assets only adds to it.

One of my most complicated deals was for a client going through exactly this situation: she and her ex-husband had decided she would remain in the family home to bring stability to their children’s lives at a difficult time. She would therefore need to buy him out, but was having a hard time securing finance.

I received a call from her distressed grandfather explaining the situation.

They had tried several lenders and brokers to get the loan but had not been able to find a solution. By the time they came to uno Home Loans, they were starting to get worried.

My primary aim in this case was to prevent as much disruption to her family’s lives as possible. The eldest son had Asperger’s syndrome and the youngest had attention deficit disorder. Changes to their lives, even small things, had an enormous impact, and their mother desperately wanted to minimise this as much as possible.

Loan size and term $135,000 for 30 years

I looked through uno’s lending panel and talked to our BDMs to discuss the situation and options available. Due to the client’s income source, I spent a lot of time looking at specialist lenders that would be able to consider her situation. My research showed that Liberty would be the best option considering the income presented by the client.

As I had spent so long understanding the client’s needs and gathering all the supporting documents, beyond the requirements stipulated by Liberty, it made for a seamless transaction. As my conversations with the client showed, she certainly needed this to be simple and painless given the stress she was already under in finalising the divorce.

I managed to provide her with a great solution and negotiated a competitive rate with the lender. I left the client with the feeling that she had conquered the insurmountable and not only survived but come out on top in the shortest amount of time.

THE TAKEAWAY

This case reinforced to me the importance of investing time and effort: asking the right questions, being a fastidious notetaker, and gathering more information than the lenders require. This really saved the client, lender and me so much time in the long run and made for a much better client experience.

We built a great rapport during the journey, and I felt that I was able to turn a negative situation into a positive one for her. She certainly felt supported and that I had made the time to really understand her needs.

The case also reminded me that having an in-depth knowledge of all lenders’ credit

She certainly needed this to be simple and painless given the stress she was already under in finalising the divorce

Paul Sealey Mortgage adviser, uno Home Loans

financial position, long-term needs and goals, what she estimated her living expenses would be post loan settlement, and the impact of this loan on her future position.

In working through to find the right solution, we found that the client’s greatest obstacle was going to be finding a lender who would accept her income. Her options were significantly narrowed because she received a carer allowance, family tax benefit and spousal support.

policies – not to mention great relationships with BDMs – assists in getting the best outcomes for clients and helps a broker to talk through scenarios. This is particularly true for cases that are a bit out of the box.

Putting myself in the client’s shoes inspires me to always go that extra mile.

My goal is to provide the high level of service that I would like to receive if the roles were reversed, and it has proven to be a winning formula so far. AB

www.brokernews.com.au

21

PEOPLE

CAUGHT ON CAMERA Finsure and LoanKit Group’s national conference took place in Queenstown, New Zealand, last month, with 200 brokers in attendance. The conference included keynotes from Mark McKeon, Steve Sammartino and Mark Donaldson VC and was followed by a gala dinner and awards ceremony that recognised leading brokers and brokerages across 13 categories. Among the winners were John Pantelidis, Complete Lending Solutions; Elizabeth Barter, Finestream Capital; Colin Lamb, Mortgage and Finance Solutions; William Dale, BD Professional Mortgages Pty Ltd; Noushig Megerditchian Finsure and LoanKit; Anthony Alabakov, My Mortgage Freedom; Neville Ayrouth, First Point Finance; Anthony Calandrella, ANZ; Anthony Alabakov, My Mortgage Freedom and Mhairi Macleod, Astute Ability Finance.

Photography by Simon Kerslake

22

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23

PEOPLE

Get involved in the discussion Share your thoughts at

brokernews.com.au

FROM THE FORUM

Top comments from trending stories on brokernews.com.au

Commonwealth Bank CEO Matt Comyn told the royal commission he supported a flat-fee remuneration model for brokers and regulatory change with respect to trail commissions during the final round hearings on 19 November. Comyn said CBA had been looking to move to a flat-fee model back in April 2017 but was concerned that other institutions would not follow. He said, “We were struggling … with how to implement, and I’m sure we will return to it. We felt there was a genuine first-mover disadvantage.”

So basically using their power and greed to destroy the viability of the broker industry and then being able to fleece customers more than ever before. Since when was the RC all about brokers’ income? What a farce.

We need the aggregators to stand unified and challenge any CEO that believes similar. Is this a royal commission into broker remuneration?

Brett | 20 Nov 2018, 09:23 AM

Broker | 20 Nov 2018, 07:50 AM

Mr Comyn is the personification of a ventriloquist’s dummy.

CBA does not realise that over 17,000 small businesses will go broke with no upfront payments or trail commissions.

That does not include ancillary small businesses that rely on broker-introduced business for their survival.

The banks are looking to hijack the RC, divert the attention away from their misconduct and place the focus on broker commissions. If the RC is blindsided by the banks and their agenda to break down the broker industry’s viability, the outcome will be the death of broking. There is not a silver lining for any of these participants.

Concerned | 22 Nov 2018, 09:30 AM

Terry | 20 Nov 2018, 09:31 AM

Careful not to bite the hand that feeds you, Mr Comyn(ist).

In order to have a balanced conversation I would like to offer my support to Matt Comyn ... but I can’t ... the guy is a moron!

Craig | 20 Nov 2018, 08:50 AM

Ex CBA Broker | 20 Nov 2018, 09:31 AM

Perhaps the question should be, what value do you, Mr Comyn, provide your customers for your annual salary package?

Leigh | 20 Nov 2018, 08:51 AM

CBA has made no secret that they want rid of the broker channel; with the second-biggest branch network they are well positioned should it take a major hit.

The really disturbing thing for me was how conveniently QC Rowena Orr played to that agenda. Plenty of questions where the broker channel could be scapegoated easily.

Denis Flynn | 20 Nov 2018, 08:54 AM

CBA have been trying to undermine the broker industry for years. This is proof that they have no intention of changing their ‘greed is good’ philosophy. They still see even the commission as a means to increasing company profits at the expense of brokers and, in turn, customers.

Bottom Line | 20 Nov 2018, 09:33 AM

You heard it from the horse’s mouth: CBA is not interested in paying brokers for the work performed but still want their support. You’d need to really think twice before giving this bank any business!

This bloke is an absolute hazard and a joke. He has no concept of what a broker does for a client.

Don Pasquale | 20 Nov 2018, 09:39AM

Country Broker | 20 Nov 2018, 09:11 AM

I think we will all be OK. The government bodies will see through this self-serving dribble. It’s not as if they have just caused the housing market to grind to a halt...

I do hope that the commission sees right through this as a blatant misdirection!

Aaron | 20 Nov 2018, 10:00 AM

Peter | 20 Nov 2018, 10:08 AM

24

CBA don’t value the broker chain so why give them business!

Support the non-bank lenders!

Any broker worth their salt will remove CBA from their panel immediately. I have! It won’t matter what they do with broker remuneration if they don’t have any brokers.

Anon | 20 Nov 2018, 09:51 AM

Fed Up | 20 Nov 2018, 10:11 AM

www.brokernews.com.au

www.brokernews.com.au

25

DATA

WESTERN AUSTRALIA

VIC SPOTLIGHT

Income outpaces dwelling prices, improving affordability Over recent years, Perth has found itself in an unusual position. According to Kate Forbes, national director of property strategy at Metropole Property Strategists, household income has grown at a faster pace over the past five (3.7%) and 10 years (30.6%) than median dwelling prices, at 1.1% and 11.6% respectively, leading to improved affordability. However, Perth house prices keep falling due to local economic conditions, poor consumer confidence and an adverse supply-to-demand ratio.

As in all of Australia’s other states, WA’s population trend has a significant impact on the overall performance of its property market. “While Perth may level out in the next six months, it’s much too early for a countercyclical investment in the west,” says Forbes. “I can’t see prices rising significantly for a number of years.” This is in large part due to the oversupply of new apartments, meaning little to no prospect of capital growth or rental growth in the apartment market.

Area

Type Median value

Quarterly

12-month

growth

growth

Perth

H

$495,000

-3.9%

-1.0%

WA Country

H

$325,000

-4.4%

-2.9%

Perth

U

$380,000

-3.8%

-2.6%

WA Country

U

$214,000

-16.1%

-14.9%

NEW SOUTH WALES

Opportunities abound for those willing to look beyond Sydney Despite the downturn, opportunities remain for those willing to look beyond Sydney’s everexpanding borders. Wollongong and its surrounding areas present a number of interesting opportunities.

Looking northward, numerous properties in Ballina and Byron Bay are also undergoing extensive renovation and renewal, particularly in the Ballina Island and East Ballina precincts. This has partly been borne out of necessity – such as legal requirements for owner-occupiers – as well as buyer interest, as there is demand among investors for high-quality renovated properties.

However, for those who do want to invest somewhat closer to Sydney’s urban hub, it may not even be necessary to look so far afield.

“One of the nice areas I like is Central Coast – that’s an hour and a half from Sydney,” says Philippe Brach, CEO of Multifocus Properties.

“The lifestyle is great – we’re looking at houses around $600,000, which is a lot cheaper than if you’re closer to Sydney.”

Area

Type Median value

Quarterly

12-month

growth

growth

FIGHTING THE DOWNTURN

Victoria’s performance may be following in the footsteps of NSW, but buyers and investors can still enjoy many benefits in this market

has found itself in a similar situation to sister state NSW in recent months, with an overall downturn across the house and unit markets. Nonetheless, it remains an attractive option for many investors, and they are yet to be deterred.

As Australia’s second-largest urban hub it will always retain a certain attraction for owneroccupiers, renters and prospective investors alike. The primary issue at the moment is around the margins that can actually be made across all these market segments.

Naturally, some buyers are seeking greener pastures. For Philippe Brach, CEO of Multifocus Properties, the key is to look for areas that offer sustainable growth. He points to both Geelong and Ballarat as cities that are enjoying rapid increases in value, in part because they are within a commutable distance from Melbourne.

“Today, there’s a massive migration of people who were living in Melbourne out to these areas because the commute is fine and prices are a lot cheaper,” says Brach.

“In Geelong, you can find a four-bedroom house on a nice block of land at only $500,000.

Prices have grown quickly and are still growing fast because not only is Geelong a commutable distance from Melbourne but the area has got its own economy, and the government is pushing a lot of its functions there, like the National Disability Insurance Scheme.”

Similarly, in Ballarat you can get four-bedroom houses on 600sqm blocks for $430,000 to $450,000, which is a more attractive proposition than the pricing in the nearby capital.

“Closer to Melbourne, the same properties would be worth $700,000 to $800,000,” says Brach. “So a lot of people would actually move out there to beat the price issue.” AB

H

$915,000

-9.4%

0.0%

Median price (houses)

NSW Country

H

$470,000

-1.7%

4.4%

$518,661

Sydney

U

$700,000

-4.1%

-0.9%

NSW Country

U

$400,000

2.6%

-0.6%

www.brokernews.com.au

In spite of the soft market in Melbourne, there are still opportunities for buyers The Melbourne market has definitely softened over the course of 2018, with stock sitting for longer before selling and prices declining slightly across the board. Given the enormous growth of the last decade this is hardly surprising, and it's important to keep it in perspective. Even a 5% drop in market values only takes us back a year or perhaps two – hardly the catastrophe that some in the media would like to pretend.

Having said that, it's important to be realistic about the market as it stands and adjust accordingly. If you can delay selling for another year or so, then it's probably a good idea.

There may also be some good buys in the current market, provided you don't overleverage the property. It's important to recognise the opportunities that a soft market offers, but don't put yourself in a position where a continued decline could put you under pressure.

All in all the market is definitely soft, but it's not a cause for panic, and if you're in a position to buy, then now may be a good time.

Edwena Dixon Founder and senior mortgage broker, Pinpoint Finance

SUBURB TO WATCH: BACCHUS MARSH

Sydney

26

BROKER PERSPECTIVE

VICTORIA

Median price (units) $324,894

Source: CoreLogic

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

23.6%

36.6%

55.1%

4.0%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

9.3%

21.9%

25.5%

5.6%

AUSTRALIAN CAPITAL TERRITORY

Taxing times for the Australian capital OPPORTUNITIES AND KEY INFRASTRUCTURE

Connectivity

Roads

Rail

Future industries

Construction of the airport link to begin by 2022

The 6km Drysdale Bypass will cost $117m

Cranbourne line upgrades will double train frequency and create 1,000 jobs

A $20m fund for new energy jobs will support renewable energy

HIGHEST-YIELD SUBURBS IN VICTORIA Suburb

Type

Median price

Quarterly growth

12-month growth

Warracknabeal

H

$110,875

4%

-5%

Cobram

U

$150,000

-12%

-17%

Nyah West

H

$147,000

7%

13%

Orbost

H

$152,360

-2%

-5%

Donald

H

$135,000

8%

3%

As stamp duty is phased out, gradual increases in land tax are affecting prices in Canberra.

As a result, Malcolm Gunning, president of the Real Estate Institute of Australia, says, “We don’t expect to see any growth in Canberra unit prices.

If anything, I think it will trend down.”

However, optimism remains: with the government serving as the territory’s biggest employer, job opportunities are strong. Canberra also has good infrastructure, thanks to initiatives such as the new light rail network. And while the city has not traditionally been as favoured by investors as Sydney or Melbourne, its relative affordability is attractive.

“Canberra is also underpinned by the growth of surrounding areas Goulbourn and Queanbeyan,” says Gunning. “They’re two strong growth areas that are based on affordability.”

Canberra and its neighbouring areas are seeing families relocate from cities where housing costs are higher, which is boosting the local economy.

Area

Type Median value

Quarterly

12-month

growth

growth

Canberra

H

$697,750

0.6%

6.2%

Canberra

U

$435,000

-1.8%

0.2%

www.brokernews.com.au

27

DATA

SOUTH AUSTRALIA

12-month

growth

growth

Adelaide

H

$467,500

1.6%

3.4%

SA Country

H

$290,000

-3.3%

1.2%

Adelaide

U

$389,200

5.2%

4.3%

SA Country

U

$168,000

-32.3%

-2.2%

QUEENSLAND

MEDIAN HOUSE AND UNIT PRICES

Regional areas stumble, but Geelong makes a splash

$1,000,000

Type Median value

Quarterly

12-month

growth

growth

Brisbane

H

$540,000

-0.9%

2.9%

QLD Country

H

$425,000

-2.3%

0.0%

Brisbane

U

$399,000

-2.3%

-1.9%

QLD Country

U

$383,000

-3.0%

0.7%

28

www.brokernews.com.au

Total auctions

122

Cleared

29

Uncleared

32

Clearance rate

47.5%

PERTH Total auctions

39

Cleared

2

Uncleared

8

Clearance rate

20%

Houses

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

$460,000

$450,000

$317,500

$0

$345,000

$100,000

$480,000

$200,000

$310,500

$300,000

$476,250

$500,000 $400,000

$540,000

$600,000

$721,000

$700,000

$688,000

$800,000

$860,000

$900,000

Good things appear to be on the horizon for Brisbane. While property price growth has been slow in the past few years, this city still shows the most potential for growth in the three years ahead.

“Property is relatively affordable compared to other east coast capitals,” says Kate Forbes, national director of property strategy at Metropole Property Strategists. “Over the past five years, median prices have grown by 16.1%, while household incomes have increased 9.2%.

Throughout the 10 years to June 2018, prices have increased by 24.1%, while household income growth has been stronger, at 31.3%.”

Brisbane is also fortunate to have not experienced the same crushing prices associated with Sydney and Melbourne. According to Philippe Brach, CEO of Multifocus Properties, houses range from $700,000–$750,000 near the city, to under $550,000 less than an hour away. “There are some good investments that are growing nicely in capital because you’re so close to the centre,” says Brach.

Area

ADELAIDE

Darwin

Units

$417,000

Quarterly

$370,640

Type Median value

There were 2,384 auctions held across the combined capital cities this week, returning a preliminary auction clearance rate of 46.8%, an increase on last week when the final auction clearance rate fell to its lowest reading since June 2012, at 42.7% of 1,541 auctions.

Given this week’s preliminary result is one of the lowest we’ve seen yet, it’s likely that as final results are collected this week’s final clearance rate could come in lower again, potentially nudging the low-40% range. The weighted average clearance rate has continued to track below 50% for seven consecutive weeks now; this is a considerably softer trend than that seen over the same period last year when clearance rates were tracking around the low- to mid-60% range.

The weakening weighted result is largely attributed to softening conditions across the two largest auction markets of Melbourne and Sydney; these two cities have accounted for 83% of all auctions held so far this year. Results across each of the smaller markets were varied this week, with Adelaide recording the highest preliminary auction clearance rate of 47.5%, while in Perth only 20% of auctions cleared.

$541,500

Area

WEEK ENDING 11 NOVEMBER 2018

$662,500

While prices are still rising in Adelaide, results actually indicate a slowing in the annual rate of gain, says Kate Forbes, national director of property strategy at Metropole Property Strategists.

However, there are still reasons to be positive.

Adelaide is the only capital city not to have seen a reduction in settled sales, and Forbes is quick to point out that there’s no such thing as ‘the market’ – SA is a combination of markets, and some are doing better than others.

“In a marked shift, the greatest growth has shifted from the highest-valued properties towards the lower and middle of the market,” she says.

Damien Lee, head of acquisitions at Caifu Property, is still cautious at the moment, though.

“I think there are potentially some very good gains to be made out of Adelaide in the next five to 10 years,” he says. “However, jumping in at the present day is still a bit soon.”

CAPITAL CITY AUCTION CLEARANCE RATES

$381,500

Adelaide prices on the rise, annual rate of gains down

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

-0.1%

-0.5%

-6.1%

-7.4%

Melbourne

-0.1%

-0.6%

-4.9%

-4.9%

Brisbane

0.2%

0.1%

0.5%

0.4%

Adelaide

-0.1%

0.1%

1.0%

1.6%

Perth

-0.4%

-0.8%

-3.5%

-3.8%

-0.1%

-0.4%

-4.4%

-5.1%

Combined 5 capitals

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

BRISBANE CANBERRA Total auctions

110

Cleared

36

Uncleared

44

Clearance rate

Total auctions

139

Cleared

27

Uncleared

57

Clearance rate

32.1%

45%

SYDNEY Total auctions

830

Cleared

258

Uncleared

275

Clearance rate

48.4%

TASMANIA

MELBOURNE Total auctions

1,141

Total auctions

3

Cleared

437

Cleared

1

Uncleared

468

Uncleared

0

Clearance rate

Clearance rate

48.3%

TASMANIA

Area

Strong gains in 2018 are set to slow in the coming year According to Kate Forbes, national director of property strategy at Metropole Property Strategists, Hobart has been the strongest-performing capital city in Australia over the last two years. But it won’t last forever, and caution is advised.

“Over the last five years median dwelling prices have increased at about double the rate of household income growth,” Forbes says. “This has deteriorated affordability.”

As this is prompting investors to move their aim to the next hotspot, it seems likely Hobart’s strong property price growth will slow down in the coming year.

Nevertheless, Tasmania’s employment rate is still one of the highest in Australia, says Malcolm Gunning, president of the Real Estate Institute of Australia. Tourism is driving the employment market – particularly among the younger population – and is emerging as one of the strongest industries.

N/A

Type

Median value

Quarterly growth

12-month growth

Hobart

H

$440,000

-3.3%

12.8%

TAS Country

H

$290,000

-3.0%

7.4%

Hobart

U

$345,000

0.0%

12.0%

TAS Country

U

$242,000

-0.2%

1.8%

All data sourced from CoreLogic.com.au

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29

PEOPLE

Aggregator PLAN

IN THE HOT SEAT Ray Hair, executive director of The Local Loan Company, explains the importance of a client-first attitude and reveals the hiring and education plans that will underpin the firm’s expansion in 2019 What’s one of your recent career highlights?

I have been fortunate to work with some of the industry’s best A people over the last 20 years, initially in my 10 years with PLAN Australia, then with ALI Group and more recently with Homeloans.

However, my current role is my career highlight. Working with two professional and passionate business partners, Kylie Platt and Susan Lepidi, and our brokers and client service team, is something I should have commenced 10 years ago.

Q

What’s the greatest challenge for brokers at this time?

Brokers face two very significant challenges right now, each of A which can provide opportunity. The fall from grace of our lending and investment institutions provides insight into how easy it is to lose sight of what is most important: our clients’ interests. Put your clients first and provide advice that addresses their current and future needs.

Building client knowledge and trust is of paramount importance, and it will pay dividends.

Our other challenge is the emerging economic slowdown and credit crunch. Lower immigration, cooling property prices, rising interest rates and rising unemployment all point to increased financial stress for many people. Now more than ever our clients need our support, advice and assistance.

Q

What was your first job?

My first full-time job was with the ATO, where I worked for six A years in a variety of roles whilst also finishing my economics degree and backpacking around the world. I then joined Deloitte, where I worked for another six years, qualifying as a chartered accountant before moving into financial services with the RACV, then Fortis Insurance and PLAN Australia.

Q

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

Growing a boutique, diversified financial services business is A an ongoing process that is both rewarding and challenging.

We are currently working to launch our new-to-industry broker program and double our broker team in Perth and Melbourne.

Developing an integrated financial planning and mortgage broking practice is about recruiting and developing the right people.

We know we have one of the best client service teams and effective processes to support our brokers; now we need to build a national business that delivers professional, passionate service and advice to existing and new clients. AB

Q

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