Australian Conveyancer edition four - The year interest rates came knocking

AUSTRALIAN

Conveyancer.

THE PRACTITIONER’S COMPANION

2023 IN REVIEW

THE YEAR INTEREST RATES CAME KNOCKING • HOME PRICE ANALYSIS • LEGISLATIVE CHANGE • 2024 PROPERTY OUTLOOK # 4 • D EC E M B E R 2 0 2 3

POWERED BY

the burning questions

2 •

UK property sales hit

by Cyberattack: Is Australia at risk?

A

cyberattack on a major UK legal managed services company in late November brought property sales to a standstill for up to 200 real estate agencies.

While there was no evidence that clients’ personal data has been compromised, the disruption has destabilised the market and caused reputational damage to the company, CTS. The incident occurred on November 24 and as of December 12, the company was still working to resolve the issues.

The incident is being scrutinised globally, highlighting the need to further tighten data security.

Australian Conveyancer asked two industry experts this month’s burning question . . .

The CTS notification to customers on its website (December 12).

A

Q

ustralian property conveyancers are served by similar managed legal service providers including triSearch Australia.

Their market leading solution known as triConvey is a cloud-based practice management solution built for conveyancers providing users access to an integrated software, search and conveyancing tools platform. triSearch chief executive officer, Chris Gibbs said that “as the sophistication and scale of cyberattacks increases a prevention-only response is no longer enough.

“Businesses should assume a cybersecurity attack will happen and by focusing on early detection and response planning businesses can be more resilient to an attack.

“The more prepared we are as a business for an attack the quicker we can bounce back and protect the interests of conveyancers, lawyers, home owners, and buyers”, Mr Gibbs said.

In early November, Sydney-based data security strategist and consultant Shameela Gonzalez told Australian Conveyancer that it was more a case of when not if a cyberattack attempt is made on the industry.

As transactions involve property and family trust funds, triSearch CEO the stakes are high. A Chris Gibbs. director of security PHOTO: JULIAN specialist CyberCX, ANDREWS Gonzalez said:

Could the Australian conveyancing industry face a similar risk?

A U S T R A L I A N C O N V E YA N C E R • 3

“In our world we talk about high-value targets.

From a conveyancer point of view, one thing a criminal will consider is who are the Australians that are financially better off? What post code do they live in? What are their mortgages? The property they are buying.

“That information becomes really lucrative for cybercriminals to then go and exploit an individual or on-sell to the information to other criminals.”

Meanwhile, a December 8 statement on the CTS website in the United Kingdom read: “CTS recently experienced a cyber incident which impacted a portion of the services we deliver to some of our clients.

“Since then, we have been working around the clock with the assistance of third-party experts to resolve this matter.

“At the outset, we established a four-phased plan which would enable us to restore client services as safely as possible. We have successfully completed phases 1-3 and are now at phase 4, which is the restoration of client environments. Phase 4 is a complex exercise and may take some time.

“We remain in contact with our clients and are keeping them informed as we progress through this final phase,” the statement said.

THIS ISSUE DATA DASHBOARD Property sales statistics show that NSW homebuyers opted for the space, tranquillity and clean air of Sydney’s northwestern suburb last month. On the other hand, Victorians sought out the inner city Melbourne vibe.

See more Page 4

PROPERTY REVIEW Strong demand and low supply pushed up home prices across the country in 2023 despite home loan interest rates hitting a 12-year high. How we coped and what does 2024 look like. Our special Spotlight shows: • Home prices by state: 6 • National snapshot: 10 • How the market stablilised: 12 • To rent or buy: 13 • Tracking the rates: 14 • Projections for 2024: 16 • The banks’ perspective: 18 • How the laws changed: 19

Q&A The heads of progressive conveyancing practice Your Move reflect on a fascinating journey and peak into the future.

See more Page 20

COPYRIGHT © Copyright 2023 triSearch Services Pty Ltd. triSearch and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) of this publication including all data, information, images, commentary and content (content). All rights reserved.

data dashboard

4 •

Peace, tranquillity and opportunity Oakville

Hottest suburbs The NSW suburbs where most property was bought in November 2023.

POSTCODE

SUBURB

1

2765

Oakville

2

2155

Kellyville

3

2170

Liverpool

4

2747

Caddens

5

2259

Wyong

6

2750

Penrith

7

2250

Erina Fair

8

2148

Blacktown

9

2154

Castle Hill

NSW

First-home buyer activity

A cluster of suburbs less than hour’s drive northwest of Sydney’s CBD was the focus of home buyers’ attention during November. Buyers sought value and lifestyle in their purchasing decisions.

The Reserve Bank’s December decision to hold the cash rate at 4.35 per cent also offered some comfort for buyers and made their purchase decision even more palatable. Oakville, 53 kilometres and a 45minute drive from Central Station was NSW's most popular suburb for buyers last month.

Nestled in the Hawkesbury Valley’s peaceful farming district, you know you’re in Oakville the moment you see fruit and vegetable stalls dotted along the main roads.

Nearby Caddens (Number 4) and Penrith (6), with a similar vibe made the state’s Top 10, suggesting buyers are not prioritising central Sydney over a homely lifestyle. Liverpool, Blacktown, and Kellyville – each located near Sydney’s outskirts – were also popular with buyers last month.

How many first home buyers entered the market in November 2023, compared to same time last year.

First Home buyers: Despite cost-of-living pressure across the country, first-home-buyer sales are on the increase in NSW. There was a 5 per cent jump in firsthome-buyer in November over the corresponding month in 2022. First-home purchases made up 30 per cent of sales in the state.

Quick sales: And the time it takes to sell a home was significantly shorter in November 2023 compared to November 2022. It took on average just 55 days to offload a home. At the same time last year, homes were on the market for 70 days. The result signifies a buoyant finish to the 2023.

2145

Pemulwuy

70%

2022

2023

25%

Time on Market The average time a property spends in market before being sold, compared to the same time lastyear.

55

November 2023 30

November 2022

40

50

60

70

70

Percentage of all properties sales recorded by triSearch.

Existing home owner

30%

First home buyer

Overseas investment Which countries invested in the Australia property market for the first time in November 2023.

5.145%

1. India 2. Nepal 3. China

3.27% 2.86% 2.53%

4. New Zealand 5. United Kingdom 6. South Korea

DAYS

10

75%

7. Philippines 8. Vietnam

1.71% 1.39% 1.06% 0.65%

9. Bangladesh

0.24%

10. Indonesia

0.23%

A U S T R A L I A N C O N V E YA N C E R • 5

Melbourne’s heart: Loud, proud and very liveable

Queenslanders went to town in November

VICTORIA

QUEENSLAND

Doncaster

Melbournians are extremely proud of Australia's southern capital.

They say it’s the food, cultural and sporting hub of Australia and evidently love telling Sydneysiders all about it.

But arguably it's the Economist Intelligence Unit’s Global Liveability Index, which annually ranks 173 cities around the world, that has the last say. In 2023, it ranked Melbourne the third most liveable domain behind Vienna and Copenhagen, and just one place ahead of the Sydney, which occupied fourth spot.

Locals will say Melbourne has an incredible food scene, events, and attractions, as well as playing host to sporting festivals such as the Australian Formula One Grand Prix and the Australian Open tennis. With all of that “in the bank”, perhaps it’s no surprise that Melbourne’s CBD suburb (3000) was the hottest location for home sales in Victoria in November.

Convenience, culture, cuisine, and cleanliness. It’s next-door neighbour, Southbank, on the other side of the Yarra was Victoria’s 10th most popular spot among home buyers last month.

Melbourne St Kilda

Chadstone

Brighton

Hottest suburbs The Victorian suburbs where the most property was bought in November 2023 POSTCODE

1

3000

SUBURB

Melbourne

2

3029

Tarneit

3

3141

South Yarra

4

3806

Berwick

5

3978

Clyde North

6

3182

St Kilda

7

3136

Croydon

8

3029

Truganina

9

3030

Werribee

10

3006

Southbank

As was the case in Australia’s other large city locations last month, Queensland home buyers made their way into town to settle down in November. Inner city Brisbane’s Newstead was the most popular address for sales in the Sunshine State, ahead of perennial beachside favourites like Surfers Paradise, which came in at Number 9 last month. Upand-coming Newstead has a growing nightlife scene centred on a stretch of former warehouses featuring craft breweries and pubs with a hip, laid-back atmosphere.

Continuing the industrial-chic vibe, nearby Gasworks Plaza has stylish bistros and cafes built around a decommissioned gasometer. Convenience, entertainment, and proximity to the office appear to have been the big drawcards.

In other takeaways from the Queensland data, Morayfield (fifth) and Caboolture (sixth) dropped a few spots month-on-month but still remain hot.

And North Lakes was in the Number 3 spot last month but has disappeared from the Top 10 in November.

Newstead

Bulimba

Fortitude Valley

Hottest suburbs The Queensland suburbs where the most property was bought in November 2023 POSTCODE

SUBURB

1

4006

Newstead

2

4125

Park Ridge

3

4207

Yarrabilba

4

4215

Southport

5

4506

Morayfield

6

4510

Caboolture

7

4035

Albany Creek

8

4110

Pallara

9

4217

Surfers Paradise

10

4503

Griffin

Disclaimers - The content provided in this publication is of a general nature and does not take into account future market conditions or your individual circumstances.

You should exercise your own skill and judgment when considering investment decisions and seek professional advice where appropriate. While triSearch uses commercially reasonable efforts to ensure the content contained in this publication is current, triSearch does not warrant the accuracy, currency or completeness of the content and to the full extent permitted by law excludes all loss or damage howsoever arising (including through negligence) in connection with this publication.

6 •

spotlight

PROPERTY YEAR IN REVIEW

It was a year of big movements in the property sector with everything from interest rates to housing prices to housing affordability 8.4 seeing an upward trend nationally.

8.85 BRISBANE

SYDNEY

ANNUAL HOUSE PRICE GROWTH (%) ALL DWELLINGS, YEAR TO NOVEMBER 2023

6.54 5.42

CAPITAL CITIES

NATIONAL

2.60

2.92 HOBART

REGIONAL AREAS

1.75

2.25

2.21 REST OF NT

DARWIN

0.74

REST / TAS

0.97 ACT

1.39

MELBOURNE

REST OF VIC

1.56 REST OF NSW

A U S T R A L I A N C O N V E YA N C E R • 7

12.7 PERTH

I 9.74

ADELAIDE

9.74 REST OF SA

7.36 REST OF QLD

5.96 REST OF WA

n a bid to curb worrying inflation, 2023 saw the Reserve Bank of Australia raise rates five times, increasing the February, March, May, June and November cash rate by 25 basis points each time and bringing the total rate increase for the year to 1.25 basis points.

Meanwhile, national home prices – bucking some predictions of a slow-down or a possible property crash – have remained resilient in most states despite higher interest rates.

“Earlier this year national home prices reclaimed 2022’s price falls in their entirety, with the upswing continuing in November as national home prices climbed 0.22 per cent month-on-month to set another fresh record, bringing them up 5.53 per cent so far this year and 1.29 per cent above their previous peak recorded in March 2022,” Eleanor Creagh, senior economist at PropTrack, said after crunching the November national figures.

“Looking ahead, although there is a risk interest rates rise further, they are close to if not already at their peak and while the outlook for the economy is weaker, population growth is set to continue rebounding strongly.

“Together with the housing shortfall and continued challenging conditions in the rental market, prices are expected to continue to rise despite affordability remaining stretched.”

Domain’s chief of research and economics Dr Nicola Powell said Australia’s 2023 property market would be defined as the year price growth defied high-interest rates and a new cycle began. “It was a surprise, given that it was largely expected to be the year that rapid rate hikes continued to hit housing demand and would impact price growth negatively,” she said, adding that 13 rate hikes over 18 months have “been a win for savings rates, but the impact on borrowing capacity and mortgage affordability has cut deeply.”

“What subsequently unravelled over this past year was a reverse of expectation that defied logic – as a shortfall of housing supply collided with rapid population growth, a strained construction sector and the tightest rental market on record – and Australian property prices rose.

“House prices for the combined capitals bottomed out at the end of 2022, allowing the new year to commence with a new price cycle, with Sydney leading the pricing recovery, followed by Brisbane, Adelaide and Perth as the only capital cities where house prices have persistently hit all-time highs and avoided any material downturns. All in all, as we bid farewell to 2023, it’s safe to say that it was a year in property that surprised everyone,” Powell said.

BY LEIGH REINHOLD is the principal of Oz News, a freelance media company supplying print and electronic stories and concepts to local and international markets.

8 • SPOTLIGHT

YEAR IN REVIEW

HOME PRICE GROWTH “The sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing.”

Eleanor Creagh, PropTrack

FACTORS OFFSETTING HIGHER INTEREST RATES

Analysis by PropTrack found strong housing demand in 2023, lifted by constrained rental markets, low unemployment, record overseas migration, and home equity gains of recent years, has worked alongside limited housing stock to offset the effect of higher interest rates.

PRICES STILL ON THE UP – ALTHOUGH GROWTH IS SLOWING

In the longest period of consecutive monthly increases since the pandemic boom, PropTrack said home prices nationwide recorded their 11th month of growth, lifting 0.22 per cent in November.

“Although the volume of new listings hitting the market has increased in recent months housing demand

has remained strong and prices have continued to rise, albeit at a slower pace,” said Eleanor Creagh. “At the same time, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing.

“The positive tailwinds for housing demand and a slowdown in the completion of new homes continue to counter the sharp deterioration in affordability and slowing economy.”

Prices nationally have grown 5.53 per cent, completely reversing the big falls seen in 2022. With more properties coming onto the market in Melbourne and Sydney, the spring of 2023 offered more choice for buyers however home prices still moved higher in November.

The pace of growth was seen to slow in every market excluding Darwin, regional NT and regional SA.

A U S T R A L I A N C O N V E YA N C E R • 9

HOME PRICE GROWTH BY GCCSA (HOUSES)

HOME PRICE GROWTH BY GCCSA (UNITS)

REGION

MONTHLY GROWTH (%)

ANNUAL GROWTH (%)

MEDIAN VALUE ($)

REGION

MONTHLY GROWTH (%)

ANNUAL GROWTH (%)

MEDIAN VALUE ($)

National

0.37

4.55

821,000

National

0.31

4.48

631,000

Capital cities

0.38

5.77

919,000

Capital cities

0.32

4.51

653,000

Regional areas

0.33

1.68

639,000

Regional areas

0.28

4.38

553,000

Sydney

0.42

8.15

1,365,000

Sydney

0.16

5.27

800,000

Rest of NSW

0.35

1.09

749,000

Rest of NSW

0.21

2.22

601,000

Melbourne

0.20

0.58

924,000

Melbourne

0.71

0.97

626,000

Rest of Vic

-0.1

-2.76

601,000

Rest of Vic

0.00

-0.46

438,000

Brisbane

0.53

7.09

865,000

Brisbane

0.48

9.04

577,000

Rest of Qld

0.65

5.95

644,000

Rest of Qld

0.46

8.68

586,000

Adelaide

0.51

8.81

748,000

Adelaide

0.16

8.46

525,000

Rest of SA

-0.21

9.18

403,000

Rest of SA

0.00

0.00

354,000

Perth

0.53

11.48

647,000

Perth

0.48

5.98

442,000

Rest of WA

0.49

5.72

480,000

Rest of WA

0.02

2.26

361,000

Hobart

0.66

-4.29

719,000

Hobart

-0.23

-3.02

535,000

Rest of Tas

0.15

-0.59

522,000

Rest of Tas

0.03

1.71

415,000

Darwin

-0.06

-1.52

552,000

Darwin

-0.21

-0.91

399,000

Rest of NT

-0.01

-1.18

461,000

Rest of NT

0.00

0.00

348,000

ACT

0.11

-0.55

976,000

ACT

0.13

1.29

617,000

SOURCE: PROPTRACK. REGIONS SHOWN ARE DEFINED BY ABS GCCSA (Greater Capital City Statistical Area) STANDARDS.

SOURCE: PROPTRACK. DATA REPRESENTS VALUES FOR DWELLINGS (HOUSE AND UNIT COMBINED). REGIONS SHOWN ARE DEFINED BY ABS GCCSA STANDARDS.

10 • SPOTLIGHT

YEAR IN REVIEW

HOBART

PERTH Perth was the strongest performing capital city in the past year with prices up 12.76 per cent, marking a record high. With tight rental markets supporting home values, population growth coupled with relative affordability and low stock levels intensified competition.

When comparing annual price growth, Hobart remains the weakest performing market, with prices down 6.63 per cent from their March 2022 peak after rising a small 0.03 per cent in November.

This comes after several years of outperformance as well as strong growth during the pandemic.

Home prices in Hobart are still up 37.93 per cent since March 2020.

CITY HIGHLIGHTS BRISBANE DARWIN ADELAIDE Adelaide experienced strong performance with prices up 9.74 per cent. Relative affordability, population growth, tight rentals, low stock levels and strong buyer demand all contributed to a seller’s market.

Unlike other capitals, which experienced price rises in November, Darwin experienced a 0.12 per cent decline.

However, annual growth for the northernmost capital did see a 1.75 per cent rise over the year.

MELBOURNE The price recovery in Melbourne is lagging that of other capitals – apart from Hobart – with November prices climbing 0.04 per cent month on month, bringing prices up 1.39 per cent from their level of a year ago. Prices in Melbourne remain 3.71 per cent below their peak in March 2022.

SYDNEY

ACT The nation’s capital, Canberra, saw a yearly growth of 0.97 per cent.

REGIONAL AREAS Prices are up 2.76 per cent for regional markets in comparison to the capitals which are up 6.62 per cent in the year to November. During the pandemic, prices in regional areas spiked and home values are still up 49.75 per cent since March 2020, while home prices in the combined capitals are up 32.03 per cent over the same period.

BIG GROWTH MARKETS Record growth with prices rising 10 per cent or more in

parts of Western Australia, South Australia and Queensland confirmed those markets as the top-performing areas over the past year. A combination of factors – including population growth, more affordable housing and very low stock, especially for Perth and its record low listings - helped these markets avoid a downturn in prices.

Sydney home prices have experienced 12 straight months of growth, pushing prices to record highs.

In November prices were sitting 8.40 per cent above the levels of the previous year and 1 per cent above the previous February 2022 price peak.

In 2023, Brisbane regained all of its 2022 price falls, climbing in November by 0.2 per cent to reach a new price peak.

In November prices climbed 8.85 per cent above the previous year’s and were up 8.91 per cent year to date.

A U S T R A L I A N C O N V E YA N C E R • 1 1

HOW MUCH FURTHER DO PRICES NEED TO RECOVER FROM THEIR PEAK IN APRIL 2022?

HOW DOES THE FUTURE OF PROPERTY LOOK FOR 2024?

Domain charted the figures *domain.com.au

House and unit price forecasts for 2024. *domain.com.au

LOCATION

HOUSES UNITS MEDIAN FROM PEAK MEDIAN FROM PEAK

LOCATION

HOUSE

UNIT

Sydney

$1,583,521

-0.4%

$783,546

-2.7%

Sydney

7-9%

3-5%

Melbourne

$1,049,038 -4.1%

$568,417

-5.5%

Melbourne

2-4%

3-4%

Brisbane

$865,072

At peak

$511,476

At peak

Brisbane

7-8%

4-6%

Adelaide

$862,078

At peak

$464,783

-0.3%

Perth

6-7%

1-2%

Canberra

$1,050,575 -10.6%

$554,266

-9.1%

Adelaide

7-8%

2-3%

Perth

$724,033

At peak

$380,435

-9.9%

Canberra

3-5%

2-3%

Hobart

$712,062

-6.8%

$495,380

-12.8%

Hobart

2-4%

+/-1%

Darwin

$649,538

-4.3%

$382,403

-21.4%

Gold Coast

6-7%

4-5%

Capitals

$1,084,855 At peak

$624,290

-0.5%

Sunshine Coast

4-6%

1-2%

Regionals

$591,139

$455,884

-0.3%

Regional NSW

2-5%

2-3%

Regional Vic

2-4%

1-3%

Regional Qld

2-5%

1-2%

Capitals

6-8%

2-3%

Regionals

2-4%

1-3%

Australia

5-7%

2-4%

At peak

HOUSE AND UNIT PRICES AS OF 15TH NOVEMBER 2023.

“In 2024, we anticipate continued growth in house and unit prices, with some buyers, sellers, and renters proactively adapting to the lingering impact of the 2023 market movements and potential changes in the coming year.”

DR NICOLA POWELL DOMAIN’S CHIEF OF RESEARCH AND ECONOMICS.

12 • SPOTLIGHT

YEAR IN REVIEW

PROPERTY MARKET STABILISING

“Demand is now being deflected away from those higher price points towards the middle to lower end of the marketplace.”

Tim Lawless, CoreLogic chief economist

A

nalysts are forecasting property prices will not keep rising as quickly this year (2024) as the market appears to be stabilising in key regions.

CoreLogic reported the median national property price is at a record high of $753,654, although it is far higher in Sydney at more than $1.2 million.

Key markets Sydney and Melbourne were fairly flat in November, but prices were still rising strongly in Perth (+1.9 per cent), Brisbane (+1.3 per cent) and Adelaide (+1.2 per cent).

CoreLogic’s chief economist Tim Lawless said property value growth was slowing as buyers at the top end of town eased up on paying sky high prices.

“We’ve seen a real reduction in borrowing capacity.

And we’ve also seen serviceability constraints becoming more pressing,” he said. “Demand is now being deflected away from those higher price points towards the middle to lower end of the marketplace.”

Lawless said this included units and apartments, with prices still rising strongly in most markets.

The median price for an apartment is now more than $450,000 in every capital city except Darwin. In Sydney the median unit price sits at $836,000.

“We’re moving into this burgeoning under-supply across the medium to high density sector of Australia’s housing markets, and that probably will support prices across the unit sector to some extent,” Lawless said.

RESIDENTIAL REAL ESTATE CARRIES AUSTRALIA’S WEALTH

The total value of Australian residential real estate reached a new peak of $10.2 trillion at the end of October, with more than half of Australia’s household wealth tied up in its 11.1 million dwellings. Outstanding mortgages against all residential housing stands at $2.2 trillion – a comfortable 22 per cent loan-to-value ratio. Meanwhile commercial real estate is valued at $1.3 trillion.

HOUSEHOLDS STRETCHED AS AFFORDABILITY REACHES ALL-TIME HIGH

Mortgage repayments as a share of income are the least affordable on record in most cities, according to recent analysis by CBA. “Mortgage repayments as a share of income are currently the least affordable in the history of our analysis in all cities except for Brisbane and Perth,” said CBA economist Harry Ottley. “Median income data in the ABS employee earnings survey (which has a longer timer series) indicates repayments Australia-wide are approaching the levels seen in the late 1980s when the standard variable rate peaked at 17 per cent.”

And Sydney is leading the charge when it comes to expensive housing, leaving Melbourne in its wake, “The difference between Australia’s two most populous and usually most unaffordable cities, Sydney and Melbourne, is now the largest that it has been in this dataset,” said Ottley. “It is likely Sydney is approaching affordability constraints in terms of dwelling price growth. Our current dwelling price forecast for Sydney in 2024 is below that of the eight-capital city index.”

With affordability based on households having a two-person income with both on average wages, many households not in this position are finding affordability even more challenging.

Meanwhile, according to analysis by financial comparison website RateCity, the ability to borrow to buy a dwelling was now about 30 per cent less than when the RBA started its rate-hiking cycle.

“Assuming the borrower secured the lowest advertised variable loan rate and could post a 20 per cent deposit, November’s rate rise will trim about $10,500 from the total a single person can borrow,” said RateCity.

“The reduction in maximum borrowing capacity has now ticked past $200,000 for a typical borrower.”

A U S T R A L I A N C O N V E YA N C E R • 1 3

BETTER TO BUY THAN RENT Many renters in the capital cities would be financially better off if they bought the apartment they were renting, according to research from analytics company PropTrack.

The data compiled in October forecast the cost of renting a property over a ten-year timeframe as opposed to buying a property with a 20 percent deposit, “With how sharply rent costs are going up, a lot of first-time buyers, I think if they can manage it, they would love to jump into home ownership just to avoid the uncertainty of rent costs over the next year or so,” said PropTrack economist Paul Ryan.

THE HELP TO BUY SCHEME WILL ENCOURAGE MORE AUSSIE HOME OWNERS

Federal Housing Minister Julie Collins.

PHOTO: AAP

As little as a 2 per cent deposit will be enough for some prospective Australian home buyers to get into the market - with the assistance of the federal government’s Help To Buy Scheme.

In a shared equity scheme for eligible home buyers, Help To Buy applications are open to Australian citizens earning less than $90,000 individually or $120,000 as a couple per year. The government will loan applicants part of the upfront purchase price of a new home— either 30 per cent of an existing property or 40 per cent of a new build.

“Right across the country Help to Buy will be lifechanging, bringing home ownership back into reach for thousands of Australians, particularly renters,” said Housing Minister Julie Collins. Eligible applicants will need to have saved a minimum deposit of 2 per cent and show they can comfortably finance the rest of the property price through a home loan.

14 • SPOTLIGHT

YEAR IN REVIEW

THE RBA STRATEGY “Higher interest rates are working to establish a more sustainable balance between aggregate supply and demand in the economy.”

Michele Bullock

CASH RATE (%) AS SET BY RESERVE BANK OF AUSTRALIA

A

fter a year punctuated by hikes, the Reserve Bank of Australia held the official home loan cash rate at 4.35 per cent on December 5. The pause was touted as an early Christmas present, despite the rate now at a 12-year high.

RBA governor Michele Bullock could not rule out further rises in 2024 as a mechanism to lower inflation.

“Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable time frame will depend upon the data and the evolving assessment of risks,” said Bullock, assuming the top job in September.

Since the Reserve Bank began to tighten monetary policy in May 2022 – and in easily the most aggressive cycle on record for the RBA – home owners have felt the cumulative impact of 13 rate rises.

According to RateCity.com.au, mortgage repayments have increased by $1,210 a month on a $500,000 mortgage, with increases on a $750,000 loan sitting at $1,815 extra, and a $1 million loan increasing by $2,420 a month.

The central bank conceded some mortgage holders were “experiencing a painful squeeze on their finances” while asserting “some households were benefiting from rising house prices, substantial savings buffers and higher interest income”.

Speaking in Sydney in November, Bullock said she had received letters from Australians struggling with cost of living pressures, with low-income households suffering the most. However she gave no guarantees the RBA would veer away from its policy settings.

“While the (bank) board recognises there is a wide

diversity of experience, the bank’s statutory objectives are economy-wide outcomes, and our key tool – the interest rate – is a blunt one. The board must therefore set its policy to serve the welfare of Australians collectively,” she said.

Nevertheless, heartening October figures showing the country’s inflation rate had eased to 4.9 per cent from the September figures of 5.4 per cent – and down from a peak of 7.8 per cent – helped prompt the RBA’s decision to leave rates on hold at its December meeting.

“Higher interest rates are working to establish a more sustainable balance between aggregate supply and demand in the economy,” said Bullock in the RBA’s December Monetary Policy Decision. “The impact of the more recent rate rises, including last month’s (November), will continue to flow through the economy. High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment.

Holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labour market.”

The governor added, “High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment.”

Reacting to the RBA decision to hold rates steady last month (December), The federal Treasurer Jim Chalmers said the decision was good news for those struggling with cost-of-living pressures and would be “met with sighs of relief right around Australia”.

“This is a difficult time of year at the best of times,” he said. “People are under pressure from the rate rises

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A U S T R A L I A N C O N V E YA N C E R • 1 5

4.35 4.10 3.85 3.60 3.35 3.10 2.85 2.60 2.35

1.85

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0.85 Australian Reserve Bank Governor Michele Bullock.

35

AY

already in the system, from inflation which is moderating, but still too high, and our economy is under pressure from global economic uncertainty as well.

“We know that people are finding it difficult to make ends meet, but if you look at the recent data, a look at the recent commentary, it’s very clear now that we are making welcome and encouraging progress in this fight against inflation.”

With the RBA next meeting in February, Westpac chief economist Luci Ellis said: “By the time of the February meeting, the RBA will have the full December quarter inflation data as well as the September quarter national accounts and other key data.

“We reaffirm our view that the RBA board would raise the cash rate at that meeting if it sees further upside surprises to inflation or fresh evidence suggesting that inflation will decline more slowly than it intends.

“If things play out broadly in line with their forecasts, though, further moves would be harder to justify. In that case, it would be likely that the RBA would hold the cash rate steady. Currently, we believe this is the more likely outcome.”

In November, Michele Bullock told a conference of her fellow central bankers in Hong Kong that the RBA was treading cautiously: “We’re at a period where we have to be a little bit careful.

“We want to make sure we keep inflation under control and we bring it back down to our [2 to 3 per cent] band,” she said. “But we also need to make sure we do that in a context of not imposing on the economy too much, and raising the unemployment rate so much.”

PHOTO: AAP

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16 • SPOTLIGHT

YEAR IN REVIEW

WHAT’S AHEAD FOR THE PROPERTY MARKET IN 2024 AND BEYOND? OECD PREDICTS RATE RISES ARE OVER In November, the OECD updated its world economic outlook and forecast the RBAs 13th rate rise to 4.35 per cent would probably be enough to lower inflation – for now.

“The projections assume that the cash rate will be held at this restrictive level until inflation is clearly declining to the target band, with 75 basis points of interest rate cuts assumed between the third quarter of 2024 and end-2025,” the report said.

Treasurer Jim Chalmers told RN Breakfast that the lower October CPI figures coupled with the OECD forecast showed “we are making some welcome progress in the fight against inflation and that will determine the future directory trajectory of interest rates”.

level since the September quarter of 2022,” he said.

Nationally, 41 per cent of the survey’s respondents saw housing supply and affordability as a concern for the Australian government. At the state level, 43 per cent of respondents identified it as the most crucial issue for state governments.

“Addressing the lack of investment in planning systems that fail to adequately address the essential needs of all Australians is a must,” Zorbas said of perceived deficiencies in government policies and structures. “While governments have tinkered around the edges to provide housing supply in recent months, this survey shows that the property industry is still concerned about the lack of housing supply.”

“Confidence THE GREAT AUSTRALIAN DREAM remains PROPERTY COUNCIL CONFIDENT IS A STRESS, SAYS THE IMF positive within BUT GOVERNMENT COULD DO MORE In October, the International Monetary Fund (IMF) found a survey of its members, The Property Council of Australians have the highest level of mortgage stress in the property In Australia found industry confidence remained broadly the developed world. optimistic despite pressures from interest rates and In its Global Financial Stability Report, the IMF industry, inflation. reported Australians devote on average 15 per cent of especially “Confidence remains positive within the property income to paying off loans, putting us ahead of Canada, industry, especially within individual business,” chief Norway and The Netherlands. within executive of the Property Council, Michael Zorbas Meanwhile the Reserve Bank (RBA) revealed the individual said of the council’s September survey of 696 industry proportion of owner-occupiers whose essential expenses “Construction activity expectations are and mortgage costs exceeded their income in July 2023 was business.” professionals. generally positive across all asset classes, with the around 5 per cent – up from around 1 per cent in April 2022.

Michael Zorbas

exception of the retail and office sectors, where they slightly dipped into the negative territory.

“Expectations regarding construction activity in the retirement living sector have hit their highest mark since the December quarter of 2021.

“Likewise, expectations for residential construction are at their peak in over a year, and industrial construction expectations have reached their highest

“Australian households and businesses are generally well placed to manage the impact of higher interest rates and inflation, supported by continued strength in the labour market and sizeable savings buffers,” the RBA noted. “However, this resilience is unevenly spread. Some households and businesses are already experiencing financial stress, and the squeeze on household budgets is likely to continue to build.”

A U S T R A L I A N C O N V E YA N C E R • 1 7

“We are making some welcome progress in the fight against inflation and that will determine the future directory trajectory of interest rates.”

Jim Chalmers

FIRST HOME BUYERS GETTING BACK INTO THE MARKET The latest lending figures from the Australian Bureau of Statistics (ABS) show first home buyers are reentering the market. With sky-high rental rates country-wide, CoreLogic›s chief economist Tim Lawless said renters “are looking at any way out of the rental market” and crunching the numbers to discover they’re potentially better off buying a property than renting.

FEDERAL TREASURER JIM CHALMERS.

FIRST HOME FIRST HOME BUYER LOAN BUYER RATIO COMMITMENTS DWELLINGS (A) NUMBER

FIRST HOME BUYER RATIO HOUSING (B)

National

9,147

37.3%

32.1%

NSW

2,114

33.7%

28.7%

Vic

2,957

41.8%

36.5%

Qld

1,819

33.6%

28.7%

SA

606

36.9%

29.7%

WA

1,228

41.4%

36.5%

Tas

135

30.9%

26.5%

NT

48

30.8%

27.9%

ACT

240

41.2%

37.2%

PHOTO: AAP SOURCE: AUSTRALIAN BUREAU OF STATISTICS, LENDING INDICATORS SEPTEMBER 2023

18 • SPOTLIGHT

WHAT THE BIG4 BANKS ARE FORECASTING

Westpac initially predicted a stable housing market for 2023 but revised its forecast – citing strong population growth – for national house price inflation to 7 per cent for the year 2023. It expects a further 4 per cent price rise in 2024.

Commonwealth Bank had anticipated a 3 per cent rise in home prices in 2023 but changed its outlook to 7 per cent growth for 2023 – on the back of increased migration, tightening in rental markets, and low levels of housing supply.

The bank forecasts a 5 per cent rise in 2024.

National Australia Bank predicted a 4.7 per cent rise in property prices for 2023 on the back of a supply/ demand imbalance.

The bank projects a further 5 per cent increase for 2024.

ANZ revised its previous forecast of an 11 per cent decline for 2023 to a stable market, followed by a 5 per cent increase in 2024.

FIVE TRENDS DOMAIN IS PREDICTING FOR 2024

#1

AN INTEREST RATE CUT WILL SPARK DEMAND A cut in interest rates or other stimulus measures will spark demand and create another price upswing – a prospect likely to come to fruition in the latter part of 2024. An alternative to a rate cut would be an easing of the mortgage serviceability buffer, speeding up access to the property market by lifting borrowing capacity and/or improving the cost of holding debt, increasing demand and resulting in swift upward price pressures on the housing market.

#2

THE FLIGHT TO AFFORDABILITY Urban spread and gentrification will be on the rise as more people chase affordability. Buyers will explore bridesmaid suburbs and areas they initially overlooked. The flight to affordability for first home buyers will be ignited by the federal government’s Help To Buy scheme.

#3

YIMBYS WILL REPLACE NIMBYS It will be the year of progressive housing and planning reforms nationally in 2024, with the not-in-my-backyard folk swinging to yes-in-mybackyard. We will see a visionary attitude towards housing development and affordability that takes a radical approach to enable urban densification in areas where people want to live.

#4

POPULATION-DRIVEN HOUSING DEMAND Domain analysis found population growth has a cumulative longer-term effect on house prices and, therefore, will continue to play a driving role in our housing markets into 2024 and beyond. Together with a perilous rental market, it makes purchasing more attractive and may shift some to buy, given the current challenges of securing a lease.

#5

RENTAL MARKETS REACH A TIPPING POINT Australia’s rental market is playing a much larger role in our housing market than we have been used to – increasingly more of us are renting, and for longer. This will continue to play out in 2024. However, a tipping point will be reached at some stage, rent growth will slow, and some submarkets will operate with a more balanced rental market.

A U S T R A L I A N C O N V E YA N C E R • 1 9

YEAR IN REVIEW

THE CHANGING RULES Some state and territory property laws and taxes are changing. Will they affect you and your clients?

QUEENSLAND

VICTORIA

ACT

The new Property Law Act 2023 was passed this October in a bid to modernise Queensland’s property laws and allow for better facilitation of e-conveyancing and electronic transactions.

An Annual Property Tax will replace land transfer duty (stamp duty) on commercial and industrial properties in Victoria from 1 July, 2024. As they are sold, commercial and industrial properties will be transitioned to the new system, with the tax to be payable from 10 years after the transaction.

The ACT government continued the reduction of the Conveyance Duty Tax Rate and, effective as of July 1, 2023, the lowest owner-occupier conveyance duty rate on purchases up to $260,000 was reduced from 0.6 per cent to 0.49 per cent While the property price threshold for owner-occupier (offthe-plan) conveyance duty concession increased from $600,000 to $700,000.

One of the most important changes to the act is the Seller Disclosure Scheme which gives a buyer the right to terminate the contract for sale at any time before settlement. If the seller fails to provide any of the Disclosure Documents at the relevant time or provides Disclosure Documents that are inaccurate or incomplete regarding a material matter the buyer has the right to walk away from the transaction. These reforms aim to make the process more transparent for buyers and reduce complexity for sellers.

NSW The exemption threshold for the First Home Buyers Assistance Scheme was raised in July, 2023 to offer stamp duty waivers for newly built homes valued up to $800,000.

There was also the introduction of the Build-to-Rent and the Affordable Housing Project Fund in the ACT with the 2023-24 budget allocating $345 million in additional funding to housing programs and initiatives.

SOUTH AUSTRALIA

WESTERN AUSTRALIA

In South Australia, the government increased the Property Value Cap for the first home owner grant to $650,000 and abolished stamp duty for eligible first home buyers for new homes valued up to $650,000 with relief phased out progressively up to $700,000.

In WA the government extended the off-the-plan transfer duty concession to 30 June, 2025 and property value thresholds were increased. Property tax will also be set at 1 per cent of the property’s unimproved land value, with the changes proposed to take effect from July 1, 2024.

It also abolished stamp duty for eligible first home buyers for vacant land intended for a new home construction - valued up to $400,000 with relief phased out progressively up to $450,000.

The government also introduced a Low Deposit Home Loan Scheme allowing first home buyers to borrow to construct their first home with a 2 per cent deposit.

Another significant change is the introduction of a 50 per cent land tax concession for new eligible Build To Rent developments.

q+a

20 •

A U S T R A L I A N C O N V E YA N C E R • 2 1

YOUR MOVE CONVEYANCING David Winning Founder and Head of strategy Felicity McAllan Chief executive

Moving with the times.

Adapt, pivot and innovate

A

t the heart of Sydney based Your Move Conveyancing’s success lies a philosophy of agility and preparedness, championed by founder David Winning and CEO Felicity McAllan. This approach has enabled the company to not only survive but also thrive during the tumultuous periods of COVID and a volatile interest rate environment. The leadership team’s focus has consistently been on the importance of adaptability and readiness for change, which has been crucial in steering the company through uncertain times.

The challenges brought by the pandemic and economic fluctuations have been significant, yet they have served as catalysts for Your Move Conveyancing to strengthen and grow. The company’s ability to embrace change and leverage it for development has been a defining feature of its journey. This has involved a strategic balance of maintaining core values while being open to new opportunities and approaches.

Australian Conveyancer magazine sat down with the rather humble business leaders who openly discussed their journey through both prosperous and challenging periods.

22 • Q+A

AUSTRALIAN CONVEYANCER: What changes have impacted conveyancing the most in recent years? DAVID WINNING: It’s hard not to reflect on the COVID period. It brought forward a lot of people’s desires to upsize, downsize, swap and tree change. It accelerated the market incredibly over a short period but that growth and volumn wasn’t sustainable.

Rising interest rates in the past 12 months have increased cost of living pressures and forced people re-evaluate their goals and desires.

The recorded transactions in NSW were down about 30 per cent year to year; July and August saw that stabilising somewhat.

We’re starting to see numbers slowly increase again suggesting growth ahead.

AC: What changes should we be pushing for in the next five years?

FELICITY MCALLAN: The uptake of electronic conveyancing since COVID-19 has been a huge change and there will be continued improvements in that aspect of service delivery.

The biggest change I’d like to see is standardisation across the whole of Australia – federal regulation or national conveyancing provisions, making sure everybody’s delivering to a high standard in any state or territory.

However, for that to happen in the next five years would be a miracle.

“AI could be great for the industry, but learning how to adapt it into workflows and ensuring quality and correctness is most important.”

Felicity McAllan

AC: What technology do you use to drive the business forward?

DAVID WINNING: We’ve been able to utilise a lot of the integrations with triConvey with our billing, trust accounting, searching – everything’s all in the one place. We’ve also built custom software integrations to cover our business functions and enable us to scale effectively. It’s been a really a significant component of us being able to provide services as efficiently as we can.

FELICITY MCALLAN: We use triConvey as our CRM and it’s an amazing platform because of its integration, searching and billing.

Having centralised information is important to us as it keeps the team on the same page.

We are continuously evaluating new technology for improvements to quality, service and productivity. We look to automate repetitive tasks and have created internal tools that save time and give our team an advantage when working at scale. triConvey is a key component of this.

AC: Is there a place for artificial intelligence (AI) in conveyancing?

FELICITY MCALLAN: I believe that the face-to-face and human interaction with customers will forever be valuable. The best thing we can do is learn more about AI and how it can help us complete tasks to make us more efficient.

AI could be great for the industry, but learning how to adapt it into workflows and ensuring quality and correctness is most important.

A U S T R A L I A N C O N V E YA N C E R • 2 3

AC: Is cybersecurity a concern for your business? How are you mitigating risks?

DAVID WINNING: It’s a huge issue.

Conveyancers and solicitors alike aren’t generally cybersecurity experts so it’s a space where we need to continuously educate ourselves. We engage experts, read recommendations from financial institutions and talk to others in the industry to keep up.

Client emails being hacked and incorrect bank details being provided is a particularly worrying area because of the large sums involved. We spend a lot of time educating our clients at the beginning of the transaction, talking to them about what account details they should be expecting to use, and vice versa. We’re getting account details before there’s an opportunity for those details to be manipulated and always checking verbally as well. You cannot be too careful in this area.

The banking industry also needs to come to the party in that respect, make it easier to adopt emerging technologies and ideas that mean there is more security in the transfer space.

“Conveyancers and solicitors alike aren’t generally cyber-security experts so it’s a space where we need to continuously educate ourselves.”

David Winning

AC: How can conveyancers stay up to date in this ever-evolving industry?

FELICITY MCALLAN: By speaking to people, build networks, share ideas, speak with all the stakeholders and consumers, real estate agents, mortgage brokers and software practitioners.

Just share and listen. It’s so important to understand how other people view a topic so you can consider your own perspective and draw an informed conclusion.

AIC offers networking groups which are a great way to get involved with the wider industry, meet new people and find new opportunities.

AC: What’s your advice for conveyancers looking to grow their business?

DAVID WINNING: People like interacting with other people, and the biggest thing that we found in the early days was that nothing beats personal interaction.

Being able to pick up the phone, talk to someone directly, go out and meet them for coffee, let them get to know you and vice-versa.

That really helps define your position are in the market and the services you provide to clients that make you stand out. Is it availability, pricing, different types of technology that you’ve adopted?

They’re the sorts of things that referral partners in particularly just want to know about.

24 •

the toolbox

Soul searching: Capturing your team’s culture Workplace culture is often a difficult concept to describe, other than to say you know it’s special when everything just clicks.

It speaks to the heart and soul of a business: what makes it tick and how people interact with each other and engage in their work.

With unity comes strength. There is power in a team lining up behind a common purpose and mission to succeed.

Late US president John F. Kennedy once said: “efforts and courage are not enough without purpose and direction”.

Culture and performance coaches say that identifying and committing to a common purpose and mission makes evident what a business must prioritise. It offers the perspective to see what we can accomplish. Some describe it as having a “North Star” to follow. Here we explore key principles and practices that build a strong company culture.

1. ESTABLISH CORE VALUES

A good company defines and carefully articulates its mission: Why it exists.

Core values demonstrate to stakeholders what is important to the business and guides the decisions it takes.

2. LEAD BY EXAMPLE

Business success starts at the top. Good leaders embody the spirit and values of the company and set the tone for employees to follow.

DISCLAIMERS The content provided in this publication is of a general nature and does not take into account future market conditions or your individual circumstances. You should exercise your own skill and judgment when considering investment decisions and seek professional advice where appropriate.

3. TRANSPARENCY AND CELEBRATE ACHIEVEMENTS

Trust in your business is a product of transparency and authenticity in all you say and do in business.

Within the conveyancing process, being transparent at the beginning of the workflow, explaining what methods you use to conduct the conveyance, and what they should expect, can go a long way to preparing expectations and understanding. Celebrating individual and team success improves productivity and engagement in the workplace.

4. EFFECTIVE COMMUNICATION

Inclusive, consistent, and high-quality communication is a critical reminder to all inside the team what is acceptable and what is expected. It recognises good behaviour and celebrates the wins. Strong, thoughtful external communications signal to customers and partners your business’s commitment to them.

Keep the messaging brief, consistent and relatable.

While triSearch uses commercially reasonable efforts to ensure the content contained in this publication is current, triSearch does not warrant the accuracy, currency or completeness of the content and to the full extent permitted by law excludes all loss or damage howsoever arising (including through negligence) in connection with this publication.