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The Royal Commission into misconduct in the Banking, Superannuation and Financial Services Industry was established on the 14th of December 2017 in Australia and as the name of it suggests, is there to investigate whether criminal or legal proceedings against the wider Financial Industry should be referred to the Commonwealth.
Some of the major findings by the Royal Commission so far have been the forging of documents, a “bribery ring” involving an incentive program and underestimating and in some cases, just not including at all, a borrower’s “living expenses”.
All of this all sounds really bad, and it is, but have any of us stopped to think about the ramifications of such a Royal Commission and what impact this will have from a Macro & Micro Economic standpoint? For the most part, I suspect no. Most people I speak with are left speechless that the Financial Industry could do this to us, I mean the Commonwealth Bank posted a full-year cash profit of $9.8bn last year, the least they could do is the right thing?
Which is why I understand, why the public are so outraged. The big four banks post huge profits and this seems to come at any cost, however, when we want to buy a new car, house or invest in shares using a margin loan, this is more than often the first place we go. Why?
Someone once asked me “what is an acceptable profit for a bank?”. The reason they asked me this question was because I naively said that, or something to the effect of “the bank makes too much money”. At the time, I had only just started my banking career (a decade or more ago) and the person who asked me that question was my bank manager at the time. I remember trying to think of an answer and my manager seeing the perplexed look on my face saying “if you were going to borrow a lot of money or deposit a lot of money with a bank wouldn’t you want them to be so secure that you would never lose that money or asset?”. She had me snookered – what could I say to that? She was right. If I was going to borrow half a million dollars or deposit $100k into a Term Deposit, I would want to be certain that it wasn’t going anywhere.
Knowing all of this, what impact is the Royal Commission having on borrowing money to buy a house for example? I can tell you one thing, the banks are now definitely calculating our living expenses, to the dollar I am told. They now all want to see genuine savings, in your bank account, not that motorbike you just sold. Forget about 15 years Interest Only loan terms on an investment property loan, not going to happen – you’ll be lucky to get 5 years and good luck trying to extend it beyond that, you’ll most likely have to start paying Principal & Interest.
So, in other words, if you are looking to get your first home or upgrade your first home to get into something a bit bigger for the family, I hope that you fit the lenders new lending policy, or it is going to be much harder to borrow money. I’m not saying that it is all the Royal Commission’s fault, because it isn’t, but please don’t think that there won’t be any blow back, because we are already seeing it now. Unfortunately, it isn’t going to be the CEO of the Commonwealth Bank who is going to be the most effected financially or the leader of the Greens who was the first to propose a royal commission into banking “several years ago”. No. It will be the Mum’s and Dad’s, the first home buyers and the “middle class Australians” who now no longer fit the “banking guidelines” to borrow money for their first or second home or who need to work that much harder to save for a deposit or to show they don’t spend too much money because the “computer says no”.
Maybe I’m being a little dramatic or maybe I’m not but…
Be careful what you wish for.
My combined experience at selling real estate and working as a strata manager has lead me to the realisation that most people do not fully understand strata title, including owners that currently own strata title property. More of a concern is that the most sales people do not understand how to correctly read and interpret a strata plan, and so are often giving misleading or incorrect advice to their buyers and sellers.
The strata plan notates the division of ownership between each individual lot owner within a strata scheme and the strata company. Therefore the plan also specifies what each lot owner is responsible for maintaining and what the strata company is responsible for maintaining (the exception may be the responsibility of insurance as the strata company may vote to hold a joint insurance policy to insure all of the buildings within the strata plan, as well as the common property). Many older strata plans are set up so that lot owners do NOT own their buildings (as they are owned by the strata company), and instead they only own the cubic space within the walls of the building inside or defining their lot.
There are also by-laws that apply to strata title which need to be read and understood in conjunction with the strata plan to fully understand the rights of each owner within a scheme. By-laws can be unique for each strata scheme, which is why it is unwise to assume that the way one scheme is set up and operates is the same as any other scheme.
Some people are worried about buying strata title property because they have a fear of the unknown (eg by-laws) or have heard stories of strata owners who have had their strata scheme poorly managed. This is a shame as there are many benefits to owning a strata title property, such as access to shared services like swimming pools/saunas/spas, gardens and playground equipment, BBQ areas and other recreational facilities. Also, the cost of buying in to strata schemes is usually comparatively less than the cost of buying in to non-strata freehold title properties.
If you’re thinking of purchasing or selling a strata title property and wish to discuss any aspect of it then contact the strata specialist at Merrifield Real Estate.
Selling Houses Australia, Love it or List It, The Block. The list goes on of TV shows that has captured the attention of Australian population. Property is an interest to a lot of people in this country and they can’t get enough of watching these shows. But what can we learn about the changes they make? Pretty simple is that presentation of homes is the key to achieve maximum results. So what do they start out with? They de-clutter the house and use nice simple furniture when remodeling the home. Neutral colours are used throughout rather than outrageous feature walls. Even the flooring has modern updated colours whether it’s vinyl, carpet or tiles. Majority of the work done is cosmetic rather the structure.
Floor plans are important and most buyers want open plan living today so create as much space as possible. Spend time getting kitchens & bathrooms right. These are key areas of the house that people spend a lot of time in. Today’s people are time poor so make things easy. First impressions count so get the outside of your property looking amazing otherwise you can forget how good inside looks as you won’t even get people in the front door. Mow the lawns, edge the paths, don’t have overgrown plants, mulch the gardens, add some colour with creative planting, pressure clean pavers or roof tiles, get rid of useless features and keep it simple. Once again nice clean colours to give it street appeal will get attention. You want to the best property in the street not known as the worst property in the street.
It’s really not rocket science but you would be amazed at the amount of property owners that expect top dollar or cant sell there properties due to presentation. So if you are thinking of selling, why don’t you tune in to some of these shows and learn how the experts do things. Education is the key and as I say, if your not prepared to learn then how can you expect to get a different result.
As with all markets there are peaks periods and softer selling times. This generally flux awaits with the seasons. So what opinions do you have if your property has been on the market for a while but hasn’t sold coming into a traditionally quieter period like winter. Well first of all, you can’t sell a secret so if you really want to sell then your property needs to be on the market. You may decide that you need to adjust your price so that you have a better chance of finding that buyer. And there is a 3rd option which a lot of owners consider as a strategy which is lease to sell.
Lease to sell when you actually take the property off the market, look at leasing your property say on a 6 – 12 month lease and then bring your property back to market in the summer or better months. It’s not popular amongst potential tenants however the benefits for the owner is that it brings in income, offers possible tax deductions and may allow you to achieve the price you need to get in a better selling time. Of course it depends on your circumstances and it’s not for everyone especially owner occupiers. However it is food for thought and good to know that there is more then a couple of options available. To learn more about this contact one of our experienced sales representatives.
A Market Appraisal or a Market Opinion should be a document provided by a Real Estate Agent or Sales Representative to an owner of a property or business that suggests a price that the property or business could sell for in the current market. I stress the word “should” as I often speak with people who have had a Real Estate person out to their home who have not provided them with a written appraisal.
In WA, all Real Estate Agents and Sales Representatives are governed by the “Real Estate and Business Agents Act 1978” & the “Real Estate and Business Agents and Code of Conduct 2016”.
Part 6/26 of the Code of Conduct specifically refers to:
“Duties regarding opinion of market price” and I quote;
“If an agent or sale representative gives a person an opinion as to the current market price of real estate of a business, the agent or sales representative must not act as an agent or sales representative for the person unless the agent or sales representative gives the person the following in writing –
So other than the legal requirements that an agent should provide you with the appraisal or opinion in writing, there are some more practical reasons, such as, how is the person to know how the agent or sales representative came to their price? Are they just guessing? How does your property compare to others in the area? If these questions aren’t answered by the agent or sales rep in the written Market Appraisal then I would be very hesitant to go any further with that person.
After all, if you go to market with most likely your biggest asset, the first thing a prospective buyer is going to do is their due diligence. So why would you as an owner not do the same thing? If an agent comes to your property and doesn’t provide you with a written Market Appraisal/Opinion, what else aren’t they going to do? What else don’t they know?
A question real estate professionals, (myself included) are constantly asked by prospective buyers and even just the general public (because let’s be honest, Australians love real estate, they love talking about real estate and want to know what’s going on with real estate) is, ‘is now a good time to buy’. The naysayers out there are always capable of giving you a reason (or more) of why not to get into the market or why not to start or grow an investment portfolio, however, today we are going to look at some of the reasons why you should be!
After the Global Financial Crisis hit and Western Australia’s prices fell sharply, the prices reached a stable point in the market at which there wasn’t a great deal of moment in the market either up or down – especially in the postcode of 6330, which is what we are focusing on today. The market in Albany has remained stable after a huge drop in prices after the GFC. History tells us that what goes up must come down and what goes down must come up in relation to property prices. So, looking at what history tells us, the next move should really be up, the question is really when?
The RBA (Reserve Bank of Australia) Board decided to keep the Australian Cash Rate at a record low of 1.50% at their board meeting on the 6th of March 2018, which was in spite of a strengthening global economy and the unemployment rate decreasing. This means that for the average Australian looking to get themselves a Home or Investment Loan, the time has never been better.
Albany’s rental market remains strong with the average rental value being $349 per week and the average price of a house in the ‘Albany Urban Area’ being $380,000. Rental vacancies are also low, which is great news for investors or would-be investors. To give you a ‘live’ example of ‘why rent when you could buy’ is a property that I have on the market at the moment. A 2 bed, 1 bath, brick & tile duplex unit in Mckail that is currently leased for $230 per week and on the market for $199,000 – with figures like this, it doesn’t take a genius to work out which would be the better situation.
I could go on giving you more facts and figures like the ‘Albany Urban Area’ is still down 1% on the last 10 years or that the Sydney & Melbourne markets have slowed (which can ultimately be a good thing for WA property owners in the future), but I won’t do that, I’ll just say this instead, given the choice between owning property in 6330 or not at this current time, I know which one I’d choose.
Traditionally speaking the month of January in the Real Estate world has always been busy with people moving towns and interstate following the end of the festive season, however in recent years we have been seeing a change to this with January being a slower month especially in the rental sector.
Within the Property Management Department at Merrifield Real Estate our stats show quite clearly that the summer rush in January has now moved to February which has experienced a huge increase in the number of properties being leased. During January for the past 3 years there has been an average of 7 properties leased, however the month of February has shown a large increase with an average of 15 properties leased for the month. This is obviously great news for anyone with a rental property becoming available at this time of year as demand is higher and prices can be slightly adjusted according to what is on offer.
As at today there is currently 84 properties available throughout the Albany area being advertised on www.realestate.com.au this amount is quite low which helps push prices higher and allows for a faster turnaround when advertising your property for lease. Generally speaking this time of year sees majority of tenants made up of families with couples coming in close behind, the flow of people moving to Albany from Perth and interstate increases at this time of year with many families wanting to secure properties close to preferred schools to ensure they are in the correct catchment intake.
Previous records show that 3 bedroom, 2 bathroom properties are always in high demand with 3 bedroom, 1 bathroom homes coming a close second due to the drop in rental value. Many prospective Tenants are looking for value for money when it comes to choosing a rental property whilst ensuring the suburb is also a good area. Well-maintained properties with minimal maintenance issues also seems to be something prospective tenants are much more concerned about and whether the property allows pets. We see a huge difference in demand when pets are considered and when they are not; by allowing animals Landlords do feel the risk is higher however there are some benefits such as increased tenancy terms, higher rental yields and lower vacancy times which can outweigh these problems.
All in all the prospect is looking good for the month of February, if previous years are to go by we will see a large increase of prospective tenant enquiries with plenty of properties being leased.
Deciding who to select for a real estate agent you are going to come to a decision with regards to whether you are going which what is called an exclusive agent, joint exclusive agent or an open listing authority. I will explain the difference for the sellers out there that are considering bringing their property to market.
An exclusive agent is where you are selecting one agent for a length of time to conduct your business exclusively. A joint agency is where you will select 2 agents to be involved and they will work exclusively for you. And then there is also an open listing which means you are going to list it with every agency for instance in Albany here.
The benefits of having an exclusive agent is that you only have to solely deal with them direct. Any agent can sell any other property in Albany or any other suburb matter of fact, it is what we call a conjunctional in the industry.
So there is no benefit to having an open listing you are way better off having an exclusive listing working with that agent, building a good relationship with that agent and working hard to get a great result.
If you want to know about listings and exclusive agency then are you welcome to contact us.
You may have noticed recently that one particular bank is advertising on TV with regards to property reports and having them done for buyers being able to complete that online.
I would be a little bit careful about that because of the fact that the information that is being used while they can access data from RP Data or Landgate or other different organisations that physically don’t go through the property and actually assess the property so it can be a little bit misleading there.
So it is really important that if you are going to get an assessment on a property either as a buyer or as a seller that you speak to a real estate agent who takes into account everything that is on the property and work from there.
If you are looking to know more about property in regards to the value then talk to your real estate agent.
I’ve been asked a question recently about property developers and what they look for. So I am going to let the viewers in today about developers are looking for.
First of all the majority of developers are quite big developers so they are looking for high lot yields – what I mean by this is properties that are able to be subdivided into a quite a lot of blocks. So you might be looking at a lot that can be split into 100, 200 plus blocks, so there is some longevity in the process.
Most developers will want to do what is called due-diligence on the property. So that is their investigations and research in to the cost of subdivision, also the selling of the blocks – what they can get for the block, amount of blocks sold over a year and how long that is going to take to move their stock because there is what is called holding costs, which are costs that developers incur while they are waiting for the property to hit the market, to be sold, titles to be issues and stuff like that.
A lot of the time developers have either boards or investors to report back to. That has to be taken into consideration as part of their decision making in regard to risk and also regarding finance, which can be a challenge in the current market.
Those are some of the things that developers are looking for, obviously we work with a number of developers. If you would like to talk more developments or you are a developer and looking for some land then please come and talk with us.
Real Estate is a really diverse industry and there is a lot different job opportunities within real estate that you might like to consider as a career.
Obviously sales representative which is what I do as well as a number of others in my office. So that is selling houses and that side of things.
There is also opportunities which exist through residential property management which is looking after landlords properties, very challenging role and a very thankless role but I am lucky I have a great team that does all that. So there is opportunities there to learn about residential property management and forge a career. Commercial management which is more around leasing with warehouse, retail or business space and the like.
And then other niche areas such as selling businesses, selling rural property being anything from small acreage to broadacre property and then you might like to move into Strata property which is something again very different and very specialised.
Apart from that you are looking at general administration, trust accounting. So about 8 or 9 different roles that can be completed if you are considering real estate as career.
The REIWA website is a really good place to go to get general information or come and have a chat to us at Merrifield Real Estate and we can talk more about it.
The latest June quarter figures from the Real Estate Institute of Western Australia have just been released and are showing some interesting data. Showing there were 90 sales for the late quarter basically an annual growth of negative -1.3%, over a 5 year period a .9% growth and then over a 10 year period a negative -.9%. So that is a certainly a reflection of what has been happening in the market place.
The average selling time frames for days on market is now 85 days compared to other regional areas being Geraldton 81 days, Kalgoorlie 102 days and Broome 114, so not too bad compared to other regional areas.
The median price for the last quarter was $363,500, that was an increase on the previous quarter which was $350,000. We now sit around $380,000 as an average base.
Leasing wise; 179 leased for the June quarter and that showing an average rent of $343 per week. So not too bad for landlords.
Some very interesting information, a little snapshot of the market place. If you would like to know more about that please feel free to call us at Merrifield Real Estate.
There is a change happening for people selling property over $750,000 as of 1 July 2017 this is really important for people to know.
What the changes is, is the Australian Taxation Office has what they call a Clearance Certificate that will be required for anyone selling a property over $750,000. The reason for this is they are looking at way to stop tax avoidance from foreign nationals.
So the process behind this is, if you are selling a property over $750,000 you will have to apply to the ATO via their website is the best option at this stage – to complete a form to obtain the Clearance Certificate. If you don’t obtain this certificate prior to settlement, what will happen is the ATO will hold back 12.5% of the sale proceed until that clearance certificate can be provided. If you are looking to settle on a property over $750,000 after 1 July this is going to be really important to make sure you to have this in order.
My advice is to talk to your real estate agents, go on the ATO website or talk to your accounting. This is a major change and it comes in to affect 1 July 2017. If you would like to know more about this please get in contact with us on 9841 4022.
So I am just walking back to my office from an appointment on York Street and just having a look around at all the businesses that are open and you may or may not have thought about buying a business for yourself. There are a number available in Albany in different sectors such as restaurants, retail or all kinds of different industries.
If you are looking at purchasing a business it is very important to do your due diligence. That is another word for doing your research to ensure you are covering everything. If you want to learn more or have a chat to us about purchasing businesses then it is certainly something we can discuss and put you in contact with various experts such as lawyers, accountants and the like to be able to help you transact of them.
Business is certainly a career option if you are looking at changing jobs.
June 30 is quick approaching and its that time to get everything in order with regards to submitting all the information you require to your accountant so they can complete your tax return.
As part of that if you own an investment property it is important that you have an end of year summary statement. This covers all your expenses that you are able to claim as part of your deductions for your investment property.
One thing you might like to consider before June 30 is getting a depreciation schedule, we have touched on this in an earlier video and there are significant benefits of getting that for your properties.
Have a chat to your accountant and have a chat to your real estate agent get everything in order before June 30 and you will be in a much better position to lodge your tax return earlier and potentially get a refund.