Australian Conveyancer edition six - Fighting the force of nature by triSearch

AUSTRALIAN

Conveyancer. THE PRACTITIONER’S COMPANION

FIGHTING THE FORCE OF NATURE How a 30-year climate outlook is helping home owners navigate fire, flood and erosion threats

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Housing revolt erupts over NSW plan to ramp up building A battle over housing is underway between the NSW government and local councils, which claims communities are being kept in the dark about zoning changes. A push to increase housing density in NSW is facing a local council uprising as one Sydney mayor complains the plans will spell the end of the family home. But Premier Chris Minns has dismissed the criticism as “hyperventilating”, adding the state government has a mandate to ramp up building to tackle the housing crisis. Weeks before Christmas, the Labour government announced a major planning overhaul, including 40 transport hubs expected to cater to 210,000 new dwellings across greater Sydney, Newcastle and Wollongong. The proposed precincts - including many in heritage-protected areas would be subject to increased density. Dual occupancies, such as duplexes, will also automatically be allowed in all low-density residential areas, many of which are currently characterised by single homes on large blocks. But multiple Sydney councils say the government hasn’t provided enough information about the zoning changes. Annual building completions for NSW sit at about 48,000 homes, well short of the 75,000 annual average that the state has committed to for the next five years.

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A decade to save for a country home as regions grow Regional Australia can look forward to more jobs and innovation, but health, housing and climate change present challenges, a landmark report says. Regional Australians have to save for nearly a decade to get a house deposit, almost as long as it takes to crack the capital city markets. That’s one of many findings in the federal government’s 2024 State of Australia’s Regions report, which shows the rapid growth of country populations is a double-edged sword. While the report found jobs and innovation abound in the regions, inequitable healthcare, climate disasters and the housing squeeze are major challenges. All regions experienced growth in 2021/22, with coastal areas leading the charge. The population shift increased the time to save for a house deposit to 9.7 years in September last year,

up from an average of 7.2 years in September 2019. That puts regional markets only slightly below capital cities, where it takes 10 years to get a deposit, according to the report. Federal Regional Development Minister Kristy McBain (pictured) said the Labor government wanted the regions to be thriving places where people can pursue a variety of jobs. “As communities outside of our big cities grow, it’s more important than ever that regional people have access to reliable, fit-for-purpose services in their own backyard – from education, health and connectivity,” Ms McBain said.

NEWSROOM Stories that moved the dial Home lending hope on the horizon Lending to hopeful home owners and investors took a tumble in the final month of last year, marking the first decline in five months. The 4.1 per cent fall in new home and investment property loans in December followed steady increases in lending throughout 2023. The drop to a total of $26.27 billion was led by a a 5.6 per cent decline in owner-occupier lending, figures from the Australian Bureau of Statistics show, with investor home loans sinking a more modest 1.3 per cent. CommSec economists Ryan Felsman and Craig James said there

were competing influences pulling home lending in different directions. They said higher interest rates and lofty home prices were reducing demand for lending by driving up the cost of servicing a loan. “But stable interest rates, prospect of rate cuts ahead, tight rental markets and solid job markets are providing some interest for budding home owners or investors,” they wrote in a note. Despite the fall in lending over the month, over the year lending among investors rose 20.4 per cent and 7.4 per cent for owner-occupier loans.

Queensland home building boost

THIS EDITION

The Queensland government will encourage developers to build more homes in metropolitan areas by relieving $350 million in infrastructure charges. Premier Steven Miles and Housing Minister Meaghan Scanlon vowed in February to address the state’s housing shortage by also releasing more stateowned land for social and affordable homes. Miles said the approach to working with industry had to change if the number of homes was to keep pace with Queensland’s growth.

The RBA’s decision to keep interest rates on hold was welcomed this month by homeowners. It may be some time before we see a reduction. Why?

INTEREST RATES AND THE PATH FORWARD

“A key pillar of the Homes for Queenslanders plan is building more homes faster,” he said. “The Infrastructure Infill Fund ... will deliver more housing options in demand areas - close to schools, transport and healthcare. “This funding is in direct response to the feedback we’ve received from industry.”

Q BURNING QUESTION: BETTER. FASTER. STRONGER.

The conveyancing industry is a rapidly evolving one. Processes that used to require trawling through archives and mountains of physical paper documents is now largely available in digital form. Undeniably, it’s more efficient. But the transition has also inspired automation initiatives throughout office workflows that have allows more time to be spent servicing clients. There are many ways to make the small but important tasks less time consuming, so we ask:

QUESTION: What are some of the initiatives (even the little things) that you have deployed to automate element of workflow and win back time?

Developers will have to show community benefit and provide smaller and more affordable housing to be eligible for the infill funding. These are more likely to be units and townhouses. Social and affordable housing will be provided using state-owned land, with the medium-density dwellings part of federal government housing reforms.

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VICTORIAN AIC INSIGHTS: WHAT NEEDS TO CHANGE AIC Victoria president Shakila Maclean shares her perspective on the megatrends buffeting the industry.

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DAN LYNCH Licensed conveyancer, managing director & principal, First State Conveyancing First State Conveyancing have implemented several workflow automations over the past 24 months. These include task scheduling tools, email filters as well as document templates to name but a few. These initiatives both enhance efficiency and boost overall productivity. AI, including tools like ChatGPT, will continue to influence our strategic planning as we look to further enhance efficiencies through the continued automation of appropriate tasks. As I see it, the benefits of AI are obvious, including increased productivity, rapid data analysis together with improved customer interactions to name a few. There are legitimate concerns regarding data privacy, potential biases as well as the ongoing need for human oversight. For First State Conveyancing, balancing the benefits of AI with ethical considerations to enhance customer satisfaction, remains pivotal in implementing a comprehensive strategy that harnesses the advantages of AI while simultaneously mitigating the associated risks.

THE 30-YEAR CLIMATE IMPACT ON PROPERTY We commissioned a longrange climate report to project risks of bushfires, floods and coastal erosion over the next three decades. These risks will play a significant role in planning, insurances and land values. This detailed 20-page Spotlight report is a must read.

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MOVING OUT OF TOWN? The Data Dashboard reveals the migration from city living to affordable living on the city outskirts. Dig into the detail.

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4 • NEWSROOM

Nothing’s in, nothing’s out: RBA keeps options open “We’re looking for data which convinces us and helps us to be reassured that inflation is coming back to target within that time frame.” Michele Bullock

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

BY POPPY JOHNSTON, Australian Associated Press

he Reserve Bank of Australia (RBA) kept interest rates on hold this month but needs to be convinced it’s done enough on inflation before considering cuts to the key cash rate. The central bank has dampened hopes of an interest rate cut any time soon, telling households it’s keeping its options open because the war on inflation hasn’t been won. “Nothing’s in, nothing’s out,” RBA Governor Michele Bullock said during her first post-board meeting media conference when asked about the likelihood of hikes or cuts. Board members decided to leave the cash interest rate steady at 4.35 per cent on February 6 after the bank’s first two-day meeting, as was widely expected. With encouraging progress on inflation logged in December, markets and economists had switched focus from the likelihood of more interest rate hikes to the timing of cuts. Yet Bullock said the central bank was dealing with “broadly balanced” risks tilted towards, on one hand, a hard landing for the economy, or on the other, lingering inflation. “We’re looking for data which convinces us and helps us to be reassured that inflation is coming back to target within that time frame,” she said. The press conference – a new edition to the postmeeting regime aimed at improving monetary policy transparency – fleshed out communications in a statement issued by the board. “Encouraging signs” were highlighted but the board “remains highly attentive to inflation risks”. Uncertainty hanging over the Chinese economy was flagged, as well as risks stemming from the conflicts in Ukraine and the Middle East. Services price inflation could also prove persistent in Australia, as it has elsewhere.

The board noted it had declined at a more gradual pace than goods and in line with the RBA’s earlier forecasts. EY chief economist Cherelle Murphy said the board remained “rightly hawkish” given inflation was still high and price pressures had not evaporated. “The message from the governor was clear: despite the mortgage pain being felt by many in the community, the Reserve Bank will remain vigilant in the fight against inflation,” Murphy said. She said markets were probably too optimistic to be pricing in a 25 basis point rate cut by September given inflation risks. The Organisation for Economic Co-operation and Development has warned central banks not to rush into rate cuts in an economic outlook update. The RBA has also revised its inflation forecasts down but still expects it will be back within its target range by the end of 2025 and around the midpoint in 2026. The RBA sees inflation falling to 3.3 per cent by June this year before easing very gradually to 2.8 per cent – within the two to three per cent target range – by December 2025. Gross domestic product forecasts were also revised down, which Murphy said reflected a weaker outlook for consumer spending. Consumers have been responding to tighter financial conditions by reining in their spending, with retail volume data for the December quarter from the Australian Bureau of Statistics particularly weak when accounting for population growth.

Productivity, conflicts cloud the path forward The job of bringing inflation under control isn’t finished, although consumer price growth does not need to be back within target before rate cuts start. Inflation remains unfinished business in the 0. 35 RBA’s books. Sluggish productivity growth and conflicts in the Middle East and Ukraine lurk as

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1.35 Reserve Bank of Australia (RBA) governor Michele Bullock addresses the House of Representatives Standing Committee on Economics as part of its review into the RBA’s 2023 annual report at Parliament House in Canberra, Friday, February 9, PHOTO: LUKAS COCH

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potential risks that could keep inflation high, Bullock told a parliamentary hearing on February 9. At the same time, there are reasons to fear a deeper economic slide, including a weaker consumer and China’s troubled property market. The central bank started lifting interest rates in 2022 when inflation was rising quickly. Economic data suggests the tightening cycle is working and a softer December quarter inflation print has fuelled hopes of an end to hikes and directed the conversation towards the timing of cuts.

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Bullock would need to be “very confident” in the inflation outlook before easing rates, she said, but the key price measure did not have to be within the two-three per cent target range before cuts could start. With uncertainty still clouding the path forward, the RBA has kept further interest rate hikes on the table. But when asked for her opinion on calls from the International Monetary Fund and others to lift interest rates higher, the governor conceded “they’re a bit more hawkish”. “They have a slightly different view on the balance of risks to us and I think they put a little bit more emphasis on inflation expectations,” Bullock said. Several committee members queried Bullock on sluggish productivity growth, which has been flagged as a risk to the inflation outlook. Wage increases in the absence of productivity growth mean businesses are producing less output with the same amount of input, keeping upward pressure on the prices firms want to charge to maintain profit margins. Bullock said there were good reasons to expect productivity growth to recover, including an uptick in business investment. The pandemic could also explain much of the recent weakness in productivity growth and should eventually drop out of the longer-run trend. Bullock said a failure to kickstart productivity growth could push out the planned timeline to return inflation to target. ANZ head of Australian economics Adam Boyton and his colleagues said communication from the RBA had been “a little more hawkish than the market expected”. At the same time, the central bank’s updated economic forecasts were “arguably a little more dovish” given its inflation predictions were built on an assumption the cash rate eases to 3.4 per cent by the end of 2025. “We think the board will want to be very confident that inflation is coming back to the band in a sustainable fashion before changing its rhetoric,” ANZ’s note read.

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6 •

FACE-TO-FACE

with Australian Institute of Conveyancers Victorian president Shakila Maclean

A time to reflect, juggle and innovate BY MELISSA IARIA

ustralian Institute of Conveyancers Victorian president Shakila Maclean is enthusiastic about how conveyancers can be better. Elected in August, 2022 and a board member of the peak body since 2018, she juggles her responsibilities with running All Hours Conveyancing, which she founded over 15 years ago. As conveyancers gear up for a new year, Australian Conveyancer magazine met Shakila Maclean to discuss her reflections on an industry grappling with tech changes, cybersecurity threats and a volatile property market.

PHOTO: AARON FRANCES

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

AUSTRALIAN CONVEYANCER: How did you end up in conveyancing? SHAKILA MACLEAN: I spent time in a law firm working on some conveyancing files when a team member went on maternity leave and somehow, I had a fair bit of on-thejob training. The question of whether people are getting the right training is a big bugbear for the industry. The legislation says you need 12 months work experience but is it enough? AC: Describe a key difference between the industry today versus when you started? SM: When I started, everything was very manual and labour-intensive. We bound contracts, printed documents and put ‘sign here’ stickers on them, then posted them out and waited for them to come back. If there was a cash purchase, you’d do things like stamping and registration by running to the State Revenue Office and the Title’s office. Now we’re seven years of being paperless. You can send everything to your client via PDF and they can sign it. The parameters of how our business is run are the same, but how we run our practices is very different. AC: How do you juggle being president with your work at All Hours Conveyancing? SM: I juggle running my business, the president role and being a mum and a wife. We’ve recently done a restructure at the AIC, so I’ve been heavily involved in that. Sometimes I drop a ball, but if being a conveyancer’s taught me anything, it’s to be very organised. Conveyancers work on dates, calendars and tasks and being able to task everything has been a key reason for my success. I’m also okay to delegate. Since becoming president, I’ve been really fortunate to have a supportive and united committee. The juggling is one thing, but like anything, it’s having the right team around you. AC: What are your personal career goals for 2024? SM: This year is about boundaries and managing my time better. Over the past couple of years the boundaries have just been out the door. If I can set boundaries, for example by putting my phone on silent, I’m getting on with my task and can service everybody better. Businesswise, I’m looking at a brand refresh and really ensuring we’ve identified our ideal client.

AC: What megatrends are influencing the industry right now? SM: Cybercrime is a big national issue. There needs to be enough consumer and practitioner education about what they need to do. We should really have a system setting out the minimum needed for a cybersystem. Victoria is about to announce our cyberframework. Other issues obviously include interoperability and the impact on the consumer and subscriber, and vertical integration and the ongoing threat to the national conveyancing profession. AC: What key regulatory changes are ahead for conveyancers? SM: In Victoria, major land tax changes were introduced in January. It’s fantastic news and something we’ve had to prepare and provide education around. Further changes are coming into play around June or July. AC: How are conveyancers perceived by the industry? SM: I think we’re definitely undervalued. We need more consumer education around the importance of a conveyancer, what they do and that it’s not just a paper shuffle. If your conveyancer gets it wrong, you’ll really understand the value of a good conveyancer because fixing a mistake is costly and time consuming. AC: What other issues are you noticing in the industry right now? SM: In Victoria, some ageing members are selling up great big practices, which are being purchased by conveyancers who are inexperienced or enough time hasn’t been spent transferring knowledge. For conveyancers, service is personalised and clients have an expectation already if they’ve dealt with you. But those who’ve sold their businesses say they aren’t being run the same way. These businesses are then being sold again or run into the ground. These business owners worked really hard for a long time, made a successful career and had good businesses with good turnovers. It will be interesting to see how things can be done better. Then again, some dynamic practitioners are coming on board with their own practices who are really great operators. We have raised a few concerns with our

8 • Q+A

“It’s great to ask Siri what the weather is, but can you trust AI to read a contract? Probably not.” Shakila Maclean

regulator and these are being addressed and hopefully we can announce these soon. AC: Are industry changes inevitable with the move towards digital and AI? SM: The changes are inevitable. Previously, you had to go to the Titles office to search titles and now it’s electronic. We used to settle via paper, so you’d have four parties attend at a location and transfers and cheques and documents got checked and today it happens all electronically, which is welcomed. In terms of AI, it’s having the right knowledge around it. I don’t necessarily know how it can help day-to-day in my conveyancing business. It’s great to ask Siri what the weather is, but can you trust AI to read a contract? Probably not. It’s also about making sure people don’t cut corners and make errors that way. AC: What issues should be on the radar for conveyancers? SM: Conveyancers need to understand cybersecurity and the impact of your business being hacked and ensure they have the right cyberframework for their business. Now is also a good time for conveyancers to do some housekeeping and streamline workflows if they haven’t already. Also question if there’s a better way to do things. Make sure your team understands they should not be cutting corners. That’s really important because a lot of people can quite quickly fall into bad habits.

and have systems in place, you can really become more profitable and time efficient in the long run. AC: Are conveyancers who fail to adapt to new technology in danger of dying? SM: If you don’t adapt, you’ll always get left behind. At some point you have to make some changes, but if you choose not to, is your business going to be relevant? Will people want to do business with someone who posts things out over three or four weeks when they know another business will email it to you literally that afternoon?

AC: How can conveyancing firms best protect themselves from hackers? SM: Conveyancers need to really wake up to the fact that if it’s happened to Optus and Medicare, it can happen to us. AIC Victoria is just about to bring in a cybersecurity framework for their members and suggestions for our members that will give them perspective on what they need to do. I often wonder whether the practitioner does not understand what’s required, so therefore they don’t value a cyberthreat enough to give it the time and attention it needs?

AC: How can firms best embrace these technology changes? SM: Personally, I read up on any changes and investigate and ask questions of my peers. I found once I joined the AIC as a member, I had the AIC community support I needed, which was really helpful. It allows you to meet others, hear about their ways of working and we can learn from our peers and compare business ideas, which is really positive. When you implement anything, you’ll have good and bad days. On a really good day it will make sense that you did it.

AC: How does the adoption of tech advancements affect workflows? SM: I’m a big supporter of technology to make life that little bit easier. If you can streamline your processes

AC: Conveyancers are busy people. How should firms best stay on top of trends? SM: Learn the pros and cons before you implement anything. My strategy is to always do as much research as I

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When you’re in business, the biggest thing is you ride the waves – it can’t always be buoyant, great times. There are people reading this who have probably been through the recession and 18 percent interest rates. Everyone has a story. Many clients are also coming off fixed rates, so that will be where people need to offload, which needs more conveyancing – but then someone’s got to be able to buy it on the other end.

can, because at the end of the day your team is affected by the decision and you’ve got to be able to support them through it. I make sure my staff are embracing it because that will make the transition much easier. AC: Can AIC do even more to help conveyancers in this regard? SM: Yes, absolutely. If we hear about something from an AIC perspective, we’re onto it. For example, if there’s a new software product out for conveyancers, we won’t know about it unless we’re contacted about it. It’s really important these providers contact us so we can make arrangements to promote it among our members. AC: Ideally, what would you like to do as president? SM: We’ve gone through a lot of growth and change in the past 12 months as an organisation. We’ve always been a big provider of education and professional development to members, but the next part for us now is to provide more education than we have before and do it better, so members can get the most out of us, the AIC. AC: With high living costs and interest rates still biting, how do you see the volatility in the property market playing out? SM: Some members are saying they are flat out and others are quiet or not at capacity. The question is, are different parts of the state having different outcomes or is it actually just how you run your business?

AC: Buying property is high stakes and stressful. How important is it for conveyancers to ensure the customer journey is pain-free? SM: That should be part of your client journey. It’s not just about preparing the documents and fundamentals to settle a file – you’ve got to make sure customer needs are met. Sometimes some of us joke around in Melbourne that we’re not just a conveyancer, we’re a magician, psychologist and therapist. We wear many hats and play all those parts and all of a sudden, we’re creating the customer journey without even realising it. It’s that commitment to our clients that makes our customers feel like their journey was seamless. AC: Is there anything that can be done better? SM: Absolutely. With business in general, there’s so much we can all do better and it goes in so many ways. For instance, it could be how someone answers your phone at work if they’ve had a really bad day. You’ve got to have the right people on the tools. It’s also knowing what sort of conveyancer clients are looking for. Some conveyancers are excellent at dealing with the hard stuff and some don’t want to do that. AC: The impact of climate events on land zoning and property values is becoming more talked about. What obligations, if any, should conveyancers have in their duty of care to protect buyers? SM: When acting for a vendor, it’s important you disclose and put in all the relevant certificates needed. There’s no point trying to cut corners or save the client money, because at the end of the day you need to put the relevant information in. When acting for a purchaser, if the relevant information is in the Contract of Sale and Section 32, you can review the contract before they sign, or it goes to auction and then you can review and disclose all that information to your client.

spotlight

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Navigating the state’s perfect storm A 30-year climate outlook is shaping the risk profile for properties prone to bushfires, floods and coastal erosion. Scientific modelling reveals thousands of NSW home owners and investors face a perfect storm with severe consequences to land values, zoned restrictions, and insurance premiums. The situation is being closely monitored by all states and territories. This Spotlight report – intended to inform, not frighten – examines how governments, lawyers and the property industry are battening down to protect and advise.

Australian Conveyancer reviews: • The Climate chaos • The outlook and regions in the firing line • The obligations • The conversations navigating a path forward

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With Australians suffering through the past five years of intense climate-related disasters, analysts and lawyers are warning that prospective home owners and investors could be buying into a perfect storm. And making buyers aware of the potential risks to any property of bushfire, coastal erosion, rising sea levels and riverine flooding could be a compliance issue for property lawyers and conveyancers. According to analysis by international legal firm Norton Rose Fulbright, commissioned by property data experts Groundsure, Australian real estate lawyers and conveyancers already have a “duty of care to advise and warn their clients about climate risks”. “Whilst when the duty of care to advise on climate risks is factually dependent and vary from case to case, it is considered that lawyers are currently obliged to advise on climate risks and were potentially obliged to do as early as 2021,” counsels the firm’s partner Elizabeth Wild. In NSW the impact of climate catastrophe truly hit home in the spring and summer of 2019-20 when the state was engulfed by the Black Summer fires, which claimed 33 lives, destroyed more than 2448 homes, and had an estimated $4.6billion economic impact countrywide. “The 2019-20 Black Summer bushfires were some of the worst in the world and in recorded history,” concluded Dave Owens APM and Mary O’Kane in their report to the NSW Bushfire Inquiry. They visited 14 council areas of NSW from the Northern Rivers and Clarence Valley in the north to the Far South Coast and found, “We should expect fire seasons like 2019-20, or potentially worse, to happen again. Climate change, as a result of increased greenhouse gas emissions, clearly played a role in the conditions that led up to the fires and in the unrelenting conditions that supported the fires to spread.” Government body AdaptNSW says the state is at high risk of bushfire, and this risk is increasing with climate change. Figures from international environment and climate data authority Groundsure – using the Groundsure ClimateIndexTM – reveal The Blue Mountains with 1068 lots (or 48 per cent of total lots) are facing a very high risk assessment of bushfire both now and 30 years into the future, followed by the Central Coast, Sutherland Shire, Wollongong and Wollondilly.

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Vanessa Williams stands on the remains of Mogo Pottery, the business she ran with her husband Peter Williams (not pictured) in Mogo, Wednesday, January 15 2020. Bushfires swept through Mogo on New Years Eve 2019 destroying several homes and businesses. Peter and Vanessa Williams lost both their home and their business which were adjacent to each other. (AAP Image/James Gourley)

By LEIGH REINHOLD

The 2019-20 NSW Black Summer toll

33 2,444 $4.6B DEAD

HOMES DESTROYED

ECONOMIC IMPACT

12 • SPOTLIGHT

FIGHTING THE FORCE OF NATURE

COUNTING THE COST OF CLIMATE CHAOS

Debris in the Tweed River at the town of Tumbulgum, NSW, Friday, September 23 2022. The low-pressure storm system that caused flooding across inland NSW earlier that week tracked towards the coast, with flood and storm warnings covering much of the state’s east. (AAP Image/Jason O’Brien)

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

The catastrophic floods of 2022 – aka The Great Deluge and now deemed the worst floods in NSW history with 20 people dying nationally – had “the fingerprints of climate change” according to the Climate Council. Communities like Lismore, in northern NSW, copped the brunt with an unexpectedly high flood peak of 14.4 metres – 2.3 metres higher than the previous record. The Insurance Council of Australia (ICA) estimated the widespread disaster racked up $3.35 billion in insured losses, making it “the costliest flood in Australia’s history” and the fifth most costly disaster Australia-wide after the eastern Sydney hailstorm (1999, $5.57 billion), Cyclone Tracey (1974, $5.04 billion), Cyclone Dinah (1967, $4.69 billion) and the Newcastle earthquake (1989, $4.24 billion). AdaptNSW says flooding in NSW costs the economy about $250 million every year and climate change is expected to make storm and flood events more severe. Groundsure’s analysis says, “Flooding from rivers, estuaries and sea level rise poses the single greatest physical climate risk to properties in Australia. This is being driven by ever more frequent weather systems dumping record breaking rainfall amounts, especially across NSW and Queensland. “This has inevitably meant huge increases in insurance premiums, with many areas close to rivers and coasts now finding effective and affordable cover impossible. This can also have the knock-on effect that securing the mortgage can become a real challenge.” Of concern, the ICA says 229,455 properties in Australia have a 5 per cent flood annual exceedance probability (AEP), known as a 1-in-20 year flood risk. And more than half of those properties (123,475) are in NSW. For some families on the Hawkesbury River, the July 2022 flood was the fourth time in 18 months their region was inundated. The flow-on effect was insurance premiums skyrocketed. The AIC estimates 11 per cent of Australian properties are currently uninsured. “Affordability and availability of insurance is critical for Australia’s economy and communities,” says the council. “For insurers to continue to provide affordable cover, action is required to strengthen the resilience of homes, businesses and communities. “Ensuring Australians know the risks up-front in a transaction is key to building a more resilient future.”

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A new risk of unnatural disasters The news is grim on the coastal fringes of Australia with an estimated $25 billion worth of property at risk of coastal erosion. Around 85 per cent of Australians live within 50 kilometres of the coast. The Climate Council cautions: “Climate change is driving a new era of ‘unnatural disasters’ – and as a country we are not prepared to cope. We have seen how consecutive, record-breaking events can overwhelm emergency services and devastate communities.” NSW beachside suburbs Cronulla, Manly and Collaroy made the top 10 of Australia’s most at risk suburbs in CoreLogic’s Coastal Risk Scores for Financial Risk Assessment report. “In the next three decades, coastal risk will crystallise, with the tangible effects of climate change already being felt in most parts of Australia,” says CoreLogic head of consulting and risk management Pierre Wiart. “This is leading to direct physical and financial consequences. Coastal risk has far-reaching implications for the country’s property market and its supporting financial sector, including property valuations, home loan viability and insurance premiums.”

A view of damaged houses along Terrigal Beach on the Central Coast, NSW, Monday, July 27 2020. A severe weather warning had been issued for the NSW coast from the southern border to Newcastle the previous night. (AAP Image/James Gourley)

14 • SPOTLIGHT

FIGHTING THE FORCE OF NATURE

RESPONDING TO THE NEW REALITY With the evidence stark that climate disruption will have a worldwide economic, environmental and social impact in the years and decades to come, various stakeholders are formulating new policies and guidelines. Last year the Law Society of the UK updated its guidelines for solicitors in regards to advising clients on climate change, saying solicitors had the duty of care; the duty to warn; the duty to disclose; and the duty to uphold service and competence levels. Meanwhile, the Law Society of NSW told Australian Conveyancer it is currently “developing guidance material to assist NSW practitioners to recognise where the impacts of climate change may affect their practice and their clients.” The society says its guidance will be published within the first half of this year. The CEO of the Australian Institute of Conveyancers NSW, Chris Tyler says the AIC will be waiting for the Law Society of NSW to release their guidelines before informing any of their members regarding their obligations. “Climate risk is an emerging risk, it is something that needs to be considered in the future and we will have to see how it plays out,” he tells Australian Conveyancer. “Quite honestly there hasn’t been any claims on our Professional Indemnity relating to climate issues where a conveyancer has been sued for not advising that the property was in a flood zone, or whatever the case may be.

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“We’ll wait and see. There is no legal precedent for it to occur that there is a duty on behalf of the conveyancer and so we’ll see how the market develops.” Tyler believes the onus of obtaining a climate risk report should really be the responsibility of other parties including the purchaser. “When you talk about the best ways for prospective homeowners or investors to minimise risks, they have to go into it with their eyes open,” he explains. “I mean, if you’re going to buy a home at Collaroy on the beach, it has got the potential in 20 years to be undermined or affected by climate change. “Don’t go back to the conveyancer and say, ‘I could have bought a climate risk report which would have indicated that’. “You’d have to be living under a mushroom to not know about climate change, and so if you were buying a property in the Blue Mountains or in the Lismore town centre and you don’t know about the potential for either fire or flood, unfortunately you have not done your homework. “Conveyancers do talk to their clients about those risks, and they are on the 149 planning certificates from the councils. What I am saying is, don’t try and shift the risk to the conveyancer. Be a prudent purchaser.” While he awaits the Law Society’s guidance, Tyler says he believes a climate risk report could certainly be a requirement for real estate agents and the listing of any property. “I would have thought that would have been a more

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

prudent use of any climate risk reports that can be purchased supply the report when the vendors want the property listed and marketed.” Meanwhile, the Law Council of Australia’s current advice for its members states: “Australia’s laws, the legal profession, legal education and legal practice must all keep pace with the challenges and opportunities created by climate change. “Lawyers should be alive to the unfolding legal implications of climate change and its consequences, and they should be informed, skilled and ready to assist clients on climate change-related legal matters, within their areas of skill and competence.” And the Australian Property Research and Education Fund warns in its Valuation@Risk report that property valuers should take heed of the changing climate landscape with their property valuations. “Valuers need to be particularly aware of market activity and consideration of climate change risks, risk exacerbation and transition risks, particularly as change in global reporting frameworks and emissions targets are driven by market forces and likely regulation, that will have substantial impact and influence on property stakeholder decision making. “This ultimately comes back to the valuer having performed the appropriate levels of due diligence, considered the market position and any influences, made the appropriate collection and consideration of comparable data, and made a decision on the market value in the process of the valuation.”

Potential climate compliance issues Analysis from Groundsure cautions that conveyancers and property lawyers may face potential compliance issues when it comes to climate change related matters, including: Implications for property investment clients: • Exposure to higher insurance premiums • The knock-on to mortgage availability • The risk of catastrophic loss both financially and physically (bushfire and coastal erosion). Implications for law firms: • Exposure to litigation from failing to advise • Reputational damage • Wider Environmental-Social-Governance (ESG) compliance risks. And Groundsure warns of the possible consequences lawyers and conveyancers may face if they fail to advise their clients of the potential climate risks: • Claims made against them for negligence and also with respect to misleading or deceptive conduct; • Damages ordered against them • Loss of business and increased professional indemnity insurance premiums • Disciplinary action by the applicable disciplinary body, which in NSW is the Office of the NSW Legal Services Commissioner

16 • SPOTLIGHT

FIGHTING THE FORCE OF NATURE

MANAGING THE RISKS Following the UK Law Society’s updated guidelines to property lawyers and conveyancers, legal director of international law firm DAC Beachcroft UK, Tessa Rook, advises some practical steps conveyancers can take to ensure they discharge their obligations to their clients: • to research the relevant search services available relating to climate change risks and recommend such a search to their client. If the client does not want to pay for the search, the conveyancer should state (in writing) the risks of proceeding without it. • on receipt of the report the conveyancer should advise on its content and also put into context the risks involved. For example, if there is a future risk of flooding, the conveyancer may need to explain that current flood defences may not be maintained and that there could be a resulting impact on insurance premiums, the ability to re-mortgage etc.

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How governments are stepping in MAIN PICTURE: Local resident Adam Davies paddles his kayak down a flooded street in Smithtown near Kempsey on the Mid North Coast of NSW, Tuesday, March 23 2021. Thousands of residents had to flee their homes, schools were shut, and scores of people were rescued as NSW was hit by once-in-ageneration flooding. (AAP Image/Jason O’Brien)

Speaking at a press conference in Townsville following Queensland’s recent Cyclone Kirrily disaster, Prime Minister Anthony Albanese said: “The science told us that climate change would result in more extreme weather events and more intense extreme weather events. And, unfortunately, that’s what we’re seeing playing out and that’s why addressing climate change is so important.” As a signatory to the Paris Climate Agreement, Australia is already committed to transitioning to netzero emissions nationally by 2050. According to research by Groundsure: “The overall cost to Australia of not meeting the Paris Climate Agreement from now to 2050 is $1.19 trillion – due to infrastructure and property damage, agricultural and productivity losses, biodiversity loss, and human health.” In Volume 6 of the Australian Government’s five-year

Productivity Inquiry Report from 2023, the Productivity Commission states: “Households and businesses should be provided with the information they need to make informed adaptation decisions. State and Territory governments should mandate the pre-sale disclosure of climate risks for all residential and commercial property sales. “Such disclosure should cover a range of physical risks including riverine flooding, sea level rise, subsidence, fire and other natural disasters. “This disclosure could operate in the same way that States and Territories mandate the pre-sale disclosure of building reports.” In October, the NSW Minns Labor government announced its Climate Change Bill to enshrine emissions reductions targets law and establish an independent Net Zero Commission. NSW’s contribution to combatting climate change, including a goal to halve emissions on 2005 levels by 2030, is guided by the Net Zero Plan Stage 1: 2020–2030.

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“Climate change is already costing NSW through more frequent and more extreme weather events, droughts, floods and other disasters,” says NSW Minister for Climate Change, Energy and the Environment Penny Sharpe. “These laws are a downpayment on securing the future for the people of NSW.”

Managing risks Since the 2019 Black Summer bushfires, insurers have paid out more than $16.8 billion in natural disaster claims with more than 302,000 claims – totalling $7.26 billion – lodged during 2022 alone, thanks mainly to the Great Deluge floods in NSW and Queensland. While 2023 was a year of more “benign weather conditions”, Andrew Hall, the chiief executive and Executive Director of the Australian Insurance Council, warns that fewer recent catastrophic weather events “should not provide false hope that the issues of

worsening extreme weather risk have gone away”. Modelling by the Climate Council shows that 3.3 per cent of homes in NSW will be “effectively uninsurable” by 2030 with the primary risk to most homes being riverine flooding. The Climate Council has produced a Climate Risk Map of Australia providing a guide to climate changeexacerbated hazards: riverine flooding, surface water flooding, coastal inundation, bushfires and extreme wind. In its Insurance Catastrophe Resilience Report 20222023, the AIC cautions, “insurance affordability is only going to get worse if governments don’t act now before the impact of climate change on premiums is fully felt.” With Australian insurers facing cost increases of up to 20 to 30 per cent in 2023, the AIC says insurance premiums continued to rise, due to high inflation; extreme domestic and offshore weather events; the growing cost of reinsurance; and scarcer capital making riskier activities more expensive to insure. “Other than inflation, higher insurance premiums are being driven by higher risk,” notes the report, “so reducing pressure on premiums requires reducing risks, which requires long-term planning and investment to better protect Australians and their assets.” “We must continue to keep up our efforts to reduce risk in this country if we are to maintain the quality of life we so value,” says Andrew Hall. As such, in 2024 the AIC intends to continue urging federal, state and territory governments to: • Increase investment in resilience and mitigation funding, as part of a 10-year rolling program with indexed funding to reduce risk. • Prevent development of homes in high-risk locations and undertake home buy-backs where there is no viable way to protect against the risk. • Improve building codes and support household-level resilience programs such as house raising and retrofitting to make buildings more resilient.

Prime Minister Anthony Albanese and Townsville Mayor Jenny Hill during a visit to the Townsville Cyclone Disaster Co-ordination Area at Lou Lister Park, Tuesday, January 30 2024. (AAP Image/Scott Radford-Chisholm)

18 • SPOTLIGHT

FIGHTING THE FORCE OF NATURE

OUR LANDSCAPE UNDER SIEGE: 30 YEARS IN THE LIFE OF NSW The natural environmental assets that make Australia one of the world’s most desirable places in which to live, also make it the most challenging. In the past five years, large parts of the country’s populated areas have endured devastating bushfires, widespread flooding, and severe coastal erosion. These climate events have taken lives, broken families and broken the hearts of communities, and they have been financially crippling for thousands. One community in northern NSW had barely cleaned the mess left by flooding late last year before it was inundated by another this year. Lives, homes and businesses lost is what we all see. But long after waters subside, bushfires are extinguished, and seawalls are repaired, costs continue to mount and will impact future generations. Australian Conveyancer commissioned a ClimateIndex report from climate analysts Groundsure that cast a light on the risk to NSW properties now and over the next 30 years. So, which regions and properties are most vulnerable to the forces of nature: are most prone to bushfires, flooding and coastal erosion?

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About Groundsure Groundsure is an environmental and climate data authority. Founded in the United Kingdom and with a presence in Australia, it provides land and property professionals with information about risks by climate. The information can be used to inform values and transaction decisions.

The risks are real The impact on safety, development planning, land values and compliance is real. • Groundsure’s NSW ClimateIndex pertaining to land and property claims that 40 per cent of all properties in NSW are now at moderate to high risk of flooding.

• The state’s so-called Black Summer bushfires of 2019-20 costs $4.9 billion. • Insurers have paid our $13 billion in climaterelated claims in NSW. • The combined value of coastal properties exposed to coastal erosion damage is $25 billion. Climate change risk to properties is a significant compliance issue for governments, the legal profession, conveyancers, insurers, developers and home owners. The ClimateIndex suggests the risk of catastrophic loss, both financially and physically, will drive up insurance premiums. Its 30-year projection of risk to all land lots in NSW predicts the areas prone to further damage by bushfire, floods and erosion using detailed global climate analysis tracking atmospheric and oceanic patterns. Some suburbs and land lots will see reductions in risk from the elements due to favourable weather forecasts. Some regions will see no change at all. But for many, the situation will worsen during the next 30 years. Areas inundated by flooding today will continue to experience it over the next three decades, but the water levels may hit new highs. It will be a combination of vegetation growth and increased frequency of lightning strikes in some regions that will drive risk of loss by fire. The march of coastal erosion in some areas will be accelerated by changing temperatures and oceanic currents. The long-range view is now prompting discussions and decisions by government departments, authorities and peak bodies.

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20 • SPOTLIGHT

THE 30-YEAR OUTLOOK

NSW BUSHFIRES Eurobodalla in the firing line The so-called Black Summer bushfires of 2019-20 ravaged large tracts of land throughout the NSW South Coast region of Eurobodalla. Eighty per cent of the land in the local government area (LGA) was damaged by fire, including most of its national park. Three lives were lost, thousands of residents affected, and properties lost. Four years on, the scarring remains and communities are continuing to rebuild. It would be difficult to imagine a worse scenario, but the analysis using the Groundsure ClimateIndex module commissioned by Australian Conveyancer predicts the oncepristine region will be at even greater fire risk over the next 30 years, making it the state’s most fireprone region. Of the 128 LGAs in NSW, Eurobodalla is ranked the third most at-risk location from bushfires today, behind the Northern Rivers’ Clarence Valley (2) and The Hawkesbury (1) on Sydney’s north-west outskirts. It says as it stands now 2600 of Eurobodalla’s land lots – 9 per cent of its total – are currently at very high risk of succumbing to bushfire. Weather patterns over the next three decades will create a cocktail of increased lightning strikes. By 2053, nearly 7700 land lots will make the high bushfire risk category – 27 per cent of the shire’s total. It will be the state’s most fire prone area. In the same period, Hawkesbury’s conditions will become slightly more resistant, dropping to a ranking of fifth in the state, with 2690 of its 27,770 land lots (9.7 per cent) deemed at very high risk of being hit by bushfires.

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Key data sources for bushfire predictions CLIMATE DATA Decadal Forest Fire Danger Index (FFDI) (2006-2096), CSIRO A1FI SRES scenario data (equivalent to RCP8.5). FFDI is a measure used to evaluate fire weather conditions, factoring in elements such as temperature, humidity, wind speed, and drought. This modelled data produced by CSIRO modelled forward how conditions might change given the effects of climate change.

TOP 10 LGAs AFFECTED BY BUSHFIRES BY 2050 LGA

NO. OF LOTS WITH VERY HIGH ASSESSMENT OF RISK

1 Eurobodalls Eurobodalla 2 Clarence Valley 3 Mid-Coast 4 Queanbeyan-Palerang 5 Hawkesbury 6 Shoalhaven 7 Murray River 8 Snowy Monaro 9 Wollondilly 10 Wingecarribee

7688 5347 3974 3590 2690 2596 2409 2154 1902 1848

BUSHFIRE RISK RANKINGS TODAY

1 Hawkesbury 2 Clarence Valley 3 Eurobodalla 4 Mid-Coast 5 Murray River 6 Wollondilly 7 Wingecarribee 8 Shoalhaven 9 Singleton 10 Hay

2741 2715 2584 2312 2052 1902 1848 1625 1322 1221

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

HOT SPOTS: FIRE HAZARD RISKS FROM NOW UNTIL 2050 2024 2050

CLARENCE VALLEY

MID-COAST

EUROBODALLA

2024 2050

EUROBODALLA MOST AT RISK

CLARENCE VALLEY SECOND MOST AT RISK

MID-COAST THIRD MOST AT RISK

The heat map shows the progression of bushfire risk in key local government areas (LGAs). Top left: shows the statewide view today. Top right: projects the situation come 2050. LGAs Eurbodalla, Clarence Valley, and the Mid Coast are the top ranked bushfire prone areas based on the number of land lots (properties) in the firing line in the next three decades. DATA SOURCE: GROUNDSURE

22 • SPOTLIGHT

THE 30-YEAR OUTLOOK

NSW FLOODS

Sydney’s basin will always take in water By its sheer volume of land lots the great Sydney metropolitan area, made up of 33 local government areas, has the greatest number of properties prone to flooding. Groundsure’s ClimateIndex deems 21,221 properties at very high risk of flooding right now. This represents 1.7 per cent of its total 1.2 million blocks. Three decades on, the situation will change little despite mitigation strategies planned or already in play. By 2053, 21,415 land lots in the Sydney metropolitan area face a very high risk of flood. But the biggest mover in terms of increased threat of flood inundation is the Central Coast region, just an hour’s drive north of the harbour city. The Central Coast LGA, currently ranked fourth with 9.6 per cent of its properties at high risk of flooding will find a further 561 of its properties facing inundation (10 per cent). Its change is the biggest shift in terms of volume increase. In recent years, the Central Coast has been subject to other devastating forces of nature such as extreme coastal erosion in beachside suburbs such as Wamberal and Terrigal. According to Groundsure researchers, flood-prone areas of the state will most likely stay that way well into the future. The amount of water – flood levels – will become worse as weather patterns take hold in the next three decades, they warn. The Central Coast’s proximity to Sydney, and its improved highways and rail services, make it a desired place to live for those prepared to take the hour-long commute south. The Narrabri region in the NSW north-west, home to broad acre cotton plantations, needs good water supply to feed that industry. Fifty-eight per cent of its properties face a very high risk of flooding now – 8134 land lots. Over the next 30 years, the ClimateIndex predicts that just one more block of land in the area will be at very high risk of being overwhelmed by rising waters. Still, a large percentage of the region’s total land lots (58 per cent).

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Climate data used for flooding predictions The key source of climate data is the CORDEX (Co-ordinated Regional Downscaling EXperiment) Region 9: Australasia from the World Climate Research Programme (WCRP). The key adjustments relate to precipitation (fluvial and pluvial) and sea level rise (tidal). An “adjusted baseline” was then calculated for peak river flows, rainfall volume and storm-surge peak from the CORDEX climate data and/or prevailing government policy guidance.

TOP 10 LGAs AFFECTED BY FLOODING BY 2050 LGA

NO. OF LOTS WITH VERY HIGH ASSESSMENT OF RISK

1 Sydney 2 Mid-Coast 3 Clarence Valley 4 Central Coast 5 Snowy Monaro Region 6 Lake Macquarie 7 Mid-Western Region 8 Tamworth Region 9 Hilltops 10 Upper Lachlan Shire

21,415 17,642 16,129 13,480 11,787 9977 9493 8942 8814 8747

BUSHFIRE FLOOD RISK RISK RANKINGS RANKINGS TODAY TODAY

1 Sydney 2 Mid-Coast 3 Clarence Valley 4 Central Coast 5 Snowy Monaro Region 6 Lake Macquarie 7 Murray River 8 Mid-Western Region 9 Tamworth Region 10 Hilltops

21,221 17,447 16,103 12,919 11,739 9697 9493 8942 8814 8747

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

HOT SPOTS: FLOOD HAZARD RISKS FROM NOW UNTIL 2050 2024 2050 CLARENCE VALLEY

MID-COAST

SYDNEY

2024 2050

SYDNEY MOST AT RISK

MID-COAST SECOND MOST AT RISK

CLARENCE VALLEY THIRD MOST AT RISK

The heat map shows the progression of flooding risk in key local government areas (LGAs). Top left: shows the statewide view today. Top right: projects the situation come 2050. LGAs Sydney (33 councils), Clarence Valley, and the Mid Coast are the top ranked flood prone areas based on the number of land lots (properties) in the firing line in the next three decades. NB: Natural water sources influence flooding, hence little change in three decades, although researchers suggest water depths may worsen. DATA SOURCE: GROUNDSURE

24 • SPOTLIGHT

THE 30-YEAR OUTLOOK

NSW COASTAL EROSION

It is the dream of many to have an oceanfront property – just a barefoot stroll to the water’s edge. But of all the elements, the ocean can be a formidable force. Sydney’s northern beachside suburb of Collaroy took the brunt of the ocean’s fury in 2016. The coastal strip was pummelled during a massive storm in 2016. Homes were damaged and a swimming pool was pulled into the ocean, costing home-owners and local governments almost $25 million to fix. It was Mother Nature at her cruellest. Beachside properties are a rare privilege, but land lots are at a high risk of erosion now and into the future. The Groundsure ClimateIndex for NSW commissioned by Australian Conveyancer, has deemed 987 properties in Sydney’s metropolitan area at very high risk of coast erosion as of today. But in 30 years, the number of properties at high risk of erosion will jump to 1387 keeping it at the top of the trouble-spot rankings for this hazard. The northern beaches’ northern neighbour, the Central Coast will more than double the number of land lots at high risk of erosion problems. The 157 land lots at very high risk today will become 387 properties at very high risk for a new generation three decades from now. The storms that wrought havoc in Sydney Collaroy, and smashed the pristine sands of Wamberal at the same time, caused millions in damage to ocean-facing yards. The local council, the state government and residents are sharing the cost of protective sea walls, but that resolution appears to be some time away from completion.

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Key data sources for coast erosion SMARTLINE COASTAL DATA SEGMENTATION, GEOSCIENCE AUSTRALIA Used to classify the coastal geomorphology. This dataset has been used for the National Coastal Vulnerability Assessment (NCVA) and for understanding the vulnerability of Australia’s coastlines to sea-level rise and climate changeinduced hazards. DEA COASTLINES 2.0 Measures annual shorelines and rates of coastal change along the entire Australian coastline from 1988 to present.

TOP 10 LGAs AFFECTED BY COASTAL EROSION BY 2050 LGA

NO. OF LOTS WITH VERY HIGH ASSESSMENT OF RISK

1 Sydney 2 Mid Coast 3 Port Stephens 4 Eurobodalla 5 Central Coast 6 Clarence Valley 7 Shoalhaven 8 Newcastle 9 Bega Valley 10 Wollongong

1387 635 479 390 387 382 320 239 233 216

COASTAL EROSION RISK RANKINGS TODAY

1 Sydney 2 Mid-Coast 3 Port Stephens 4 Clarence Valley 5 Eurobodalla 6 Shoalhaven 7 Wollongong 8 Bega Valley 9 Central Coast 10 Newcastle

987 377 264 262 244 233 182 169 157 135

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HOT SPOTS: COASTAL EROSION HAZARD RISKS FROM NOW UNTIL 2050 2024 2050

MID-COAST PORT STEPHENS SYDNEY

2024 2050

SYDNEY MOST AT RISK

MID-COAST SECOND MOST AT RISK

PORT STEPHENS THIRD MOST AT RISK

The heat map shows the progression of coastal erosion risk in key local government areas (LGAs). Top left: shows the statewide view today. Top right: projects the situation come 2050. LGAs Sydney (33 councils), Mid Coast, and Port Stephens are the top-ranked erosion-prone areas based on the number of land lots (properties) in the firing line in the next three decades. DATA SOURCE: GROUNDSURE

26 • SPOTLIGHT

FIGHTING THE FORCE OF NATURE

WHAT HAPPENS IF YOUR PROPERTY IS ON THE WRONG END OF A RISK REPORT? As the risk of flooding in many parts of Australia increases due to climate change, the threat to millions of properties from potentially devastating inundation is also on the rise. The situation in some parts of the country, such in the local government area of Sutherland in Sydney’s south, has become so high-risk that thousands of homes could be deemed flood prone under an official consultation process currently underway with the community. Sutherland Shire Council did not respond to Australian Conveyancer request for comment on the consultation, which must still be endorsed by the NSW government to take effect. While such local government action is currently largely confined to NSW, there is potential for similar processes in other states as extreme weather events intensify in years ahead. Against this backdrop, conveyancers, as well as other property professionals, must consider how climate risks, like floods, could impact their daily practice, according to experts. “Everyone who’s working in this space needs to continually update themselves to stay abreast of the data that’s being made available so there’s both public and private sources of data that are continually being published, and I think it’s a case of people working in this space making themselves familiar with that,” says actuary Emma Vitz, a specialist in pricing and natural perils and climate risk modelling at Finity Consulting. Amid the growing threat from what the firm calls “climate-related perils” like floods, Vitz identifies an urgent need for sector professionals to appreciate that the “frequency and severity of flooding can be impacted by climate change and it’s certainly quite a significant issue that we need to deal with across the country”. “A lot of our cities are built on rivers. There was a reason for that but now it’s a bit of a problem,” she says. McKinsey & Company, the international consulting firm, makes a similar point on a global scale. In a recent

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By SAM McKEITH

“Everyone who’s working in this space needs to continually update themselves to stay abreast of the data.” Emma Vitz, Finity Consulting

report, the US-based consultancy urges real-estate players to build capability to “understand climate-related impacts on asset performance and values”. “Real-estate owners and investors will need to improve their climate intelligence to understand the potential impact of revenue, operating costs, capital costs, and capitalisation rate on assets,” it says. “This includes developing the analytical capabilities to consistently assess both physical and transition risks. Analyses should encompass both direct effects on assets and indirect effects on the markets, systems, and societies with which assets interact.” Back in Australia, Groundsure, the global environmental and climate data company, is one company trying to fill the gap on climate risks in transactions. It recently launched a ClimateIndex Report – a desktop report on current and future climate risks – that it says is specifically for use by NSW conveyancers and property lawyers for property due diligence. However, while consultants can model future risk – and are also at the centre of devising controversial criteria used to deem properties as flood prone – they have their limits. As Finity’s Vitz puts it: “The models do have limitations and there’s a lot of uncertainty in predicting future risk as well.” Even so, she says that doesn’t detract from the need for a paradigm shift on climate risk. “Building codes tend to be concerned with the present-day conditions and they’re often more focused on preserving life than resilience to the elements and that is obviously a problem when the climate is changing quite quickly,” she explains. “We really need to be thinking about, when we’re building something today, what is that going to look like in 75 or 100 years? And are we building for that to be resilient up to that point in time. “There are a lot of different parties that need to come to the table and make some pretty tricky decisions around some of this stuff.”

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28 • SPOTLIGHT

FIGHTING THE FORCE OF NATURE

EROSION: BEACH PARADISE LOST Climate events “have become a key consideration for property buyers – we’ve had an increasing number of unprecedented weather events over recent years.” Property lawyer Mieke Elzer

Devastation on the sand at Terrigal on the NSW Central Coast in July 2020. The repairs to properties in the area continue today.

Australia’s coastline is undoubtedly a beautiful place to live, but the threat of coastal erosion poses a growing risk to thousands of seaside property owners. NSW is one of the most impacted states, with high-profile and high-value areas such as Sydney’s Northern Beaches and the state’s far north coast among the most at-risk areas. With coastal erosion a key challenge for property owners in these – and other – areas nationwide, conveyancers and allied property sector professionals must be keenly aware of how to manage the issue in order to discharge their client obligations effectively. Mieke Elzer, a property and commercial lawyer at Attwood Marshall Lawyers, a national law firm with offices in Kingscliff on the NSW far north coast, counts erosion as one of several “climate related events” that can threaten properties now, and into the future. “This is becoming a key consideration for property buyers; we’ve had an increasing number of unprecedented weather events over recent years,” Elzer says of climate risks. On what professionals can do to grapple with increasing risk, Elzer points to climate intelligence that gives “the purchaser an idea as to what they’re looking at and whether they need to do further due diligence”. Alarmingly, she says results can sometimes show climate risks 30 years from now that are “quite extreme” and “a lot more extreme than is represented

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in the planning certificate”. If a risk is identified, the lawyer says steps must be taken. One key is to contact the purchaser’s insurer to see if the property is insurable against the risk, and assess premiums. It’s for reasons such as this that she says climate change can be a “major issue” if not discussed before a purchaser enters into a contract. Other tips, according to Elzer, are to carry out pre-purchase searches to ascertain risk, check council websites for risk mapping, do due diligence on the ground, and get a builder in to consider structural improvements She also notes that the right solution depends on the particular risk tolerance of a client. “It’s going to be highly dependent on the client’s situation, Elzer says, adding that “a client who’s retired and they’re just looking for a place to spend the next 20 years” will likely have a different outlook than a purchaser buying “as part of their secure property portfolio”. “Key is actually finding out what the client’s circumstances are and how comfortable they are with risk and what liquid assets they have to do things like structural improvements,” she says. Byron Shire Council did not respond to Australian Conveyancer request for comment. Northern Beaches Council referred Australian Conveyancer to guidance on its role in the state’s coastal management framework, which says the council is “working with residents to manage their risks and obligations as coastal landowners”.

A U S T R A L I A N C O N V E YA N C E R • 2 9

data dashboard

30 •

Moving out of town and moving fast NSW Take a map of NSW. Draw a circle around the metropolitan area of Sydney. Locations just on the outside of that circle appear to be the hot spots for the state’s home buyers in January. Call it sea change. Call it being able to work remotely. Or just call it affordability. Savvy buyers secured most homes roughly an hour’s drive from the Harbour Bridge, continuing the trend that told the story of property sales in this state.

Hottest suburbs The NSW suburbs where the most property was bought in January 2024. POSTCODE

SUBURB

2765

Oakville

2250

Gosford

2155

Kellyville

2560 Campbelltown

2259

Wyong

2540

Huskisson

2750

Penrith

2541

Nowra

2320

Maitland Nth

2145 Wentworthville

Topping the list of preferred purchase location was Oakville once again. It’s been running hot for months. Located in the Hawkesbury district, around 50km north-west of Sydney’s central business district, Oakville is best characterised as a peaceful rural spot, dotted with fruit and vegetable stalls selling produce from nearby small acreages. People using the property app, Homely give the area 4.4 stars (if that means anything), but what we can glean Oakville from local intel is that it is safe family and friendly. Value for money has a part to play. But to tell the story of NSW home sales last month, it’s hard to ignore the obvious appeal of affordable coastal living not too far out from the “Big Smoke”.

First-home buyer activity How many first-home buyers entered the market in January 2024, compared to same time last year.

January 2023

100

First home buyer

4.22% 2.9%

2. India 3. Nepal 4. New Zealand

2% 1.74% 1.67%

5. United Kingdom 6. Philippines

73 70

22%

1. China

The average time a property spends on the market before being sold, compared to the same time last year, including advertising.

2024

Which countries invested in the Australian property market for the first time in January 2024.

Time on market

2023

Percentage of all properties sales recorded by triSearch. Existing home owner

Overseas investment

Nowra is a little over two hours’ drive from Sydney but has pristine beaches and rolling green hills on its doorstep. The country is rightfully consumed by cost-of-living discussions and home loan interest rates. But none of this seems to be reflected in the real estate market. Conveyancers tell us they are busier than ever settling on homes. The stats tend to confirm this.

DAYS

78%

28%

Perennial favourite Gosford was high in the sales rankings. A reasonable commute and relaxed living at the weekend speaks volumes. Wyong, just a stone’s throw north, made its way into the lead rankings last month – a highly respectable fifth. Down south, Nowra came in at eight, once again signalling a preparedness for buyers to look beyond the city of Sydney itself – known as the second most unaffordable place to live in the world (behind Hong Kong).

January 2024

72%

0.79%

7. Vietnam

0.6%

8. South Korea

0.6%

9. Indonesia

0.23%

10. Bangladesh

0.23%

110

103

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

So, it’s a big welcome to Truganina VICTORIA After rifling through Victoria property sales statistics for January, the question needs to be asked: Is there something about Truganina we have all been missing? One of the key industrial precincts of Wyndham, Truganina is a 50-minute commute from Melbourne’s CBD. You have to pass it on your way to Geelong. But the relevance here is that the suburb made it to the Victorian sales’ Top 10 for the first time. Truganina is a rapidly growing suburban area. The population was 20,687 at the 2016 census. It is bordered roughly by the Skeleton-Waterholes Creek to the west; Boundary Road to the north; Foundation to the east and the Federation Trail to the south. Soccer nuts would be quick to point out that it is home to the Western United club. But what really appears to be the point is that Truganina is kind of close to the action and a more affordable option for home buyers. In saying all of that, Melbourne city, where a decent latte is never too far away, continues to be the favoured spot for those seeking to settle in the southerly state. The heart of the capital, with all of its food, entertainment and conveniences was yet again top of the top list for home purchases.

Perennial favourites top the sales list

Doncaster

Melbourne St Kilda

Chadstone

Brighton

Hottest suburbs The Victorian suburbs where the most property was bought in January 2024. POSTCODE

SUBURB

3000 Melbourne City

3029

Tarneit

3978

Clyde North

3073

Reservoir

3141

South Yarra

3030

Werribee

3121

Richmond

3072

Preston

3182

St Kilda

3029

Truganina

Cleveland

QUEENSLAND There are a few things in Queensland you can always rely on. During December and January, it’s going to be hot; it’s going to be muggy; there’s going to be a ton of visitors from the south; and the same old suburbs are going to dominate the list of property sales for the month. Yes, that was the case in January’s sales stats. A sight as familiar as Bob Katter in an Akubra, was the appearance of Sunshine Coast neighbours Caboolture and Morayfield and Townsville’s Kirwan in the Top 10. The areas clearly have appeal to property investors seeking a combination of lifestyle and affordability. But Brisbane city itself remains a favourite on the back of its amenities, food, fun, and proximity to work. It makes sense that it continually appeals to property buyers. The Olympic Games in the northern capital are still eight years away, but the investment in infrastructure that will last beyond the 16 days of elite competition will have a lasting impact on those who chose to call it home. The famous Gold Coast remains a favourite with buyers. In January they invested in Pimpana and placed their "dreams" in the aptly-named Hope Island in the sunny playground.

Sheldon

Thornlands Victoria Point

Mount Cotton

Hottest suburbs The Queensland suburbs where most property was bought in January 2024. POSTCODE

SUBURB

4164

Thornlands

4510

Caboolture

4209

Pimpana

4506

Morayfield

4817

Kirwan

4207

Yarrabilba

4301

Redbank Plains

4000

Brisbane City

4075

Oxley

4212

Hope Island

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.

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the toolbox

Essential bookkeeping

ookkeeping for your conveyancing business will always be a routine job. Whether you outsource your bookkeeping or do it yourself, you still need to be aware of and in control of your business’s financials consistently. While there are many parts of bookkeeping that can be outsourced, here are four tips you can use to ensure you’re staying organised.

1. KEEP PERSONAL AND BUSINESS ACCOUNTS SEPARATE

Having your personal and business expenses mixed might not seem like a major issue when you’re in the early stages of your business growth. However, it will be key for “tax time” and monthly billing reports that your business and personal accounts remain separate. Having separate accounts will undoubtedly make it easier for yourself and/or your bookkeeper to organise relevant business purchases, invoicing and sales, not to mention the amount of time it will save both parties when it comes time for paying bills and lodging tax returns.

2. KNOW YOUR BUSINESS EXPENSES

In the early months of starting your conveyancing practice, predicting your business expenses is going to be difficult, especially which costs are deductible from your taxes.

The Australian Taxation Office recommends following its three golden rules for what is accepted as a valid business deduction. These include: • The expense must have been for your business, not for private use. • If the expense is for a mix of business and private use, you can only claim the portion that is used for your business. • You must have records to prove it. Following these rules, especially number three, will help discern between personal and business expenses when bringing in an accountant, or doing your expenses at tax time.

3. CREATE REGULAR REPORTS

Bookkeeping your expenses can be one area of your business which may accidently fall behind or be neglected unless you stay diligent by executing regular reports. Running reports on your cashflow in and out of the business, including the distinguishing of what expenses served what purpose, will be an extremely important aspect to reporting an accurate and beneficial tax lodgement each year. Conduct in-depth reports on your bookkeeping records at the end of each quarter, paying close attention to trends like declining or growing sales, large expenses, or evidence of late-paying customers. A proper evaluation of your numbers will help you to plan for a better cash flow in the future.

4. USE AUTOMATED BILLING AND INVOICING

This applies to both the software and the search solutions you use, as well as the method of billing and invoicing you currently use for your clients. For your business, when it comes to paying routine expenses, having automated billing can help on multiple accounts. These include saving you time, and improving accuracy of your amount owing, and can even save you on credit card processing fees. As for your clients, having a system in place to automatically capture any disbursement expenses on top of your standard rate will improve your efficiency for sending out invoices. For example, using the all-in-one conveyancing solution triConvey includes access to powerful automated billing and trust accounting tools which capture your due diligence searches, limit the amount of billing errors and capture all disbursements owed to your firm and more. Overall, bookkeeping can be an arduous task, especially while you’re trying to run a conveyancing practice. However, keeping your books tidy, conducting regular reports, using integrated billing and trust accounting and knowing your expenses can go a long way to helping.