Australian Broker 18.07

APRIL 2021 ISSUE 18.07

Property prices rising rapidly Brokers, real estate agents and buyers’ agents talk about the property boom /18

Mortgage Ezy funds Kenyan students Non-bank lender transforms lives through education scholarships /22

Celebrating women in finance Female brokers meet up for Women in Finsure event /25

ALSO IN THIS ISSUE…

GREG PELL Westpac is providing a lifeline to COVID-affected businesses, offering low-rate loans under the government’s SME recovery and guarantee schemes /14

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Big deal Broker Michael Burke helps contractor secure loan to boost cash flow /16 Broker on broker Pink Finance founder Nicole Cannon on the benefits of social media /24 In the hot seat Natasha Choi explains her transition from property investor to finance broker /30

12/04/2021 1:51:40 PM

NEWS

IN THIS SECTION

Lenders La Trobe Financial sets up fund for flood-affected customers /04

Aggregators REA Group seeks to acquire Mortgage Choice /06

Market Over 5,000 insolvencies forecast after end of JobKeeper /10

Industry bodies HIA calls for end to “inefficient” stamp duty /12

Technology CBA extends digital document signing platform /08

GLOBAL WATCH What’s happening in the mortgage, broking and banking world in the United States and Canada? Here’s your snapshot of the news that matters most in North America

PENDING HOME SALES IN U.S. FALL FOR SECOND MONTH the second consecutive month, pending US home sales transactions declined in February as homebuyers continued to face the same low-inventory dilemma.

The pending home sales index fell 10.6% from January to a reading of 110.3 in February, according to the National Association of Realtors. Contract signings dwindled 0.5% year-over-year. An index of 100 is equal to the level of contract activity in 2001. “The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift, but contracts are not clicking due to record-low inventory,” said NAR chief economist Lawrence Yun. “Only the upper-end market is experiencing more activity because of reasonable supply. Demand, interestingly, does not yet appear to be impacted by recent modest rises in mortgage rates.”

FOR

www.brokernews.com.au APRIL 2021 EDITORIAL

SALES & MARKETING

Editor Antony Field

Publisher/Sales Manager Simon Kerslake

News Editor Mike Wood

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Production Editor Roslyn Meredith

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CORPORATE

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U.S. MORTGAGE APPLICATIONS CONTINUE TO DECLINE applications fell 2.2% week-over-week in the US in late March, according to a mortgage applications survey by the Mortgage Bankers Assocation (MBA).

In the week ending 26 March, they fell by 2% on a seasonally unadjusted basis. Refinances dropped 3% to a point 32% lower than one year prior. The purchase index fell 2% from the previous week but was up 39% from the same time last year. “After seven consecutive weeks of increasing mortgage rates, the 30-year fixed rate declined 3 basis points to 3.33%, which is still almost half a percentage point higher than the start of this year,” said MBA associate vice president of economic and industry forecasting Joel Kan. “Mortgage applications for refinances and home purchases both declined, but purchase activity was still convincingly higher than the pandemic-induced drop seen a year ago.”

MORTGAGE

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BOOMING CANADA HOUSING MARKET UNLIKELY TO CRASH — REPORT concerns surrounding overheated activity, a Canadian housing crash is DESPITE unlikely unless there’s a spike in mortgage rates or a significant tightening of housing policy, says a new report by Oxford Economics. A housing bubble might be forming due to a pandemic-driven shift in buyer preferences, steadily depleting supply and record-low mortgage rates, but this is ultimately unsustainable, according to the report. On the contrary, the market’s probable trajectory is an eventual cooling, say co-authors Tony Stillo and Michael Davenport. “We then expect housing to increasingly reflect slowing underlying demographic fundamentals due to an ageing population that will experience slower growth,” they said. “We expect house price growth will slow to below the pace of household income growth for the rest of the decade.”

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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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Karen, tennis pro

Oliver, culinary master mind

Nick, avid outback camper

Gavin, firefighter on call

Miki, gym enthusiast

Bindi, chess champion

Phil, environmentalist

A network that celebrates you

“

Powerhouse broker, mother and financial mentor.

With LNS you get the best of both worlds: The support of a team and the freedom to build your own business. We celebrate you as an individual, while offering the benefits of a strong and vibrant community.

As a single parent, Sarah knows the empowerment and peace of mind that comes with financial security. Her passion for helping people get financial extends past the 9-5 by running regular money management workshops for women. Sarah – you’re a finance wonder woman!

...PS, and when I’m not helping you build your business, I’m cheering on the Richmond Tigers in the AFL. - Brendan O’Donnell Managing Director, Liberty Network Services

Sarah, finance powerhouse

We’re more than just an aggregator, because you’re more than just a mortgage broker.

To find out more about becoming a Liberty Adviser, visit liberty.com.au/LNS.

Broker and snowboarder.

Whether it’s tackling snow peaks or a mountain of loan applications, Sean has a knack for navigating his way through any situation. Helping customers get financial gives him the same rush he enjoys on the slopes. Sean, we think that makes you pretty cool!

Sean, snowboard king

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12/04/2021 1:36:04 PM

NEWS

LENDERS MOULA JOINS PANEL AT AGGREGATOR FAST has partnered with non-bank lender Moula to provide greater diversity in its product offerings to brokers. Moula is joining an extensive panel of lenders at FAST that give the aggregator’s 1,200 brokers a wide range of finance solutions. “We’re excited to be partnering with one of the industry’s leading mortgage and commercial aggregators,” said Moula head of sales Tas Tzimos. “The addition of Moula will provide more product choice to the FAST brokers, empowering them to offer their SME clients fast and flexible unsecured finance.”

FAST

MORE WA RESIDENTS KEEN TO BUY HOMES increasing number of Western Australians are saving to buy a home, according to Bankwest.

The second-tier bank’s study, which analysed savings goals over the six months to January 2021, showed 49% growth in homebuying intentions among Western Australians.

This growth was apparent across generations, with millennials and baby boomers ranking homebuying as their second top priority next to big purchases. Millennials made up the majority of those saving for a home – around 20% are putting their money towards a home loan deposit.

AN

“We will stand together with all of our customers and support those most in need and help them rebuild their lives as quickly as possible” Greg O’Neill President and CEO, La Trobe Financial

Commercial Loans

Greg O’Neill, president and CEO, La Trobe Financial

LA TROBE FINANCIAL SETS UP FLOOD RELIEF FUND FOR CUSTOMERS Diversified wealth manager and non-bank lender La Trobe Financial is reaching out to support its NSW and Queensland customers hit by recent severe flooding La Trobe Financial has established a flood disaster relief fund in an effort to provide help to any clients affected by the floods in NSW and Queensland.

The $1m fund will be used to provide $2,000 cash grants to eligible customers who are in need of clothing, food and temporary accommodation.

La Trobe Financial is also offering mortgage deferrals of up to four months for its customers whose homes have been impacted by the floods.

Parts of NSW, including Western Sydney, the NON-BANK

Hawkesbury region, the Mid-North Coast and Moree, were inundated in March, with many homes destroyed and more than 400mm of rainfall recorded in a matter of days. Flash flooding also affected parts of Southeast Queensland.

Other options on the table for La Trobe Financial customers experiencing financial hardship include reductions in mortgage repayments or a switch to interestonly payment terms. Furthermore, La Trobe Financial has made arrangements so that customers can easily access their investments in the La Trobe Australian Credit Fund.

Greg O’Neill, president and CEO

of La Trobe Financial, said the fund was designed to help alleviate the crisis that some of the company’s clients have been dealing with over the past year.

“I cannot imagine how these people are feeling. We have just come out of bushfires and COVID-19, and to be confronted by these floods is a real test to their Australian spirit,” he said.

“However, we will stand together with all of our customers and support those most in need and help them rebuild their lives as quickly as possible.”

La Trobe Financial has also set up a dedicated Hardship Help Team and hotline to help customers.

Customers who have been affected should contact the team on 1800 620 639.

Other financial institutions have set up their own support schemes for affected customers, including NAB, CBA, Westpac, ANZ and AMP Bank.

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Thin

12/04/2021 1:36:19 PM

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NEWS

A G G R E G AT O R S AFG SETS UP TRAIL BOOK MARKETPLACE and specialist cash flow lender TrailBlazer Finance have set up a trail book marketplace giving AFG brokers a single point of contact whose sole focus is provide expert advice and service. “The purchase and sale of a trail book is an important decision. It was important to us that brokers have full access to information that supported their decision-making and was independent of AFG,” said AFG head of sales and distribution Chris Slater.

AFG

MORTGAGE ADVICE BUREAU RELEASES NEW TECH Susan Mitchell, CEO, Mortgage Choice

technologies have been rolled out by Mortgage Advice Bureau Australia aimed at helping its network of brokers and their clients more easily navigate the property market. It also recently launched MABrefer, a lead management tool for mortgage brokers working with potential clients on new home construction, and MABSavers, a mobile application for brokers to assist first home buyers with their finances.

TWO

MORTGAGE CHOICE WELCOMES REA GROUP PLAN TO BUY BUSINESS Mortgage Choice could soon become part of global property business REA Group, which has announced a proposal to buy the broker franchise network of Mortgage Choice Susan Mitchell has welcomed REA Group’s proposal to acquire the national broker franchise group and aggregator.

“We are very excited to be joining forces with REA,” she said. “The logic in bringing our businesses together is compelling, creating a business of scale with a strong human and digital offering. It allows us to assist more customers in a more effective way and accelerate opportunities for our network.”

REA Group is a global real estate digital business listed on the ASX. It owns the most popular property website in Australia, CEO

realestate.com.au, as well as franchise brokerage Smartline and property websites in Asia.

The company announced last month that it planned to acquire 100% of Mortgage Choice via a scheme of arrangement. The plan is to combine Smartline and REA’s extensive audience and data insights with Mortgage Choice’s sizeable footprint and strong brand, creating a broker network with more than 900 brokers and significant growth opportunities.

Mitchell said REA Group’s presence across the property ecosystem and its strong digital capability would cement Mortgage

Choice’s place as one of the top broking groups in Australia.

She said Mortgage Choice had made significant investments in its business over the past three years to grow its franchise network, improve broker productivity and instil market-leading compliance practices in a period of intense regulatory change. This included a new technology platform and a refreshed brand strategy.

“My focus over the past three years has been to set the business up to drive sustainable growth.

Our businesses are highly complementary and this will fast-track that growth, advance digital pathways to increase customer acquisition, and provide an altogether stronger offering to franchisees.”

Subject to Mortgage Choice shareholder and court approval, the scheme is expected to be complete by mid-2021.

“The logic in bringing [Mortgage Choice and REA Group] together is compelling, creating a business of scale with a strong human and digital offering” Susan Mitchell CEO, Mortgage Choice

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Better together.

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Solution-focused lending We consider the circumstances of individuals and provide alternative servicing arrangements for customers with non-standard income or liabilities.

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commbroker.com.au Things you should know: *Loan and age eligibility requirements and other limitations and exclusions may apply.

Applications are subject to credit approval. Terms, conditions, fees and charges apply. Commonwealth Bank of Australia ABN 48 123 123 124 Australian credit licence 234945.

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12/04/2021 1:38:08 PM

NEWS

TECHNOLOGY FINTECH TO RUN WESTPAC CUSTOMER ONBOARDING will partner with fintech FrankieOne, which will become its identity infrastructure provider for its new banking-as-aservice (BaaS) platform. Westpac aims to offer authorisation to businesses that lack a licence to provide banking services, with FrankieOne taking on the role of creating and running Westpac’s BaaS infrastructure, including its customer onboarding.

FrankieOne is dominant in Australia’s BaaS sector, with 100% market share, including three of the big four banks.

The move was announced at the seventh annual Fintech Summit, with FrankieOne CEO Simon Costello and Westpac general manager corporate and business development Macgregor Duncan giving a talk together. Duncan said banks were looking to change to a more open architecture and create stronger customer outcomes by allowing fintechs such as FrankieOne to take over customer onboarding.

WESTPAC

ACCC FINE WITH NAB’S NEOBANK ACQUISITION ACCC says it will not oppose NAB’s plans to acquire neobank 86 400. The decision came after it conducted an examination of the proposed acquisition. It has consulted other banks, non-bank lenders, mortgage brokers, fintechs and other industry players and found that competition would not be affected should the acquisition go ahead. 86 400, which launched in 2019, was granted a full licence in the same year. It differentiates itself from other neobanks by not using any existing legacy or infrastructure systems used by existing financial institutions. NAB already holds approximately 18.3% shares in 86 400, having participated in the neobank’s Series B capital raise.

It plans to integrate the experience and technology platform of 86 400 to its own digital bank, UBank.

THE

Adam Croucher, general manager third party banking, CBA

CBA RAMPS UP DIGITAL DOC SIGNING FOR HOME LOAN BORROWERS The big four bank is making life easier for its home loan customers and mortgage brokers by rolling out greater access to digital documentation is to greatly expand its digital document signing offering, with home loan customers in NSW, Victoria and SA all now able to access, review and sign documents online.

The news will come as a boon to brokers. The mortgage broking industry in particular has shown in the last year that it is highly agile and adaptable, especially in adopting new technologies and streamlining processes during the pandemic.

Mortgage brokers were rewarded with a record 60.1% market share in late 2020, including writing 57% of all new COMMONWEALTH BANK

“One thing we heard from a number of brokers was that the process of sending and receiving home loan documents could be improved”

Adam Croucher General manager third party banking, CBA

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residential mortgages.

“Over the past 12 months we have heard directly from brokers about the different challenges they have faced in serving their customers,” said CBA general manager third party banking Adam Croucher.

“One thing we heard from a number of brokers was that the process of sending and receiving home loan documents could be improved. The constantly changing environment provided us with an opportunity to look at our current process and leverage our best-in-class technology to build a tool that would allow our brokers to better serve their customers not

only in the middle of a pandemic but in the future.”

With more people banking online, customers have been clamouring for the technology to include home loans, and brokers will be delighted to know that this is now a product that they can offer to their clients who bank with CBA. Speaking at a recent webinar, Simon Bligh, the CEO of data firm illion, commented on how important digital transformation is to the broking industry.

“We’re seeing rapid adoption of this in consumer lending,” Bligh said. “It began with digital lending, but now it’s moved to ‘buy now, pay later’, and it’s moving into the mortgage market … if you’re one of the 60% of the market who use a broker, you’ll be offered this tech to show your income and expenditure, and see who can offer you a good mortgage quickly. That’s good for everyone.”

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INDUSTRY UPDATE

GETCAPITAL’S DIGITAL SOLUTIONS ENSURE RAPID FINANCE FOR SMES

Jamie Osborn, CEO, GetCapital

financial circles, there’s a lot of buzz around the concept of “digital transformation”, as open banking and digitalisation enable businesses to evolve, improve operations and deliver greater value to customers, according to GetCapital’s SME Insights series.

At a time when SMEs have suffered massive disruptions and been forced to radically change their way of doing business, GetCapital brought together industry leaders to share perspectives on where digital transformation is taking the marketplace in 2021, with particular emphasis on the use of bank statement retrieval technology in lending.

GetCapital CEO Jamie Osborn discussed the topic with Simon Bligh, CEO of data-driven financial services company illion and Andrew Dodwell, Director of full-service brokerage firm Magnolia Lane Financial Services.

IN

A frictionless solution Australia’s SMEs experienced extraordinary challenges over the past 12 months. They were forced to bring forward years of development and business processes – a mix of resilience, digitisation and customer focus – just to survive.

As SMEs across Australia

took extraordinary efforts to transform their business operations, streamlining the loan evaluation process became an important step on the road to recovery. illion’s frictionless BankStatements technology has radically altered the way business loans applications get processed and approved. It allows businesses, lenders, brokers and even customers to get better outcomes, faster.

“We’re seeing rapid adoption of this in consumer lending,” says Bligh. “It began with digital lending, but now it’s moved to ‘buy now, pay later’, and it’s moving into the mortgage market.

“If I think about mortgage brokers, there are 16,000 in Australia and 10,000 of them use it. If you’re one of the 60% of the market who use a broker, you’ll be offered this tech to show your income and expenditure and see who can offer you a good mortgage quickly. That’s good for everyone.”

GetCapital has been using illion’s BankStatements technology for some time, accelerating its use in the wake of COVID as conditions changed.

“We’re in our seventh year, and I think we might have been one of the first customers of the technology,” says Osborn.

Simon Bligh, CEO, illion

“We’ve had a long partnership with illion. We’ve always had a bank statement product, and I think that is a fundamentally better proposition for everyone in the lending value chain.”

GetCapital’s journey has involved educating customers and the broader market on the benefits and security of the technology. Five or six years ago, the adoption rate of the technology was quite low, but GetCapital has seen a 10% yearon-year increase since then. For example, as recently as 18 months ago, GetCapital reported only about 65% of applications using digital bank statement technology. Now, that adoption rate is in excess of 95%. The chief catalyst was the pandemic, which drove an unprecedented upturn in terms of adoption.

“I’m sure we all experienced it as consumers: we got much more comfortable digitally registering for services, and e-commerce has come to the fore in recent months,” says Osborn. “We’ve seen broader adoption, growing confidence and value.”

Delivering customer value In the equipment financing sector, the pandemic also had a direct impact.

During 2020, because of international border restrictions, no new equipment stock was

permitted to enter Australia. As a result, the market shifted to used equipment through traditional finance statement lending instead of the quicker No-Doc loan process typically used for new asset purchases.

“Used equipment needs the kitchen sink, and it’s a two-week process,” says Andrew Dodwell.

“The businesses are getting their equipment from auction houses, and if it takes two weeks to get that loan assessed, that auction closes and someone else gets the asset.”

To Dodwell, getting approvals quickly in such a scenario is therefore just as critical to a business as it is to a lender. And as a broker, he sees the tangible benefits of bank statement technology in the value it delivers to customers, as credit providers are able to quickly meet core lending obligations, verify key income and expense information, whilst providing a better customer experience.

“The two takeaways for me are that this is real data, and relevant data,” says Dodwell. “What that translates to for us and our customers is the speed in getting approvals and also the ease with which approvals are granted.

These are the solutions that we’re trying to provide, and we’ve had some success. It’s a welcome product to bring to market.” AB

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NEWS

MARKET CAPITAL CITY PROPERTY PRICES BOUNCE BACK city housing markets have outpaced regional markets in terms of price growth for the first time in over a year, according to CoreLogic. The capital cities’ median dwelling value increased by 2.8% in March, compared to 2.5% for the combined regional markets.

Australians’ dwelling preferences have changed due to the COVID-19 pandemic, leading to a migration away from capital cities and strong gains in regional prices. Capital city values were 4.8% higher on an annual basis with the acceleration in growth evident in March, said CoreLogic.

CAPITAL

FLOODING COULD INCREASE LOAN ARREARS — REPORT

THOUSANDS OF INSOLVENCIES COMING, CREDITORWATCH PREDICTS JobKeeper has now ended, and CreditorWatch is expecting thousands of businesses that wouldn’t have survived without government stimulus to shut up shop that JobKeeper has ceased, Australia can expect more than 5,000 insolvencies in the coming three months, according to credit reporting agency CreditorWatch.

The company released a white paper late last month that charted the state of Australian insolvencies at the start of 2021, with a particular focus on how many businesses might close down due to the pandemic, the end of JobKeeper and wider economic trends.

In particular, CreditorWatch focused on the idea of “zombie” businesses, which have been propped up by government stimulus plans such as JobKeeper NOW

floods that ravaged communities in NSW and Queensland could potentially cause an increase in mortgage arrears over the coming months, according to S&P Global Ratings. Its latest report said natural disasters typically had a “more pronounced” effect on mortgage arrears in high-density areas, given the number of properties affected. “While most Australian residential mortgage-backed securities transactions do not have significant exposure to affected areas, we expect arrears to increase in the coming months in areas affected by flooding,” S&P Global Ratings said.

THE

Patrick Coghlan, CEO, CreditorWatch

but will likely fall over now that the safety net has been removed.

“CreditorWatch data has shown that increased government support during the COVID pandemic, largely the JobKeeper subsidy, has created hundreds of ‘zombie businesses’ that would not have otherwise had the cashflow to stand on their own two feet,” CreditorWatch CEO Patrick Coghlan said.

“Now this stimuli has been wound back, these ‘zombie companies’ will be made to surface so we can assess who is commercially viable and who isn’t.”

Though there is a new SME Recovery Loan Scheme in place to aid failing businesses, inevitably

some SMEs will be unable to secure finance and will thus enter administration.

“The end of JobKeeper support will be a difficult but necessary transition,” said Coghlan.

“However, there are still many government initiatives and means of support – such as the extension of the SME Loan Guarantee Scheme – which will be available for businesses that are viable and need access to finance.”

Though some businesses will fail, Coghlan said this would actually be good for the economy as a whole.

“We need to get back to at least pre-COVID administration levels and away from the synthetic environment we’ve lived in for the past 12 months,” he said.

“Businesses need to be allowed to fail; that’s how the economy works. It means companies that shouldn’t be operating aren’t pulling down the rest of the economy.”

“Now this [government] stimuli has been wound back, these ‘zombie companies’ will be made to surface so we can assess who is commercially viable and who isn’t” Patrick Coghlan CEO, CreditorWatch

INSOLVENCY REFORMS FOR AUSTRALIAN SMES Source: ASIC

Reforms that took effect on 1 January 2021:

New debt restructuring process for incorporated businesses with liabilities of less than $1m, drawing on some key features of the Chapter 11 bankruptcy model in the US

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New simplified liquidation process for businesses with liabilities of less than $1m

New class of registered liquidator who can only undertake the debt restructuring process

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NEWS

INDUSTRY BODIES AUSSIE SMES LAG BEHIND ON DIGITAL ADOPTION SMEs are falling behind the rest of the Asia-Pacific when it comes to digital transformation, according to a new report by CPA Australia.

The Asia-Pacific Small Business Survey of 4,000 businesses reveals that Aussie SMEs were the least likely to use social media for business, to invest in tech, to begin or increase online sales, or to review cybersecurity protocols. “Small businesses in Asia are much more likely to undertake activities associated with growth,” said CPA Australia small business expert Gavan Ord. AUSTRALIAN

RISKY LOANS ON THE RISE, SAYS APRA number of risky home loans rose by 26% in the last full quarter, according to industry regulator APRA. In statistics released in March it was revealed that more than $21.5bn was written in loans that the regulator classes as risky in the period ending December 2020. APRA ranks loans with a debt-to-income ratio of more than six as risky, as well as loans that come with a low deposit – a 95% loan-to-value ratio, for example – and interest-only loans to owner-occupiers.

THE

Tim Reardon, chief economist, Housing Industry Association

HIA CALLS FOR NSW GOVERNMENT TO SCRAP STAMP DUTY

when they should be looking at increasing expenditure, they had the rug pulled out from underneath them due to a falling away in stamp duty revenue.

“State governments have also become very reliant on stamp duty: round about a third to a half of state government revenue comes from it, and they need to look at alternative ways of raising revenue rather than simply taxing homes.”

Reardon said it was not important which type of property tax the NSW government chose to replace stamp duty, as whichever mechanism it used would lead to an efficiency improvement.

“You penalise people who need to change homes for health reasons, as in to move closer to a health facility, or for educational reasons, to move closer to study, or for an employment purpose you get penalised for the transfer of a home.”

Any alternative tax is better than stamp duty, claims the peak body for the housing industry in its submission to the NSW government 70% of the revenue raised was lost in terms of economy-wide efficiencies,” he said. “So it’s an extremely inefficient tax.

“It’s also quite inequitable.

We saw that particularly last year where households were required to move to pursue employment and educational opportunities, but if they bought a house in the process, they would be penalised by the punitive rate of stamp duty on their home purchases.

“We also saw last year that the sudden change in homes transacting saw a significant reduction in revenue raised by state governments. In NSW, they lost about $500m. At a time

Housing Industry Association has thrown its weight behind calls to end NSW’s “inequitable” and “inefficient” stamp duty.

The HIA submitted a report to the Buying in NSW, Building a Future consultation paper in March as the NSW government mulled over replacing stamp duty with an annual property tax.

Speaking to Australian Broker, HIA chief economist Tim Reardon said the stamp duty was inefficient, inequitable and incapable of providing state governments with a reliable income stream.

“In the Henry Tax Review, they identified it as the most inefficient tax we have in our system, where THE

“In the Henry Tax Review, they identified [stamp duty] as the most inefficient tax we have in our system”

Tim Reardon Chief economist, Housing Industry Association

BURDEN OF TAXES IN NSW Source: NSW Treasury paper Buying in NSW, Building a Future, Nassios et al (2019)

Marginal excess burden of major NSW taxes 120

107 97

100 80

63

60

43

40

36

31

25

24

22

20

8

0 Stamp duty – Vehicle duty – Stamp duty – residential new cars commercial

12

Emergency services levy

General insurance

Health insurance

Motor vehicles registration

Vehicle duty – used car duty

Payroll tax

Broad land tax

-9 Council rates

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12/04/2021 1:40:09 PM

FE AT URES

COVER STORY

WESTPAC SUPPORTS STRUGGLING SMES Through its participation in the federal government’s loan guarantee and recovery schemes, Westpac is playing a major role in providing crucial funding to small businesses affected by the pandemic and recent flooding

no doubt Australia’s economy is one of the best-performing in the world, riding out the storms of COVID-19 better than anywhere else.

Businesses are bouncing back, more jobs are available, and there’s an air of confidence as vaccinations roll out and international travel slowly returns.

But there are still bumps in the road, with heartbreaking floods in NSW and Queensland damaging and in some cases destroying the livelihoods of small business owners.

Other SMEs, especially those most heavily affected by the pandemic, namely in tourism, travel and hospitality, have continued to struggle. JobKeeper, a lifeline for many SMEs, has now also ended.

This is where the federal government’s $40bn Coronavirus SME Guarantee Scheme has been so important in supporting the flow of credit to SMEs. Phase 1 of the scheme, which started in March 2020 and ended on 30 September 2020, provides lending to SMEs (including sole traders and not-for-profits) by guaranteeing 50% of new loans issued by participating lenders.

Phase 2 of the SME Guarantee Scheme came into effect on 1 October and is open for loans with participating lenders until 30 June.

The new SME Recovery Loan Scheme builds on the framework established in the two phases of the Coronavirus SME Guarantee Scheme and is only open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021 and businesses located or operating in eligible local government areas impacted by the floods in March.

Greg Pell, Westpac’s general THERE’S

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“Westpac is committed to helping Australian businesses succeed and grow, and providing low rates is one way of doing that” Greg Pell, GM, equipment finance and commercial introducers, Westpac manager of equipment finance and commercial introducers, says Westpac has supported all phases of the government’s SME Guarantee Schemes since their initial induction in March 2020.

“This includes announcing our offer under the latest federal government SME Recovery Loan Scheme, which is helping to provide businesses with access to low-rate

finance for those that need more time and support to get back on their feet following the impacts of COVID-19 and recent floods.”

Pell says small businesses from a range of sectors have taken out loans under Phase 2 of the government's SME Guarantee Scheme, including mining, manufacturing, wholesale, retail, transport and construction.

“Customers are taking advantage

FEDERAL GOVERNMENT'S SME SUPPORT SCHEMES Phase 2 of Coronavirus SME Guarantee Scheme Businesses can now apply for up to $1m in secured loans or up to $75,000 in unsecured loans to aid recovery and growth until 30 June 2021 Loans under the scheme can be used for a wide range of business purposes, including business assets, business vehicles, working capital, or purchasing commercial property SMEs, including sole traders and not-for-profits with up to $50m, can apply for loans under the scheme If businesses currently hold a Phase 1 loan, they may be eligible to apply for refinancing SME Recovery Loan Scheme Businesses can apply for loans for up to $5m until 31 December 2021 To be eligible, businesses must either have received a JobKeeper payment between 4 January 2021 and 28 March 2021 or have been adversely economically affected by the floods in March 2021 Loans under the scheme can be used for a wide range of business purposes

of record-low interest rates and incentives to invest in office equipment, machinery and business stock, or have been using the finance to buy larger business premises,” says Pell.

With the deadline approaching for SME applications for finance under Phase 2 of the SME Guarantee Scheme, Westpac has reduced interest rates on some of its fixed and variable rate products to provide further opportunities for businesses to access funding.

“Westpac is committed to helping Australian business succeed and grow, and providing low rates is one way of doing that.

Pell says Westpac loans under the new SME Recovery Loan Scheme will provide a further lifeline to businesses that need more time and support to get back on their feet.

Westpac knows many businesses have put off upgrading equipment and technology due to cost.

“As part of Phase 2 of the SME Guarantee Scheme, together with the federal government’s instant asset write-off scheme expansion, we’ve seen businesses use the funds to purchase new equipment to help them make essential improvements to grow, become more competitive and sustainable,” says Pell.

Businesses investing in vehicles and technology, and using the funds to support cash flow, have been able to adapt, innovate and pivot their offering or expand by employing more staff.

“Similarly, for businesses wanting to access finance as part of the SME Recovery Loan Scheme, they can use the funding for commercial and business purposes, including additional working

In partnership with

Greg Pell, general manager, equipment finance and commercial introducers, Westpac

capital, purchasing equipment and commercial property.”

Westpac’s broker network also has an important role to play.

“We are supporting brokers by helping them support their customers,” Pell says. “One of the ways we’re doing this is by reducing our rates on the Phase 2 SME Guarantee Scheme loans and announcing our offer under Phase 3, this time called the SME

Recovery Loan Scheme.

“These support measures are communicated to our broker network, and we encourage them to start conversations with their clients as many small businesses move into a position to invest for future growth.”

Pell says Westpac’s business development managers and senior partnership managers can explain to brokers which clients may

be eligible, to support them in rebuilding and thriving after these challenging times.

“We hold regular briefing sessions with our BDMs and senior partnership managers and have an internal knowledge hub to keep them up to date with the latest changes to rates and offers, arming them with the right information to help brokers.”

Residential brokers who don’t

have commercial or asset finance experience but want to help their clients who may be eligible for the loan scheme should reach out to their Westpac BDM or senior partnership manager in their state, or connect through their residential BDM or via the Westpac website.

Apart from through the government loan schemes, Pell says there are other ways Westpac is supporting SMEs. “There are many small businesses who are recovering well from the pandemic, but for some sectors, particularly those hit hard by international border closures, there is still a way to go before normal trade resumes. If you have business customers still doing it tough, we encourage you to contact us so we can work through what options may be available for them. We take a tailored approach to each business, but the most important first step is starting the conversation with your broker or calling us direct.”

Education is another key focus for Westpac in assisting SMEs. “To ensure our customers have the right strategies in place to recover from COVID-19, we are offering 1,000 small business customers access to a free 12-week TAFE course,” Pell says.

Businesses can also go online to the Westpac Help Hub to access resources and tips from some of Australia’s most innovative businesses.

For business customers impacted by the recent floods, Westpac is offering a range of support. This includes establishing a flood support fund with up to $10m available, from which business customers can access $5,000 grants to assist with the recovery and reopening process. AB www.brokernews.com.au

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PEOPLE

Have an interesting deal?

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

antony.field@keymedia.com

BIG DEAL Michael Burke is a senior manager at asset and commercial finance specialists MKP Finance, which has offices in Sydney, Melbourne, Brisbane and Perth. He helped an earthmoving contractor boost cash flow by using equity in plant and equipment THE FACTS

Client Well-established (15yrs+) civil earthmoving contractor

Loan size and term $1,050,000 over 48 months

Goal Location To provide working Sydney, NSW capital, secured against business plant and equipment

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Aggregator Connective

a challenge isolated to the civil and earthmoving sector, it is magnified for contractors by the requirement that they also pay bank guarantees and retentions up front.

Traditionally, contractors have established and utilised facilities such as an overdraft to plug this working capital gap.

Mainstream financiers will typically secure

THE SCENARIO

Our client, who is a well-established and successful civil earthmoving contractor, recently secured a pipeline of contracted project work that will generate revenue over the next 18 months.

The business had continued to trade well during the COVID-19 pandemic and was optimistic about the opportunities likely to arise due to the federal government’s ongoing commitment to funding infrastructure projects.

To be in position to capture these project opportunities, our client was seeking a facility from a financier who understood the true value of the equity in their plant and equipment. Their well-maintained fleet consists of Tier 1 earthmoving equipment, including excavators, bulldozers, graders, water trucks and wheel loaders. Historically, the business had funded new and used equipment under a chattel mortgage agreement over a three- or four-year term with no end-of-term balloon.

As is the case with many earthmoving contractors, the largest asset in this client’s business is the equity in their plant and equipment, and they were looking to leverage this equity to reinvest back into the business.

Cash flow mismatch is a common challenge facing many civil and earthmoving contractors when commencing new projects. There are many significant upfront expenses that are incurred at the start of a new contract, and these are often carried by the contractor for up to 90 days before any revenue is seen.

This mismatch between expenses and revenue creates cash flow pressure for many operators. While it is by no means

Lender MKP Finance

to create working capital to help businesses grow, while giving them the flexibility of stronger cash flow and peace of mind by uncoupling owners’ and directors’ personal assets from the business.

We identified a parcel of assets within our client’s fleet of Tier 1 earthmoving equipment that were more than 50% paid down through their current finance term. The reason for choosing these assets was not only to minimise the cost of early termination for the client but also because these assets held the largest amount of equity.

The payout figure for these assets was $550,000, and when evaluating this against a Day 1 80% advance of orderly liquidation value, MKP Finance was able to provide the directors with a working capital payment of $500,000 into their business bank account.

The amount financed was $1,050,000 ($550,000 payout to financiers and $500,000 paid to the business as working capital). The loan term was 48 months, with no end-of-term balloon.

In this new finance facility, the client’s monthly payments were equal to their repayments on their existing facilities, with the added benefit of having $500,000 of working capital available in their bank account. The following key financial information was required to approve this facility: three years of finalised financial

MKP Finance has developed a unique value proposition that utilises equity in plant and equipment, providing contractors with the capital they need such a facility with a GSA (general security agreement) over the trading and assetholding entities within a group structure, in addition to obtaining mortgages over the residential and commercial properties held by company directors. For an SME contractor, facility limits (such as overdraft, bank guarantees, etc.) will often be capped against a percentage advance on the property valuation.

The key failure of this approach is that it does not recognise the true value of the largest asset in the business: equity in plant and equipment.

THE SOLUTION

Michael Burke Senior manager, MKP Finance

At Moody Kiddell & Partners (MKP) Finance, we have developed a credit product that recognises the true equity in a contractor’s plant and equipment.

Leveraging against this value, we are able

statements; forecast and assumptions; and a plant and equipment valuation by an approved valuer for the equipment securing the facility.

THE TAKEAWAYS

It is important that financiers recognise and understand the value of a business’s largest asset. This is particularly true for businesses that are capital-intensive.

For earthmoving contractors, mining contractors and transportation businesses, their largest asset is most often their plant and equipment. As specialists in asset and commercial finance since 1981, MKP Finance has developed a unique and differentiated value proposition that utilises equity in plant and equipment, providing contractors with the capital they need to capture opportunities and grow their businesses. AB

www.brokernews.com.au

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12/04/2021 9:25:44 AM

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OPINION

OPEN BANKING CHANGES MISS THE MARK Open banking is moving ahead, but Richard Atkinson from data firm illion, one of the few firms accredited to offer services under the Consumer Data Right, says the ACCC’s latest rule changes don’t quite get it right Increasing consumer benefit: Allowing business and corporate consumers to access their CDR data, and adding flexibility and functionality to improve the consumer experience in relation to the management of consumer consents to collect and use CDR data, joint bank accounts and accounts that have additional cardholders.

eagerly awaited open banking system has lurched forward a few inches after the ACCC published a third set of amendments to the Consumer Data Right rules on 19 February, but it hasn’t gone far enough. illion has made several submissions to the ACCC’s CDR Rules drafting processes, and we have long advocated for a system that makes it easy for individuals to securely share their data while providing mechanisms for businesses to securely access their CDR data, minimising barriers to entry at the same time.

We are already providing digital frameworks to more than 8,000 brokers across Australia, but what open banking will do is give us a common set of rules and a shared system at a time of significant challenge.

The ACCC’s latest amendments follow the release of a consultation paper a few months earlier, in which feedback was requested on a number of proposed rules changes. I’ll summarise these briefly below: AUSTRALIA’S

The introduction of new accreditation levels: Creating new pathways for service providers to become accredited data recipients.

Proposals for new levels or “tiers” of accreditation are intended to lower barriers to entry and reduce compliance costs for service providers that do not require unrestricted access to CDR data. They also recognise that supply chains for data services regularly involve multiple service providers, and that CDR participants can appropriately manage risk and liability through commercial arrangements.

Providing customers with greater choice of who they share their data with: Permitting accredited data recipients to disclose CDR data with a consumer’s consent to third parties, including to their trusted professional advisers (such as accountants, tax agents and lawyers) and any third party on a limited “insights” basis.

Unfortunately, the latest amendments have addressed only one of the three changes –

Based on the fact that we don’t have a view on what the next stage looks like, it’s likely that other players in the market will not be able to participate until at least 2022.

In our experience, the current model imposes a significant cost on an organisation to achieve accreditation.

There is a clear and present danger that the benefit of CDR will not be realised, as the barrier to accessing the data (in the form of accreditation) is too high, evidenced by the

The ultimate goal of the CDR is to give customers the right to direct that their data is shared with others they trust

Richard Atkinson General manager of consumer product, illion

the component that will provide “increased consumer benefit”.

Don’t get me wrong – illion is strongly supportive of this particular change.

We remain concerned, however, that the amendments don’t address the other two changes the ACCC proposed – the introduction of new accreditation levels, and the provision of greater choice for customers of who they share their data with.

Curiously, too, the latest amendments fail to meet the government’s own recommendations for tiered access to data – Recommendation 4.8 in the Government Inquiry into the Future Directions for the Consumer Data Right.

If you boil it all down, the ultimate goal of the CDR is to give customers the right to direct that their data is shared with others they trust so they can benefit from its value. To achieve this outcome, the rules framework must balance security and cost of accreditation against facilitated data sharing.

We are now only six months away from all ADIs having to expose transactional data to the CDR; however, the current rules still have a single model for accreditation of organisations to receive CDR data.

fact that there are only six data recipients accredited after six months – two of which are illion.

All this is further complicated by responsibility for the drafting of future rules amendments passing from the ACCC directly to the Treasury this month.

The enabling legislation for CDR is, as far as we can tell, still also waiting for parliamentary approval.

Ultimately, where this all leads now is not really clear. The ACCC has addressed the easy question, but what about the other, more difficult questions? It is vital that regulatory reforms in our sector satisfy consumer demands and continue to foster an environment that enables agile data solutions.

We know from the introduction of the UK’s open banking model that regulation was a big problem. The UK’s open banking system has been operational for two years now, but the legislation and rules haven’t provided a good foundation for it to be really successful.

Let’s make sure we learn from their issues and get it right in Australia – aligned to the original goals of the Consumer Data Right and the future direction that the government has articulated. AB www.brokernews.com.au

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12/04/2021 10:07:16 AM

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NE WS ANALYSIS

BOOM TIME FOR BROKERS, AGENTS

The property boom shows no signs of slowing down, with national housing values growing at the fastest rate for 17 years. Australian Broker asked two brokers, a real estate agent and a buyer’s agent for their insights

Australia, the residential property market is defying all expectations and recording astounding price rises.

CoreLogic’s hedonic home value index shows values surged 2.1% nationally in February, the largest monthly change in the index since August 2003.

The real estate analytics company says the rise in housing values, which is occurring across all of the capital cities and regions, is being spurred on by record-low mortgage rates, improving economic conditions, government incentives and low housing supply levels.

ACROSS

The latest available CoreLogic figures, for the 28 days ending 4 April, show a monthly rise in housing values of 3.2% in Sydney and 2.1% in both Melbourne and Brisbane, as well as 1.4% in Adelaide and 1.6% in Perth. Even more incredible are the year-to-date increases, led by Sydney at 6.9% and Melbourne and Perth at 5.1%.

Australian Broker asked mortgage brokers Sofie Chapman of Buyers Choice in Sydney and Tom Uhlich of Brisbane’s Boss Money how the property boom was affecting them. McGrath real estate agent Simon Nolan and HighSpec

“I have clients who love where they live. They are in a great position to borrow the funds needed to make their home a castle” Sofie Chapman, mortgage and finance broker, Buyers Choice Properties principal buyer’s agent Amanda Gould, both of Sydney, also shared their insights.

Sofie Chapman has been a broker for more than nine years

RAPID RISE IN AUSTRALIA’S DWELLING VALUES Source: CoreLogic

INDEX RESULTS AS AT 28 FEBRUARY 2021 Change in dwelling values

18

Month

Quarter

Annual

Total return

Median value

Sydney

2.5%

3.6%

2.8%

5.3%

$895,933

Melbourne

2.1%

3.5%

-1.3%

1.8%

$717,767

Brisbane

1.5%

3.5%

5.0%

9.3%

$535,618

Adelaide

0.8%

2.7%

7.3%

11.8%

$478,587

Perth

1.5%

4.2%

4.6%

9.3%

$491,795

Hobart

2.5%

4.8%

8.7%

14.0%

$535,994

Darwin

0.7%

5.5%

13.8%

19.4%

$438,645

Canberra

1.9%

3.7%

9.7%

14.6%

$706,454

Combined capitals

2.0%

3.6%

2.6%

5.9%

$675,014

Combined regional

2.1%

5.4%

9.4%

14.4%

$438,185

National

2.1%

4.0%

4.0%

7.6%

$598,884

but also has more than 22 years’ experience as a professional property investor and developer.

She has a portfolio of 10 properties across Australia.

The Buyers Choice residential and commercial broker has offices in Sydney and Adelaide, with clients in both NSW and SA. She expects the house price increases to continue until at least October.

“Building approvals are at an all-time high, and the supply of materials such as timber is short,” says Chapman. “With the price of building set to go up 6% and not enough supply of established homes to meet the market demand, I believe the boom is sustainable for now. I think the slowdown will occur when people start travelling abroad and spending money overseas.”

Chapman says her broker business is busier than ever, and most of her applications are for pre-approval loans as customers want to be ready to make strong offers or bid at auction.

“Pre-approvals take time and have a lower conversion rate.

Often the pre-approval lapses and we need to rewrite the entire application and go through the whole qualifying process again.

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Sofie Chapman, mortgage and finance broker, Buyers Choice

“There is a lot of time invested in writing applications, following up the client, assisting them with negotiation skills when making offers, and preparing property reports.”

Chapman says providing excellent customer service at every touchpoint is important to ensure loans are converted.

“Getting my processes tight and efficient has been a key focus during this boom season.”

In Sydney, low interest rates, cashed-up buyers, government incentives, pent-up buyer demand and a shortage of available housing have created the perfect mix to drive a booming property market, she says.

For brokers, the lack of housing stock on the market has been offset by refinances, renovations and new-home construction.

“I believe there is a great opportunity to focus on people wanting to renovate and refinance,” Chapman says. “I have clients who love where they live and don’t want to move. They are in a great position to borrow the funds needed to make their home a castle.

There are also great refinance offers at the moment, and if it’s in your client’s best interest to do so they should consider refinancing.”

Regional Australia has experienced even higher property price growth than the capital cities, but Chapman says established city brokers should think twice about expanding into the regions.

“If you are going to expand to a regional area, be prepared for a lot of hard work networking. Regional customers tend to want to support local businesses, so if you are going

Tom Uhlich, mortgage broker and CEO, Boss Money

of JobKeeper. Employment advertisements have increased strongly, indicating there are an increasing number of jobs available which will hopefully offset the removal of JobKeeper.”

Chapman predicts there will be a short-term cooling of the property market once Australia’s borders reopen to overseas travellers and Australians resume

“Cash is really king now. Most agents are telling buyers that unless you offer cash you don’t stand a chance” Tom Uhlich, mortgage broker and CEO, Boss Money to go into a regional area you should be prepared to go to the local football games, and support local initiatives, clubs and events. Unless you have a weekender in a regional area, I imagine it would a hard market to crack into.”

JobKeeper ended last month, but Chapman doesn’t believe it will affect the property market.

“If we were going to see an impact I think we would have seen it by now, with the media speculating doom and gloom with the ending

holidays abroad, but only until immigration picks up again.

Tom Uhlich has been a mortgage broker for 17 years. He worked at Aussie Home Loans in Sydney 20 years ago as a strategy analyst and helped develop the Aussie broker model that operates today.

Uhlich says he moved to Brisbane for a change of lifestyle and to run his own business.

“I started working for Aussie as a broker in 2004 and ended up having two franchises – Kenmore

and Forest Lake. I sold them in 2015 and started Boss Money Mortgage Broking in 2016,” he says.

The property boom is having a positive effect on Boss Money.

“The last three months have been our biggest,” Uhlich says. “The enquiries are an interesting one, as all this hype and activity has brought out plenty of people who have FOMO but can’t really get into the market. Hence, enquiries to actual lodgement conversion is much lower than pre COVID.” Uhlich says the data doesn’t really explain why the boom is happening, but he has own views.

“I think COVID gave people time, time to realise they don’t want to live in their home any more, time to realise they like their home but it needs some additions.

“More importantly, people who can now work from home going forward have thought to themselves, if I can work from home, why am I living in Sydney, Melbourne or even Brisbane? Why am I in a city when I can head up or down the coast or even go bush?

“We have seen 35% of our loans that fit this category.

Looking at our business, we have our highest percentage of pre-approvals ever. So many buyers www.brokernews.com.au

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and so little houses have pushed prices north, way north.”

The conversion rate on preapprovals isn’t high. Uhlich says 50% of people won’t buy anything.

“People go hard for four to six weeks then just fade away. And this market is so tough on buyers, I would get two to three calls per day from buyers saying they just missed out on this and that. Agents are telling me they have 50 groups through a property and 10 offers.

My buyers are saying the same.”

In the last month, there’s been a push from buyers to opt for cash contracts with no finance clauses.

“Cash is really king now. Most agents are telling buyers that unless you offer cash you don’t stand a chance. It’s basically like buying at an auction; there’s no way of pulling out. If your finance is declined by the bank, you lose your deposit and could be sued by the seller.”

Uhlich says he recently sat down with three buyers and worked through their numbers as they wanted to offer cash, even though their loans were not approved.

“All three bought cash. I am lucky I have been a broker for 17 years as I know a deal, but still had to be sure so I ordered and paid for their credit files

if there is, it’s going so quick. They fear selling and being homeless, plus rental vacancies are also so low.

I would say a third of these have decided to take advantage of the HomeBuilder grant and renovate their home.”

Uhlich doesn’t believe the end of JobKeeper will have much impact, as most businesses are back to normal trade, but he is concerned about how small tourism, retail and food businesses will cope.

“I thought the mortgage deferrals may have forced people to sell, but they came and went in September, and now at the end of March there are only a very small percentage of people of repayment holidays. Low interest rates have also helped.”

“The other smoking gun is interest rates and lending restrictions. Rates will rise; it’s just a matter of when.

The RBA is saying it won’t lift rates till 2024, but the markets have priced one into 2022. Watch this space.

“With lender restrictions, I see in New Zealand they have reduced the LVR on investment purchases to 70%, which has slowed their property somewhat. Maybe similar restrictions will happen here.”

Simon Nolan has more than 20 years’ experience as a real estate

“This market we find ourselves in now is unlike any I have experienced in my 21 years as an agent” Simon Nolan, sales agent, McGrath Estate Agents plus did desktop valuations on the properties they were interested in.”

The cash trend is also being driven by slow loan turnaround times.

“Some of the larger lenders are taking 20 days just to pick up an application, let alone approve it, so clients are having to make offers with no finance clause in the hope they are approved. I haven’t had a loan declined for two years, and given my 17 years’ experience I know if it’s a deal or not.

The lack of housing stock is also affecting Uhlich’s clients, whether they are buyers or sellers.

“We are at a crossroads in the market at the moment,” says Uhlich.

“Plenty of buyers and a booming market normally would bring more sellers to the market, but my clients who are looking to sell (and buy) like the sell part but are scared to hit the market because they can see there isn’t much stock to buy, and even 20

agent in Sydney’s eastern suburbs.

He currently works at McGrath’s Maroubra office. The award-winning agent has racked up 950 sales totalling $900m.

He says recent home value increases of more than 3% in Sydney are impressive.

“Sometimes the media and other interest groups can latch on to and promote eye-catching figures that are more hype than reality. But not in this case,” Nolan says.

“I think statistics can often be playing catch-up with reality in any rapidly moving market, and this market we find ourselves in now is unlike any I have experienced in my 21 years as an agent.”

Nolan says the good prices and reasonable competition of December continued when his team started back in mid-January and flowed into February with a 90% auction clearance rate.

Simon Nolan, sales agent, McGrath Estate Agents

“At the time of writing we just had a ‘Super Saturday’, but even that larger stock level day resulted in yet another 90% clearance rate.

These figures tell the story of a skyrocketing selling market.”

There are two submarkets – properties with land and properties without, Nolan says.

“Properties with land kept us uber busy, with most properties receiving hundreds of enquiries and 75 to 150 through the door in a typical campaign.”

However, he says apartments were more subdued, with numbers half those of houses.

“But now in early April we are already seeing buyers downshift as their aspirations of buying a property with land evaporate and they focus on apartments, which is helping the apartment market to gather speed too. There are numerous examples of spectacular prices being paid across the country, with some properties selling for 10% to 30% more than they would have achieved in most of 2020.”

Nolan says the rapidly rising price rises aren’t sustainable.

“I do believe there is room for further price growth but not at the current pace. All markets are cyclical, so either predictable or

unforeseen factors will come into play and cool the market mania down. The big question is when.

“I do feel the market has reset at a new ‘normal’ level, and if history is any guide we will see a flattening of prices and a more stable market further ahead.”

Two of the “counter-intuitive” hallmarks of a hot selling market are off-market sales and seller hesitance to list, says Nolan.

“My team made four off-market sales in February and two in March, and the reason for choosing this approach was often similar: ‘If we could get X amount of dollars and not have to tidy up, pay for marketing/styling, avoid open for inspections and just be done with it, we’d sell’.

“In all cases, it was a very high price, but in all cases our buyer work produced the buyers who could deliver.”

Nolan says seller hesitance is down to one sticking point: “If we sell we then have to buy, and there’s nothing on the market”.

As for the boom in regional areas, he says the most noticeable movement for his clients has been unit sellers leaving Sydney and heading north, south and west for a house and land.

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Amanda Gould, director and principal buyer’s agent, HighSpec Properties Buyer’s Agents

“But I have not seen many house owners doing this. Working from home seems here to stay, so house owners have more ability to modify their home to enable this.”

The end of JobKeeper and other support measures could negatively affect some employees or business owners who own property.

I would assume the boom could potentially have brokers very ‘busy’ getting pre-approvals but possibly having to be selective to some extent with their time allocation to each client, as many will not win the bidding wars, and as we all know or learn the hard way, ‘busyness’ is not necessarily good business.”

“This is the best time to put property on the market, because there’s barely any properties so they’re going to get a record price” Amanda Gould, director, HighSpec Properties Buyer’s Agents “It would be sad if that forced the sale of property, but if it did then it may lead to more selling stock, but it’s too early to say.”

Nolan says he has an active two-way referral relationship with a few mortgage brokers.

“I believe a good agent and a good mortgage broker can make a real difference when it comes to helping clients get what they want.

“I know that they will look out for the best interests of the people I refer and make me look good.

Amanda Gould is director of HighSpec Properties Buyer’s Agents in Sydney. Its core areas are the Eastern Suburbs, the Inner West, the North Shore and the Northern Beaches.

“I started the business 10 years ago, but I have been buying properties since 1988, so I’ve got a really good cross-section of what’s been going onto the market, what’s happened in 2017 when we had a peak, and right across the board since the ’80s really.”

Gould says at present 70% of her clients are owner-occupier and 30% are investors.

“Last year we didn’t have many investors at all, but that doesn’t surprise me with COVID; it was more owner-occupiers.”

Client demand for property is really strong, says Gould.

“But the stocks are down 30% from last year, which is driving a lot of what’s happening. The fear of missing out is driving people to overspend way above the guides.

The reason stock levels are down is that people are too scared to sell their house in case they can’t find another.”

There is a lack of housing stock across Sydney, but the work-fromhome phenomenon is leading to more people wanting to upsize.

Gould says.

“This is great for us because we’re getting more clients wanting to upsize, whether it’s a unit going from a one-bedroom to a two-bedroom, or a house going from a two- or three- to a five-bedroom.

“A lot of people are thinking ‘we’re going to need a designated area to work in’, so a lot of people are upsizing, which is great, but the lack of stock is still apparent, and it’s right across the city.”

Gould says affordability is at a record low, unlike last year during COVID when homes became slightly more affordable.

“A lot more first home buyers were able to get into the market during COVID – those that still had jobs of course. But we’ve found prices rising at two and a half per cent in February. If we look at extrapolating that out, it’s a significant increase over the year, and if they don’t buy in the next couple of months they’re going to be priced out again.”

Gould doesn’t see a rise in housing stock in the near future, and auctions are achieving record prices.

She says she went to a recent auction for an unrenovated home in Waverton on behalf of a client, and there were 19 registered bidders but only three actually made bids because the auction moved so quickly.

“It had already gone away over the guide where most people were obviously sitting, and they didn’t even get to bid.

“I ended up buying that for my client, which was great, but it was way above the guide,” says Gould.

“But that’s why clients have got us on their side to give them a true

indication of what’s happening in the market and what value a property is worth in this current market.”

Gould says if current price rises continue for the next few years, people in Sydney are going be paying $2m for a one-bedroom apartment.

“It’s actually got to level out, but it’s not happening any time soon unless the stock levels start rising in the immediate future.”

Fear of missing out on property is driving both buyers and sellers.

“The cash rate’s not moving, and experts are saying it’s forecast to stay like this till 2024. So people are saying another $100,000 really isn’t as much as it would have been a year ago. People justify going up a little bit just to get into where they want to be because the money is so cheap.”

The media plays a big part in the fear factor for property sellers, says Gould.

“People are hearing there’s hardly any properties so they won’t put theirs on the market, but what they’re not realising is that this is the best time to put it on the market because there’s barely any properties so they going to get a record price.

“If they’re buying and selling in the same market, yes, OK, there’s less stock, but they’re already in the driver’s seat to able to get the best price and have more money to go buy the next place.

“This is the time to sell – that would be the message I’d be getting out there. Why are you hanging on?

You can’t get better than this market to be selling.”

Record numbers of people are applying for home loans or refinancing, and Gould is urging her clients to use a broker so they can save thousands of dollars.

“We are very big supporters of the broking community; ever since I started the business, brokers have been my number one strategic partner and referral base.

“We refer a lot of business.

Even if clients have bank finance we try to push them to a broker to help them really get an understanding of what other finance options they’ve got rather than just going to a bank.”

Buyers’ agents also speed up the process for buyers.

“The average buyer takes six months to a year to buy a house if they don’t have a buyer’s agent,” Gould says. “With us, we accelerate that process to four to 26 weeks, so it’s a massive difference in time frame.” AB www.brokernews.com.au

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21

12/04/2021 1:50:52 PM

FE AT URES

BUSINESS INSIGHT

MORTGAGE EZY INVESTS IN CHILDREN’S FUTURE Non-bank lender Mortgage Ezy is transforming the lives of 12 high school students in Kenya, setting up direct intervention education scholarships to help them find a way out of poverty

in the lucky country got Mortgage Ezy executive chairman Peter James thinking about how fortunate Australia was when it came to navigating the COVID-19 pandemic. In his Christmas message to staff at the Gold Coast-based lender and mortgage manager, James said he and the team at Mortgage Ezy felt so much gratitude to be living in Australia and were mindful “of the great suffering occurring in many parts of the world right now”.

Instead of Christmas parties, gifts LIVING

and hampers, he said Mortgage Ezy would redirect that money to “give a gift that keeps on giving” by setting up direct intervention scholarships for 12 deserving and disadvantaged young people in Kenya.

Australian Broker caught up with James and Mortgage Ezy project manager Winnie Masibo, who is originally from Kenya, to find out more.

James says Mortgage Ezy has supported a number of external charities over the years, but this is the

A LETTER FROM SCHOLARSHIP RECIPIENT GLORY TATU MENZA I am schooling at Ngala Memorials Girls and am currently in form one.

Am coming from Malindi-Watamu village. Am 15 years old, am coming from a family of seven children. My hobbies are reading and singing, my career is to pursue medicine. My goal is to complete my studies at all levels and continue up to university and masters.

My father has no job although his is the bread winner, but it seems hard for him because he’s now suffering from pressure.

Life is so hard to my mum too because she’s not employed, every sunrise she walks to the streets looking for labour jobs.

I was happy when I joined a boarding school. But it hurts me, because for every re-opening and closing of schools I have to walk a long distance.

We usually eat hard maize with beans (kitheri) when am at school. During the holidays I often spend the days without eating.

It is so hard for me to do my assignments at home during the holidays due to lack of light during the night. Which lead to the lack of self-studies.

I live in a makuti house but when it rains a lot of water drops and it damages my books, my school uniform and our households.

Yours faithfully, Glory Tatu Menza

22

first direct intervention program the business has initiated.

“That’s why I got Winnie involved, because she’s got contacts in Kenya and it meant that we could ensure that every dollar that we donated was used for the kids in a direct way,” he says. “COVID in Kenya is at epidemic proportions,

any special needs and making recommendations.

“There was one boy, for example, that just didn’t have appropriate clothes. There’s others who didn’t have books; they couldn’t afford the textbooks and supplies. There’s other kids that have had some emotional upsets and so forth. So it’s just about

“Whatever we need to do to support the child staying in school and prospering in their studies we’re willing to consider” Peter James, executive chairman, Mortgage Ezy and of course attention is on COVID, but there’s still these basic needs that these kids have.”

Masibo completed an MBA at Macquarie University, did an internship at Mortgage Ezy and was hired full-time in January.

With the help of an agent in Kenya and volunteers, Mortgage Ezy has selected eight girls and four boys, aged 13 to 15 – for the program.

It will pay the cost of their high school education, including boarding fees, uniforms and textbooks, right through until they start university.

“We’ve got students at high school level who are having financial difficulties completing their education,” Masibo says. “It’s a mixture of boys and girls, different locations, different schools, so we’ll pay for their fees all the way to the end of high school, which takes about four years.”

James says a small group of volunteers in Kenya are providing assistance by helping with the selection process, identifying

identifying the need and intervening to make sure they’ve got the best chance of success in their schooling.

“Our philosophy has been whatever we need to do to support the child staying in school and prospering in their studies we’re willing to consider … what I’m excited about is to make a difference in these kids’ lives.”

James says a lot of the children are inspired by Masibo. “They’re seeing her as a great role model, and what is possible. You know I’m sure that some will even rise above the levels of Winnie, but she’s an inspiration.”

He says the students, who all attend boarding schools, also know their report cards are being monitored.

“Now that’s not to say that we’re asking for, you know, an A-grade average, but we expect them to improve, and we expect that their attitude and efforts will be commensurate with them keeping their place in the scholarship program,

www.brokernews.com.au

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12/04/2021 10:53:52 AM

Scholarship students Mathew Miller, Paul Kibet and Kevin Kipkoech playing chess

Scholarship student Irene Mutuko

because we want to make sure that it’s a gift that keeps on giving.

“The schools they’re attending are excellent schools in Africa.

So it means that not only will they be assured of a good job at completion, but that will flow into their communities and families as well.

So that’s our hope.”

Unlike Australia, public high schools in Kenya are not free – they are expensive, costing more than private schools, but provide a better education. Annual school fees can range from $400 to $1,500 a year, plus boarding fees. Students’ grades in primary school determine which national high schools they can attend.

“It’s based on merit,” says Masibo.

“So you go to high school depending on your grades in primary school.

And then you have the option to choose private, of course, if you have money, and you have the option to go to public or national schools, which perform better, at the end of year four.

So that will give you the better grades to go to university.”

Many of the students come from poor backgrounds and have parents who are unemployed, with many mouths to feed. Masibo adds that students on the program are living far from home, but they get proper meals and places to sleep.

Some of the teens have written touching letters seeking support and describing their difficult circumstances, which have been

published on Mortgage Ezy’s website [see one girl’s story in the boxout opposite].

Masibo says some of the students couldn’t attend school because their fees were in arrears, so the program covers those balances.

Program volunteers in Kenya contacted schools in all seven counties looking for students who had performed well but were not able to pay their fees.

“So they’re all spread throughout the country; there are students from

Peter James, executive chairman, Mortgage Ezy

direct contact with the schools and send letters and emails. James says there has been an outpouring of gratitude from the students.

“They’re all spread throughout the country; there are students from the west, the coast, Nairobi … it was really hard choosing” Winnie Masibo, project manager, Mortgage Ezy the west, the coast, Nairobi … it was really hard choosing, because what happened is we got so many applications,” Masibo says.

“We’re looking at them going through high school and making it into university and getting a good job and just getting their families out of poverty – they could be the hope of their families.”

Due to COVID, neither Masibo nor James have been able to visit the students, but the volunteers have

“Some are just keeping us posted on the activities that they’re now involved in and how they’re loving the fact that they’re able to concentrate on their studies. Some kids were saying that ... now they’ve got the right uniform, no one is making silly jokes at them; they’re able to fit in and feel comfortable in the school community. That’s just wonderful.”

James says Mortgage Ezy hopes to expand the program next year to cover more students. “I’ve got lofty

Winnie Masibo, project manager, Mortgage Ezy

goals. My goal in the next 12 months is that we can help 100 students.”

Brokers and other firms and individuals have told James they want to be involved, and he says if there is enough interest Mortgage Ezy might set up a formal charity.

“We’ve consulted with a solicitor and an accountant about setting up a charity, and the concept for us is about having the direct connection with a student. Here, you have a relationship with that individual and you feel a great sense of satisfaction with knowing that you’re able to make a huge difference, not just to them but their families and communities as well.”

James says by going to better schools the students will have a great chance of getting into a good public university, at a fraction of the cost of a private university.

“Our hope is that those students that graduate to public university, we can help sponsor them if necessary as well. So we’re really looking at the journey to take these kids into their professional lives and trades.” AB www.brokernews.com.au

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23

12/04/2021 10:54:05 AM

PEOPLE

Do you have a question for our broker mentors?

Email your question to:

antony.field@keymedia.com

BROKER ON BROKER

Nicole Cannon is the founder of Sydney brokerage Pink Finance and has been a broker since 2002. The experienced senior loan consultant and MFAA Community Panel member answers questions about mentoring, social media, diversification and the end of COVID-related government support

The government’s financial support measures connected to COVID-19, such as JobKeeper and rent relief, have ended. How do I support clients in financial difficulty?

Staying close and connected A has been the key for Pink Finance. Lengthy conversations were held with our customers on JobKeeper and those who requested relief. We were checking in with them to see how they were going and how their business/work was progressing. For clients who were doing it tough, we provided individual options based on redraw/offset balance and then the implications of pausing versus interest-only payments, etc., so that medium- and long-term goals would not be impacted.

Q

How important is it to have a mentor when you are starting your career as a broker?

It can be overwhelming when A you are starting out. Having someone who you know and trust to help you when you are stuck on a scenario, feeling overwhelmed with it all, or doubting yourself, and to simply share ideas with for business growth is really important. Finding the right person and the right structure can really help you gain confidence and momentum in this industry. Even industry veterans have their crew

Q

who they bounce ideas off to gain clarity and different perspectives.

So I think having a mentor is valuable indeed.

What’s the value of using social media in growing your client network, and what other forms of advertising work?

Social media certainly has its A place. The more you invest into social media and its algorithms, the more you get in return. SEO is another strategy – again it takes time and effort to get this right. The hardest thing to work through is the quality of leads and opportunities. This can be very time-consuming, but it is a way to grow your database. I have found collaborating with other businesses has worked best for me when it comes to growing my client network. You need to find a networking group you can connect with – work with real estate agents or accountants and then sell your proposition together. Create a marketing strategy that fits you and your personality as this shows your authenticity.

Q

Working as a residential broker, what steps do I need to take to diversify into other areas?

Our Pink Finance fact-find A discusses mortgage protection insurance, asking borrowers if they have a debt-cancelling

Q

Nicole Cannon, founder and mortgage broker, Pink Finance

“Social media has its place. The more you invest into social media and its algorithms, the more you get in return” arrangement in place should a party to the loan not be able to work. It also captures specific information for the self-employed.

Self-employed customers go into our database and get targeted

communications for business lending needs. We also collaborate with accountants and financial planners, so this allows us to get into commercial and business lending opportunities. AB

PITSTOP MENTORING Are you new to the industry, or simply keen to learn from experienced brokers who have words of wisdom to share? This is your opportunity for pitstop mentoring! If you have a question you’d like a senior broker to answer, contact us and look out for an expert answer in a future issue.

24

www.brokernews.com.au

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12/04/2021 10:07:38 AM

PEOPLE

CAUGHT ON CAMERA It was standing room only at the rooftop bar at East Village Sydney in Darlinghurst on 18 March for the latest Women in Finsure event aimed at supporting female brokers and allowing them to learn from each other. Female brokers, and a few men, heard a number of speakers talk about their experiences as women in the industry and the need to encourage more females to become brokers. These included organiser Finsure NSW state manager Noushig Megerditchian, BOQ general manager broker Kathy Cummings, One Stop Loans CEO Anusha Haran, and Domarina Pireh, managing director of The Lending Circle. Nathaniel Truong, director of The Loan Lounge, also spoke about giving 10% of all the brokerage’s trail commissions to charities such as A21, which fights human trafficking.

www.brokernews.com.au

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12/04/2021 1:59:40 PM

DATA

VICTORIA

NT SPOTLIGHT

Homebuyers are making the most of Victoria’s housing support packages Victorian homebuyers have saved almost $3bn on their first homes, supported by the state government’s Homes for Victorians package.

In Melbourne, more than 100,000 first home buyers have received the package since the scheme was launched, saving them millions of dollars in stamp duty costs, according to the state government.

Close to 46,000 Victorian buyers have also benefited from the First Home Owner Grant.

Of over $592m in grants provided, around a third were given to regional buyers, particularly those in Casey, Wyndham and Hume. The latest figures show that since July 2017 more than 38,000 first home buyer concessions and exemptions have been provided for properties in regional Victoria. This translates to a saving of more than $450m.

Roughly 28% of all recipients of the first home buyer concessions and exemptions have been in regional Victoria, accounting for nearly 20% of the total savings provided.

Area

Metro (H)

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

5.6%

rent

yield

$430

2.9%

$800,000

1.3%

Metro (U)

$610,000

0.5%

4.4%

$410

3.6%

Country (H)

$450,000

5.1%

10.7%

$360

4.5%

Country (U)

$340,000

1.6%

7.6%

$295

4.9%

TASMANIA

The state’s new land tax rules will ease cost-of-living pressures The state government of Tasmania has laid out new land tax arrangements. Under the changes, tax thresholds will be increased, with the land value at which land tax becomes payable increasing from $25,000 to $50,000. The top threshold will also increase by $50,000, from $350,000 to $400,000.

Furthermore, the premium penalty rate of interest will be lowered from 8% to 4%. Land tax bills of over $500 can now be paid in three instalments over the year.

Premier Peter Gutwein said these new arrangements would ease the financial burden on Tasmanian families and put downward pressure on rents. “While land tax in Tasmania is the lowest, along with Western Australia, of all the states as a share of total state revenue, there remains a need to bring land tax thresholds into the era we live in today.”

With the changes, around 70,000 landowners will be able to save up to $613 a year, and 4,100 additional landowners will pay no land tax at all in the year ahead.

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$580,000

2.9%

10.2%

$450

4.4%

Metro (U)

$428,000

2.4%

6.4%

$395

4.9%

Country (H)

$385,000

3.8%

10.9%

$340

5.0%

Country (U)

$301,000

1.8%

5.6%

$280

5.1%

26

SURGE IN DEMAND FOR RENTALS It was a quiet start to 2021 for investors in Darwin’s housing market, but rising rental demand offers hope activity in Darwin appears to be stagnant compared to the owner-occupier segment, says Jeremy Callan, property valuer at Herron Todd White.

“We are seeing tenanted sales results in the dwelling segment continue to be low, as owner-occupiers dominate both dwelling and unit markets,” he says.

While the uplift in demand and conditions experienced in the latter half of 2020 in the NT capital has continued into 2021, this improvement has primarily been driven by first home owners looking to access strong government incentives. However, demand for rentals has begun to surge as a result of recent arrivals to the city. Median rents are increasing in most suburbs. “These increases in rents combined with a sharpening vacancy rate are key factors we believe will see some return to the investor market,” Callan said.

The median weekly rate for a four-bedroom INVESTOR

home in Palmerston has risen by 13.2% to $600.

The median house price sits at $465,000. This makes a return of over 5% possible. “We can see investors being able to achieve these returns for the remainder of 2021, and believe this will draw investors back to the Darwin market.”

Units are expected to follow the same pattern. Unit rental rates in Palmerston have shown a good increase to a median weekly rent of $430 for a three-bedroom unit.

Overall, Callan believes the outlook for Darwin is positive, a stark contrast from the same time last year. However, while government incentives have boosted confidence in the housing market, it remains to be seen how this will be affected once the support ends.

“The fundamental pieces for an economic recovery have not changed. If no major projects get off the ground and there are no further employment opportunities, we may see many of the new arrivals to Darwin head back down south.”

DARWIN’S HOUSING MARKET INDICATORS - MARCH 2021 Source: CoreLogic, March 2021

Property stats for the week ending 14 March 2021

Houses

Units

$519, 575

16.3%

22.1%

5.6%

Median price

Annual growth

Total returns

Gross yield

$302,820

9.8%

15.2%

7.3%

Median price

Annual growth

Total returns

Gross yield

SUBURB TO WATCH: JOHNSTON Median price (houses) $590,000

Median price (units) $277,500

12-month growth

3-year growth

Average annual growth

Gross rental yield

7%

0%

13.7%

5%

12-month growth

Average annual growth

Weekly advertised rent

Gross rental yield

n.a.

2.1%

$395

7%

www.brokernews.com.au

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12/04/2021 12:23:50 PM

AUSTRALIAN CAPITAL TERRITORY

Property prices rising and profits growing in top-performing capital city market A larger share of property sellers in the ACT profited from the sale of their homes over the last quarter of 2020, according to CoreLogic’s latest Pain and Gain report. Over the quarter, the share of profit-making sales rose from 90.7% to 92.9%. However, there was a huge difference between houses and units: the former reported a superior share of profit-making sales, at 98.5% compared to the latter’s 85.1%.

“Both the house and unit segments had seen an increase in profit making sales over the quarter, and house sales had the highest incidence of nominal gain of any capital city house market,” the report said. Loss-making sales were most common across the suburb of Belconnen. In terms of dwelling type, 87.9% of all loss-making sales were units, 73% of which were investment properties.

Canberra has been one of the top-performing dwelling markets across all capital cities. Dwelling values in the city have increased by 3.1% in the year to date. Even units, which in recent years have remained stagnant compared to strong house-price gains, are now consistently reporting gains.

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$780,005

2.1%

7.4%

$585

4.2%

Metro (U)

$480,000

1.2%

4.6%

$480

5.5%

SOUTH AUSTRALIA

SA’s share of social housing is one of the largest in the country

HIGHEST-YIELD SUBURBS IN NORTHERN TERRITORY Suburb

House

Gross rental yield

Median price

Quarterly growth

12-month growth

Average annual growth

TENNANT CREEK

H

10%

$215,000

8%

-7%

3.4%

MILLNER

U

10%

$175,000

-5%

-35%

-7%

KATHERINE EAST

H

8%

$325,000

-3%

-3%

0.1%

COCONUT GROVE

U

8%

$230,000

5%

-6%

-4.7%

BAKEWELL

U

8%

$202,500

0%

-8%

-6.1%

BAYVIEW

U

7%

$356,000

6%

2%

-5.9%

LEANYER

U

7%

$250,000

0%

-6%

-4.5%

DARWIN CITY

U

7%

$316,500

-7%

-4%

-3.3%

GILLEN

H

6%

$430,000

1%

-1%

0.4%

MOULDEN

H

6%

$299,000

-2%

-7%

-3%

An ABS report shows that social housing in SA comprises 5.9% of its overall residential segment.

This is almost double the share of social housing stock in Victoria, which is 3%. It is also higher than the share in Queensland (3.4%), WA (3.9%), NSW (4.8%) and Tasmania (5.8%). The proportion of social housing in the state is also higher than the 4.1% share in the country as a whole.

“We want to ensure social housing is available for our most vulnerable, which is why we’re currently modernising our social housing system with the aim of delivering better, fairer, more efficient and transparent services to South Australians,” said Michelle Lensink, Minister for Human Services.

She said the state’s $550m new housing and homelessness strategy would allow for the construction of 1,000 new affordable homes by 2025. “It’s providing a steady pipeline of work for our construction and building industry. At its heart, our new $550m strategy aims to help South Australians into homeownership, prevent people falling into homelessness and ensure public housing is available for our most vulnerable.”

Area

Metro (H)

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

$510,000

rent

yield 4.1%

2.0%

2.9%

$390

Metro (U)

$367,000

1.4%

4.2%

$335

4.6%

Country (H)

$289,500

0.0%

1.8%

$270

4.9%

Country (U)

$210,400

0.0%

0.0%

$215

5.3%

www.brokernews.com.au

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12/04/2021 12:24:05 PM

DATA

WESTERN AUSTRALIA

WA property investors are now allowed to hike rent prices Now that the rental moratorium in WA has come to an end, this will help fix the state’s rental shortage, as investors will have more incentive to buy a property, according to Damian Collins, president of the Real Estate Institute of WA. Collins said the decision of the state government to extend the moratorium on evictions and price increases last September had had a “debilitating effect” on the rental market.

“Since the announcement in September, the Perth vacancy rate has dropped below 1%, the lowest level we’ve seen in 40 years. There is very little available rental stock on the market, and those people who are actively looking for somewhere to rent are finding it very difficult to secure a place to live,” he said.

The end of the moratorium should increase the number of properties available for rent and help create a more balanced market, Collins said.

“We need to encourage investor activity in WA. It is continuously overlooked how important property investors are to maintaining a healthy, affordable and balanced rental market.”

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$518,000

2.1%

2.1%

$380

4.0%

Metro (U)

$385,000

0.5%

-0.8%

$350

4.9%

Country (H)

$380,000

2.9%

9.1%

$360

5.2%

Country (U)

$256,500

8.6%

4.8%

$320

7.6%

NEW SOUTH WALES

Total auctions

79

Cleared

50

Uncleared

18

Clearance rate

73.5%

PERTH Total auctions

8

Cleared

3

Uncleared

5

Clearance rate

n.a.

Houses

Quarterly

12-month

Weekly

Gross

growth

growth

median

rental

rent

yield

Units

Sydney Melbourne Brisbane

Capital city

$486,000

$852,500 $362,500

$577,000

5.5%

Melbourne

0.3%

2.1%

5.1%

0.6%

Brisbane

0.4%

2.1%

4.9%

7.0%

Adelaide

0.3%

1.4%

3.3%

8.7%

0.5%

1.6%

5.1%

6.1%

0.4%

2.5%

5.8%

4.5%

Perth Combined 5 capitals

4.1%

$600,000

6.9%

3.6% 4.1%

$530,000

3.2%

$495

$350

$435,000

0.5%

3.6%

$400

$510,000

Sydney

0.7%

6.4%

Canberra

12-month change

$732,000

6.8%

Darwin

Year-to-date change

Metro (U)

2.2%

Hobart

Monthly change

2.9%

2.8%

Perth

Weekly change

$540

$540,000

Adelaide

CAPITAL CITY HOME VALUE CHANGES

6.7%

$460,000

$513,000

$0

1.1%

Country (U)

$360,000

$100,000

$393,750

$200,000

$1,030,000

Country (H)

$540,000

$300,000

$560,000

$500,000 $400,000

$730,000

$700,000 $600,000

$655,250

$800,000

Metro (H)

28

ADELAIDE

$900,000

The end justifies the means when it comes to ending the state’s stamp duty, Housing Industry Association chief economist Tim Reardon has said.

“The case in favour of reforming stamp duty is so strong that it does not matter which of these options is adopted, as long as stamp duty is abolished,” he said.

In November, State Treasurer Dominic Perrottet announced a proposal to make stamp duty on property purchases optional. Under the proposed arrangement, buyers would be able to choose between the current system of paying stamp duty or paying a smaller annual tax for as long as they own the property. The new property tax would be a fixed charge, with a rate calculated based on the unimproved land value of the property.

Reardon said numerous strategies could be pursued for abolishing stamp duty, including the phased-in approach or an “opt in or opt out” arrangement.

“In replacing stamp duty with a more stable, efficient and equitable tax we should remain focused on the benefits of the reform, not the complexity of the transition,” he said.

Median price

Across the combined capital cities, 874 homes were taken to auction over the week, making it the busiest Easter on record. For the 760 results collected, there was a preliminary auction clearance rate of 79.4%. The previous week saw 3,840 homes taken to auction across the combined capitals, returning the highest final clearance rate on record (83.1%).

Sydney hosted 421 auctions over the week, down from 1,410 one week before.

Of the results collected so far, 85.9% were successful, down from a final clearance rate of 87.6% in the previous week when volumes were significantly higher. In Melbourne, 216 homes were taken to auction over the week, down from 1,929 in the week prior. Of the 170 results collected, 75.3% were successful, down from a final clearance rate of 81.0% in the previous week. Across the smaller auction markets, Canberra recorded the highest preliminary clearance rate, with 93.8% of the 48 reported auctions selling under the hammer.

MEDIAN HOUSE AND UNIT PRICES

Calls to abolish stamp duty have been renewed in NSW

Area

WEEK ENDING 4 APRIL 2021

$885,000

Area

CAPITAL CITY AUCTION CLEARANCE RATES

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

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BRISBANE Total auctions

CANBERRA Total auctions

48

Cleared

45

Uncleared

3

Clearance rate

100

Cleared

51

Uncleared

32

Clearance rate

61.4%

93.8%

SYDNEY Total auctions

421

Cleared

329

Uncleared

54

Clearance rate

85.9%

TASMANIA

MELBOURNE Total auctions

216

Total auctions

0

Cleared

128

Cleared

0

Uncleared

42

Uncleared

0

Clearance rate

Clearance rate

75.3%

n.a.

Note: A minimum sample size of 10 results is required to report a clearance rate.

QUEENSLAND

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Queensland is predicted to be a top spot for investors this year Queensland’s property market has remained “extremely stable” over the past year.

In fact, prices in the state increased by 6.1% over the final three months of 2020.

“Between record-low interest rates, low stock availability for sale, improvements in consumer sentiment and Queensland’s unbeatable lifestyle, it’s no surprise we’ve also seen broader increases in values month-on-month in 2021,” said Antonia Mercorella, CEO of the Real Estate Institute of Queensland.

Brisbane’s median house price hit a new record of $725,000 last year, reflecting 5.8% annual growth. House prices increased further by 0.9% and 1.5% on a monthly basis in January and February 2021, respectively.

While conditions strengthen in Brisbane, regional markets continue to outperform the state capital. The Sunshine Coast remained the top market in the state, with houses and units reporting gains of 7.7% and 8%, respectively, in the last months of 2020.

Metro (H)

$575,000

0.9%

3.1%

$410

3.8%

Metro (U)

$412,500

1.3%

1.3%

$380

5.0%

Country (H)

$470,000

0.2%

0.2%

$400

4.6%

Country (U)

$400,000

2.1%

4.0%

$350

4.7%

Source: Except where otherwise stated, all data sourced from CoreLogic, March 2021

NICK YOUNG: TRAIL BOOK SALE EXPERT Sell your book. Keep your clients.

Release working capital or start succession planning.

03 8508 6666 | 0417 392 132 | nyoung@trailhomes.com.au | trailhomes.com.au www.brokernews.com.au

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29

12/04/2021 12:25:03 PM

PEOPLE

Aggregator Connective

IN THE HOT SEAT

Natasha Choi is a finance broker at The Australian Lending & Investment Centre in Melbourne and was ranked No. 38 on MPA’s Top 100 broker list in 2020. After starting out as a property investor, Choi became a broker in 2015

When and how did you become a broker?

As an investor from an early age, my curiosity sparked A questions to learn more about lending. As a client of ALIC originally, I joined the business and worked with Mark Davis and the team for over 18 months to gain as much exposure as possible to different clientele and lending strategies. In 2015, I became a fully fledged broker.

Q

How did being a property investor from a young age help you make the transition into broking?

A It was instrumental to my role as a broker. Undoubtedly, competition in the industry meant that not only did I need the technical skills to build credibility but, having ‘walked the talk’, it significantly aided my position as a lending adviser. Being young can sometimes be perceived as lacking in life experience, but my perseverance and desire to build wealth encouraged me to take calculated risks and ultimately build a portfolio of four properties.

Sharing my story generates conversation and equips me to educate clients on how they, too, can start investing early.

Q

What drives you in your role as a broker?

Education! It astounds me the lack of education there is in A personal finance, which is why I am so passionate about what I do. Every conversation with my clients is underpinned by learning, with the aim of empowering my clients to make the best decisions. I welcome clients to challenge me, because robust conversations always lead to a better understanding and outcome.

This also differentiates me as an adviser, because conversations centred on lending structures and strategies are more valuable than quoting maximum borrowing capacity and best interest rates.

Q

What changes have you had to make to adjust to the pandemic?

The pandemic created uncertainty at the most elevated level, A both for business owners and advisers. 2020 mandated us to support our clients more than ever, and whilst overall volumes were down, conversations were high. Being across credit policy

Q

30

Natasha Choi, finance broker, The Australian Lending & Investment Centre

changes was demanding, particularly for self-employed clients.

Reassuring clients was repetitive and emotionally taxing but extremely valuable in helping them understand their cash flows to reduce anxiety and prevent what could have been a herd mentality bias if investors all started selling their properties. We are learning every day, and being agile is critical to success, so all the changes in communications – through video meetings and validating ID – was part of the process.

What are your goals for the future?

I hope to continue to be impactful in the industry and for my clients.

A I’m extremely grateful for the loyalty in my network and their voice in promoting my service. But good service is ongoing and not transactional, and I know that my passion and dedication will always motivate me to continue delivering value to my relationships. I’d love to promote greater learning in personal finance, starting from adolescents. AB

Q

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12/04/2021 2:34:29 PM

THE CHOICE IS YOURS WITH

DECEMBER 2020 ISSUE 17.24

YEAR IN REVIEW COVID-19, a recession, bushfires and floods – 2020 threw up some monumental challenges.

We asked industry leaders to look back on the year and at how 2021 is shaping up /14 ALSO IN THIS ISSUE… Big deal How Ray Ethell helped a financial adviser consolidate his debt /20 Real estate spotlight Darwin’s house prices are rising faster than in other capital cities /26 Tech partnership to speed up loans Finsure Group has partnered with fintech illion Open Data Solutions to provide a new integrated service for brokers /22

Brokers take on bankers in cricket The inaugural Bankers vs Brokers Twenty20 cricket match in Perth raised funds for the McGrath Foundation /23

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Restoring brokers’ confidence Wealth Today’s Keith Cullen suggests brokers hard-hit by regulation changes should diversify the services they offer /25

In the hot seat From restaurants to finance: GM Capital Solutions director Andrew Soo /30

9/12/2020 11:01:04 AM

MAGAZINE The only independent magazine dedicated to mortgage industry news, opinion and analysis

WEBSITE Breaking news, in-depth profiles, features, online forum and Australian Broker TV

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SCAN TO LEARN MORE

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12/04/2021 10:26:00 AM