AS during any crisis – and even in the absence of one – the doomsayers come out in the property market. And COVID-19 is no different.
Following the pandemic we’ve seen numerous predictions about Australian property prices, including that they could fall by up to 40%.
Will it come true? Only time will tell. But we do know that despite many price fall predictions, so far they have not come to fruition – and according to the experts they are unlikely to this time.
Have previous doomsayer predictions come true?
Two names come straight to mind when we talk about doomsayers and property prices – economists Harry Dent and Steve Keen.
In 2014 American Harry Dent predicted a 30% to 50% fall and in more recent years he has forecast that prices will halve in at least Sydney and Melbourne by 2023.
Steve Keen, from Australia, predicted a 40% fall within five years last year, and a similar drop after the GFC in the late 2000s.
Will the property Doomsayers be right THIS time?
In reality over the past 10 years Australian house prices have grown in value by more than 36%, with the median capital city house price rising from $463,673 at the end of 2010 to $633,745 as at the end of August this year, according to CoreLogic figures. Since 2014 the data shows prices have risen by 16%.
So what will happen to prices in the aftermath of COVID-19?
The general consensus is that Australian property prices will fall a little in the aftermath of COVID-19. But a 40% drop is highly unlikely.
CoreLogic’s latest figures show Australian housing values were down in August by just 0.4%, with the fall only around 2% since the recent high in April.
“It’s more plausible that there will be some drops but they will be minimal. I think property prices will drop five to 10 per cent – it willbe closer to 10 per cent in Victoria and around five per cent for the rest of the country.”
As has happened in the past there will be some places where property prices increase and some in which falls will be felt the most.
Those to be hit hardest are likely to be near-new properties, due to government incentives to build brand new, as well as CBD apartments, with many rented by international students, says Koulizos.
“A typical suburban home – a detached house on a decent-sized block reasonably close to amenities – will not see much impact at all.”
Personal investment columnist Pam Walkley says she’s unsure of where property prices will head from here because we are in “unchartered territory”.
In the short term, she says, downward pressure could be put on prices if there are a lot of foreclosures following mortgage freezes, and if overseas migration slows significantly – which it is likely to do – and lessens demand.
“While I don’t see huge price falls in the short term I don’t really see any potential for huge rises either,” she says.
“But long term if the recession – and maybe it becomes a depression – causes governments to find ways to cut their outlays, major changes to the way property is treated tax-wise may be the catalyst for very hefty rises.
“Will we really be able to afford generous negative gearing breaks, family homes being CGT-free and not counting the family home in the assets test to access government pensions in our parlous state?”
Ultimately prices are very likely to rise again
Koulizos has undertaken research which shows Australia has proven to be very resilient in global economic crises, with prices rising in the five years after every time.
The research found that following the GFC in 2008-2009 capital city dwelling values increased by up to 39% in the five years after. Prices also increased by up to 100.7% after the recession of 1973 to 1975, 67.7% following the downturn of 1982 and 1983 and 47.3% following the ‘recession we had to have’ in 1990-91.
Eventually, prices will rise
Koulizos says in the case of the current health crisis, government and banks are offering an economic airbag, including record low interest rates and mortgage repayment holidays, to soften the impact financially, which is an added positive.
He points out that in the 1990s recession unemployment hit 11% and interest rates were 17.5%, while this time around we have unemployment forecast to hit a high of 10% and 3.5% interest rate, which is going to “save property prices” in Australia.
He adds that the Australian property market is heavily dominated by owner-occupiers rather than investors, and selling their own home is the absolute last resort.
At the moment he says buyer demand is low but so is supply which means prices are largely holding up.
Paul Clitheroe, financial adviser and editor/founder of Money, acknowledges that interest rates will be low for a long time, but he adds that income growth for the vast majority of the working population will also be low.
“Add JobSeeker winding back, COVID in all probability being with us for longer than we hope, banks wanting to get repayments on loans sooner than later…. you would not need to be Albert Einstein to figure downward pressure on prices,” he says.
Right now the market is generally holding due to huge government support, very low interest rates, banks deferring loan repayment and things such as the ability to access $10,000 from Super… not to mention a majority are in front with mortgage repayments”, he says.
“But jobs will disappear and may take a long time to come back, government support will reduce and in many cases people’s reserves will dry up.
While forced supply will put downward pressure on prices, Clitheroe says with time buyers can be quite confident that a growing population and eventual recovery will see property continue to be a solid investment.
Despite the COVID-19 crisis restricting immigration and the trend towards youngsters delaying having a family, Australia’s population still grows, he says, with the average prediction for population of around 35 million in a bit over 30 years. This means demand for housing will grow going forward.”
Paul Clitheroe’s 5 top tips for navigating the current property market:
Don’t hurry; forced supply is likely to increase putting downward pressure on prices.
With time, buyers can be quite confident that a growing population and eventual recovery will see property continue to be a solid investment.
Be realistic about the level of personal debt and your own job security. Being forced out of your property by a job loss could be ugly in this climate.
Buy where a growing population puts pressure on prices. Buy near public transport, schools, hospitals, parks and a decent cup of coffee.
Do not believe anything an agent tells you. They are not your friend, they work for the seller only. Do your own research.
MUCH has been said about the future of workplaces since COVID-19 forced some major changes to office life as we know it, kicking flexible work practices into gear.
At this stage, no one really knows how offices will look in the future as uncertainty still abounds, but we do know that workplaces will undergo (potentially lasting) change.
Health and safety will be a huge factor, with social distancing requirements and even temperature testing being introduced in some buildings, but flexible working arrangements will also determine how future offices will look.
“The most notable was when almost overnight the office-bound workforce globally relocated to their homes,” she says.
“The digital transformation of our organisations was achieved not through management strategy or a new technology solution, by the realities of this virus.
“For the first time in modern history working from home became the norm and even ushered in the three-letter acronym to describe it: WFH. And it is here to stay.”
In the future it is likely we will see our office spaces change to accommodate more flexible working styles and less people in them all the time, says Fell, with most workers in this knowledge economy having more of a regular opportunity to work a day or two from home.
“Our national survey amid the COVID-19 crisis showed that 69% said they were as, if not more, productive when working from home than they were at their office.
“It also showed that far from being a temporary response to a global pandemic, 78% said that working from home will become the new normal.”
Workplaces will also change to become COVID-safe, enabling social distancing and safety and health measures.
Property Council Chief Executive Ken Morrison says the Property Council has worked closely with Safe Work Australia on guidelines for office buildings, including how to manage lifts, common areas of buildings and change room facilities for cyclists and people running or walking to work.
“There is now comprehensive advice available to help building managers and businesses to make their workplaces COVID-safe. Our members have been proactively addressing these issues to provide a COVID-safe environment for their tenants and their workers.
“As people are able to return to their offices, we believe they will do so in increasing numbers depending on their local public health restrictions.”
Offices are here to stay
With more people working from home it is likely we will see less demand for full utilisation of office spaces that has been the norm over the last few decades, says Fell. But that doesn’t mean offices will be gone entirely.
“The office will still be important in the future, but likely for collaboration, creativity and social interaction – the parts of work that are harder to achieve when workers work remotely.”
While there are some who say COVID-19 is the death of the CBD or the office building, says Morrison, and we may see some tenants provide more of their people with flexible working arrangements, at the same time they may also need more space in their offices to accommodate physical distancing.
“There may be some changes to the way we configure our offices, but they will still be a very important part of our working lives.”
While Australians have shown great versatility in making the shift to working from home, many are keen to get back to their workplace and reconnect with their work colleagues in person, adds Morrison.
According to an ABS survey recently, 86% of working Australians were somewhat comfortable in resuming attendance at their usual workplace, he says.
“There are lots of positive benefits to working in an office including the opportunities they present for critical ingredients for business success, including collaboration, creativity, innovation, learning, mentoring and developing and sustaining team culture.
“Many businesses have been able to manage remote working so well because of the close internal and external networks that their people developed in the pre-pandemic. Businesses have been surfing off the previous benefits of working in offices.
“It’s also a practical issue – not everyone can do their jobs as safely or efficiently from home, so we need to make sure that our CBDs and offices are open and working again to support those businesses which need a physical premises for their staff.”
LJ Hooker Commercial Managing Director Mathew Tiller says while there will be some businesses that see COVID-19 workplaces changes as a way to reduce costs and move some work online, many businesses will be unable to reduce their office space as they will need to ensure social distancing requirements are maintained.
He says those in the former category are also unlikely to do away with the office entirely.
“They will still need a central point to meet; a place where employees can catch up and engage with others.
“Working from home is great in terms of not having to commute to the office, but human interaction is also still very important for culture of work and mental health of employees. It also cultivates ideas and strategy.
“There will always be a need for office space; it will just be used differently and for different purposes.”
Tiller says the location of offices may also change, with many businesses likely to consider moving from the CBD to a suburban office closer to where employees live.
What do I see when I look into my crystal ball?
From an Investor Viewpoint:
In my view office buildings will become more spread out over time. We may find more suburban co-work spaces in the future. People will still want to physically interact, albeit less often.
I can see some CBD Offices being converted to residential over time.
I can’t see too many new office buildings being given the green light in the future.
Smaller office spaces may become more in demand as companies downsize to reflect the new working from home reality.
If you don’t own an office and are thinking of having a small hub where workers can get together and share space, now might be a good time to start looking.
From a Tenant Perspective:
If you are a tenant with a lease that’s about to expire, now could be a good time to negotiate.
You may have a clause that allows you to “re-set” the rent based upon an independent market valuation, rather than an automatic increase or linked to CPI.
I expect to see a lot of sub-leasing space coming onto the market over time.
As a rule of thumb, businesses require roughly between 8 and 12 square metres of gross space per employee. With more employees working from home, companies could in effect get two employees in that space on a co-sharing basis, thus reducing the need for office space in the future.
IN THE AFTERMATH of COVID-19, things are changing all the time, including restrictions and the impact these are having on a range of industries, including property.
So far the property market seems to be holding up pretty well, with minimal falls in values. But it’s a different story for the construction industry (a huge source of employment for Australians), which faces a steep drop in home building after September this year.
In light of this the Federal Government recently announced a new $25,000 property grant called HomeBuilder, to be handed out to eligible people building or renovating a home, which is designed to boost construction activity and stimulate the industry.
This $688 million housing stimulus package aims to build 30,000 homes by Christmas and is predicted to generate over $15 million in national economic activity, lead to $10 million in building projects and support more than 1 million jobs.
Details of HomeBuilder are still evolving, and there may be other assistance on offer in the months to come (particularly from state and territory governments) to stimulate the housing market – we’ll have to watch this space.
In the meantime, however, here is what we know about what’s currently on offer.
What is HomeBuilder?
The scheme offers a $25,000 grant to owner-occupiers substantially renovating their home or building a new home between June 4 and December 31 this year.
It comes with restrictions though – for new builds the home cannot be priced at more than $750,000 and renovations must cost at least $150,000 and up to $750,000 for a home valued at $1.5 million or less, but the work excludes sheds, pools, tennis courts, granny flats or any other structure detached from the dwelling.
The grant is also means tested, with income caps of $125,000 for singles and $200,000 for couples.
Contracts must be signed within the next six months and construction must start within three months of the contact date.
The program is expected to be up and running within a few weeks, with applications able to be backdated to June 4 so contracts can be entered into right away.
It will be implemented via a National Partnership Agreement with the federal, state and territory governments.
At the time of writing applications for the grants were not yet open, but Australians could register interest in the scheme through the Government’s official website.
The $25,000 HomeBuilder grant is designed to complement state and territory housing assistance programs, including grants and stamp duty discounts, to encourage more people to undertake building work.
Since the Federal HomeBuilder announcement, some states have offered further stimulus, with Tasmania offering $20,000 for any owner-occupier to build a house, while Western Australia is offering owner-occupiers and investors a $20,000 grant.
What are the pros and cons of the HomeBuilder grant?
Some argue the money offered by HomeBuilder would be more effective in achieving its aims of stimulating construction if it was given for the provision of social housing instead.
While the HomeBuilder grant will encourage more people to undertake a building project – either through a renovation or new build – which will stimulate the construction sector, inevitably it will also be given to those who were already planning a project anyway, which is one of the program’s criticisms.
Other criticisms are that it’s too restrictive due to factors such as the large outlay required (particularly for renovations), property value caps, means testing and timeframes – particularly to get approvals and plans – which may lead to a low take up.
It could also inflate prices for houses or trades, as grants often do, but the short timeframe for the scheme is expected to counteract this.
Despite all these potential drawbacks it has been reported that there has been huge enquiry – numbering 8000 as at June 8- about the program in the days following the announcement. This indicates interest – and potential take up – is high, and the program could be the catalyst for people taking action after sitting on the sidelines due to Coronavirus.
In particular it could be a great incentive for first home buyers, who will also be able to take advantage of state and territory grants, but it’s also a good opportunity for existing homeowners to upgrade to a new homes or update their current home.
What to consider
You should do you own research and seek expert advice before rushing in to take advantage of this grant, despite time being of the essence.
Ensure you are making a prudent investment decision and either buying a new home that will increase in value or ensuring you are adding value through a renovation and not overcapitalising.
Chris Gray of YourEmpire.com.au says in the past property grants have often created a short-term bubble in the market, and quite often it can be a “false economy”.
Home buyers, he says, are often better off buying a mainstream existing house in a well-located suburb with no grant rather than buying a new one with a grant, as the underlying investment in the most important thing.
He warned homebuyers taking advantage of HomeBuilder to do their numbers, and determine if they would actually still do a renovation and spend the money if they didn’t have the grant.
“The grant should be the bonus rather than the reason for doing it,” he says, adding that having to spend the extra $25,000 on a higher-value renovation means overcapitalising is a real risk.
“You might spend money on things that actually devalue the property such as gold-plated taps or diamond encrusted something else. You can spend money upscaling to satisfy the requirements of the grant and it doesn’t suit the area or the type of property.
“Get a fresh pair of eyes to look over your property and determine what it is worth now and what it will be worth after so you make sure you add value and know how much to spend on a renovation.”
Do we need more property grants to stimulate the housing market post COVID-19?
At this present time, it doesn’t appear that the housing market needs propping up via other grants or handouts.
According to CoreLogic Head of Research Tim Lawless property values have been quite insulated from a downturn to date, with CoreLogic data to the end of May showing home values were down less than half a percent.
The HomeBuilder grant is more about jobs than housing, he says.
“(It) is more about shoring up jobs in the residential construction sector, so it is rightly targeted towards incentives to build or renovate, rather than stoke demand for established homes which could have an inflationary effect on prices.”
Mr Lawless explained that housing construction has been in a broad downturn over the past year and a half, and will likely slump further through the year.
“Nationally dwelling commencements peaked in the first quarter of 2018 and by the end of last year had declined by around one third to be 14 per cent below the decade average,” he says.
“Considering housing construction typically provides a strong multiplier effect on the economy via the scope of the supply chain and array of trades and industries involved, a stimulus package for the sector makes sense.”
The COVID-19 pandemic has forced many businesses to reflect on “industry norms” and the way they operate. We are no exception.
At Washington Brown we believe in researching each property and advising clients on the best way to approach achieving the maximum depreciation in the most cost-effective way.
Not EVERY property needs to be inspected in order for the maximum claim to be achieved.
This USED to be the case – but the tax legislation recently changed and property investors can no longer claim depreciation on items like ovens or dishwashers that are not brand new.
So NOW you can only claim depreciation on the structure of the building like concrete and bricks for 2nd hand properties.
If you BUY brand new items like carpet and blinds, you can still claim depreciation but it must be based upon the purchase price (not an estimate).
In the OLD days, we used to visit the property so we can value these items individually, the ATO put a stop to that.
Our Commitment to Property Investors Moving Forward
If we determine that an inspection is NOT required to ensure the maximum depreciation claim – this will reduce our fee AND you’ll receive the report sooner. Let Washington Brown work out the best depreciation plan for your property here.
Here are 5 reasons why SOME properties do not require an inspection:
Extensive Database – In 40 years we have amassed an extensive database of construction costs for the majority of residential and commercial buildings around Australia.
We have the costs – We are familiar with your building and as such, we already have the construction costs on file.
Plant & Equipment no more – You have purchased a second-hand property so you cannot claim on the existing plant and equipment components.
Online data – There is an abundance of detailed information and pictures of your specific property available online (both publicly and via subscription-based industry databases).
You have the costs – Your property is a brand new build and you have access to the construction cost, plans and inclusions list.
Here are 5 reasons why SOME properties STILL NEED an inspection:
Your property is unique – Your property is classed as High Spec/Luxury/Non-Standard and therefore not typical. An inspection will ensure the maximum deductions by ensuing all facets of your property are assessed and included.
Non-residential – This means you can still claim the full benefits of depreciation including the Plant & Equipment (carpets, blinds, etc.)
Renovated – Your property has been substantially renovated. There is insufficient information online and as such an inspection is necessary to maximise the depreciation.
More information required – We do not have access to sufficient information specific to your property. We, therefore, need to acquire this via an onsite assessment.
Plant & Equipment – Your property qualifies to claim Plant & Equipment deductions, an inspection ensures no assets are missed, which means your deductions are maximised.
Having caught up recently to co-present on a Depreciation-centric webinar in the lead up to the End of Financial year, Peter Foldes from Washington Brown was able to chat to leading property analytics researcher Terry Ryder (Owner and Creator of Hotspotting) regarding the effect of the COVID-19 Pandemic on Real Estate around Australia.
Terry, mainstream media seem to be touting that there will be a significant “hit to the Australian Property Market.” It paints a pretty gloomy picture; Do you think we’re going to see a “crash?”
The Australian real estate market is continuing to defy doomsday predictions of price drops as a result of the COVID-19 pandemic.
Prices are continuing to grow and the number of people searching for properties online is higher than it was at the same time last year, according to Terry Ryder, founder of Hotspotting.
All the data that is coming in actually defies the doomsday notions we’re seeing in news media,
Certain sections of the media in particular have been talking down real estate – and we’ve had dire predictions over the past two months about prices falling – but we just haven’t seen it in terms of the actual price data.
Figures from the nation’s largest property sales platform, realestate.com.au, are showing increases of up to 40% (compared to the same time last year) in the number of searches of properties for sale. People are certainly out there looking, at a time when the number of properties listed for sale has fallen significantly, and that might explain why the data on prices for March and for April was so strong, with six of the eight capital cities recording some price increase in April, as well as six of the seven regional market jurisdictions.
We often hear commentary on the “Australian Property Market,” implying that it behaves as a single commodity. Do you feel that some areas may actually continue to see growth throughout the pandemic period?
The nature of the local economy was pivotal in terms of which markets will continue to do well, which ones will stagnate and which ones might experience price drops.
Those markets which have and may continue to experience price drops are ones where the economy is heavily reliant on tourism, particularly international tourism.
My expectation is that the Gold Coast market will be one of the ones to drop, certainly in the short term
In contrast, strong regional cities with more diverse economies such as Ballarat, Bendigo, Orange, Albury-Wodonga, Mackay and the Sunshine Coast should continue to perform well. These are all cities where the local economy and employment are strong in industry sectors that are doing well despite the virus-impacted climate.
For example, the biggest sectors in Albury-Wodonga in terms of Number of Jobs are supermarkets & food stores, hospitals & medical services, the military and aged care.
Another example is the Sunshine Coast: One of the major factors which appealed to investors are the numerous large-scale infrastructure projects – and work on these has not stopped during the COVID-19 shutdown. Current infrastructure projects on the Sunshine Coast total more than $20 billion.
The ticks are in the ‘pro’ column of why you would be looking at a region like that for investment!
In your opinion, is now a good time to be considering a property purchase?
It is important for investors thinking of entering the market at this time to not get swept up in the doom and gloom expressed by “news media” and to keep a balanced view of what was happening. There are opportunities to be found in the current market.
I think it is a very good time to be looking because there will be opportunities to buy well.
Generally speaking, real estate is holding up quite well but there will be exceptions.
If you are out there as a buyer right now you are not going to be competing with as many investors as you might have done in normal times. You can perhaps negotiate from a position of increased strength.
I think it is a very good time to buy, as long as you select a location that has the underlying fundamentals to provide good growth.
THE POTENTIAL abolition of stamp duty in Australia has been proposed and discussed for at least a decade, but recently there have been fresh calls from many corners to do away with the property tax.
Economists in particular – starting with Ken Henry way back when he authored and delivered his Henry Tax Review in 2009 – have been pushing for stamp duty to be abolished, arguing that now is an opportune time to make major structural tax reforms to support the economic recovery post COVID-19.
If abolished, the most common suggestion is that stamp duty would likely be replaced by a broad-based land tax on real estate owners to be paid annually and/or an increase in the GST, although the Federal Government has indicated it is opposed to the latter.
Why should stamp duty be abolished?
Inefficient, bad, lazy, archaic… these are just some of the words used to describe stamp duty. Dr Henry has called it a ‘diabolical tax’ and labelled it one of the worst taxes in Australia.
The fact is that stamp duty was established in the early 19th century, when documents for the transfer of a home needed to be officially stamped to make them legally binding, and governments took the opportunity to ensure people paid taxes at the time.
But while this worked in the olden days, it’s not relevant now with our systems far more sophisticated.
There has also been no indexing over time, despite prices rising significantly over recent decades, which has resulted in huge stamp duty hikes and of course government revenue.
How much does stamp duty raise?
Domain figures show stamp duty on a median-priced home in New South Wales grew by 102% between 2004 and 2019 to reach $42,269, 183% in Melbourne to hit $44,164, and 189% in Brisbane to reach $11,013.
Governments like stamp duty because it can provide strong revenue to state and territory budgets, but the downside is that this revenue can be volatile, reliant on a strong property market and consistent transaction levels.
If transaction levels fall due to an economic downturn or a dive in confidence, so too does stamp duty revenue for governments, which can leave big holes in budgets from year to year.
For example, stamp duty revenue in NSW was $9.7 billion in 2016-17, but fell 24% in 2018-19 to $7.4 billion.
Could a broad-based land tax be an option?
In contrast, taxing land through a broad-based land tax, charged annually by sending a bill to everyone who owns land (a proportion if an apartment), would provide a much more consistent source of revenue over time.
“The problem for state government is when the property market is booming so are their coffers – and generally revenue from property is the second highest income-earner after payroll tax – but in situations like COVID-19 revenues dive,
Getting a regular land tax from all property owners is going to be much better for them to budget.”
The other major issue with stamp duty is that because it’s a massive impost on a single transaction – it could be $40,000 or $50,000 on top of a property purchase, particularly in Sydney, for example – it impacts economic decision making, often in a detrimental way, with people less inclined to buy or transact.
In particular, it can act as a barrier or deterrent to home buyers, particularly first homebuyers, who have to save both a deposit and then more for stamp duty, or add it to their mortgage, which will cost them more over time.
But it also leads to an inefficient use of housing as people become more reluctant or are unable to move – including to upsize or downsize – as they have to pay the huge cost of stamp duty each time, which makes it too expensive.
This results in people living far from work opportunities or their children’s schools, or people living in homes far too big for them as they shy away from downsizing, which also prevents that larger housing being freed up for families that need it.
“Abolishing stamp duty might encourage more home ownership, which is a good thing,
When you have to come up with a 5% deposit plus 5% stamp duty, in theory it takes twice as long to come up with, so it’s a barrier to home ownership.
For prospective home owners it’s going to be a benefit because it’s less initial money that they have to come up with.”
How would the abolition of stamp duty work?
New South Wales and Victoria are currently talking about doing away with stamp duty, while the Australian Capital Territory has been the only state or territory in Australia to actually do so, starting the process back in 2012.
The ACT is phasing stamp duty out under a 20-year plan, gradually reducing stamp duty rates and replacing it with higher annual rates or a land tax-style property rate.
While this can lead to a situation where people are paying both stamp duty on a purchase and an annual property tax over time (ie. being double taxed), thereby also ensuring the government’s revenue remains fairly stable, it’s not the only way to do it.
The other way is to abolish stamp duty straight away, and apply a land tax to purchases from a certain date, exempting people who already own a house and have paid stamp duty. This, however, could leave a hole in state or territory budgets for some time.
What are the potential disadvantages of abolishing stamp duty?
This issue of how stamp duty would be abolished and what is would be replaced with is the major potential downside, with the devil in the detail of how the plan would work.
One concern is that these annual land tax bills would have to be very sizeable to replace stamp duty, with one Deloitte Access Economics model estimating the average property would have to pay $2400 per year, but of course many properties valued at higher rates could pay up to five times as much.
And who would stop governments from upping these rates regularly, so that people end up paying much more over time?
According to the Property Council, the ACT’s approach was supposed to be revenue neutral for the government but in actual fact the revenues from property taxes are now higher.
A HIA report from the start of 2018 found the switch from stamp duty to land tax in the ACT has resulted in additional property taxes of $196.5 million, an increase of 38% over four years.
Koulizos hasn’t made up his mind about whether abolishing stamp duty is the right way to go, but isn’t a big fan of another annual financial impost on home buyers or owners, on top of council rates, insurances and water bills.
“I’m particularly concerned for people on fixed incomes or pensioners – once you get to 65 or 70 it’s another impost you have to keep paying until the day you die.”
Peter Koulizos Chairman, Property Investment Professionals of Australia
There are suggestions land tax bills for older people could be paid upon the sale of the property upon their death, but the bill of course still has to be paid.
So, will it happen?
While there is a lot of talk about the abolishment of stamp duty, whether or not it will actually happen remains to be seen.
Governments are very dependent on the huge revenue generated from stamp duty, so moving away from that will prove to be difficult.
Personally, I feel we should try our utmost to move away from this lazy tax that limits a workforce from moving to where the jobs are.
But it’s going to be very tricky politically to convince voters that replacing stamp duty with an annual charge on land is a good idea.
“Where there is a physical inspection of premises by a quantity surveyor which results in a person (the tenant or the inspector) contracting the COVID-19 virus, there may be a breach of duty of care because of the failure to take reasonable steps to avoid infection.
Due to the global pandemic status of COVID-19, the potential for infection is arguably a foreseeable risk and legal action may be taken against the landlord/owner of the premises and/or the quantity surveyor’s firm as a consequence of the breach.
It is at this stage uncertain how the Courts will deal with the liability issue and it may take years before the extent of the relevant duty of care as a result of COVID-19 can be fully defined.”
At this stage, all states have strict protocols for private viewing so real estate transactions can, hopefully, continue.
Property sales tend to take place over a limited time period and a personalised viewing is necessary in most cases.
As of the 31st of March there has been strong guidance from the Federal Government to stay home, unless you are shopping for essentials, medical reasons, exercise or you can’t work remotely.
Firms like ours and many others, have started working remotely. We have existing data on a huge range of buildings and have access to a variety of means to carry out a report.
IF THERE is one thing the majority of us have at the moment, it’s time. And since we can’t go anywhere many are putting it to good use by getting things done around home – things we have been putting off for a long time because we’re usually too busy. Surely you’ve all seen the queues at Bunnings lately… home improvement has never been more popular!
So what are the top things you should be doing to your home while you’re in isolation that could improve it for your use and even add value, without spending a fortune? We asked three experts – Craig Hogg of The Edge Property Buyers, Good Deeds Property Buyers principal Veronica Morgan and buyers agent and CEO of Propertybuyer Rich Harvey – to give us their top tips.
Clean your home’s exterior
The first thing you can consider doing is cleaning the outside of your home to improve the aesthetics, according to Hogg. Admit it, this is something that often goes by the wayside due to our usually-busy lives, doesn’t it? Now is a good time to clean all the front windows, screens, doors and gutters, and give dirty surfaces a high-pressure wash. While you’re there you can get some precious Vitamin D while you’re under lock-down, adds Hogg. It will make a huge difference to the appeal of your home, and if you have any plans to sell anytime soon it will add value as first impressions count.
Clean the inside of your home
Follow up the external clean with a good declutter and spring clean internally, including under the house and the garage, to open up some extra space, says Hogg.
“Cleaning doesn’t cost a cent and will immediately improve the presentation of your property and more than likely improve your mental well-being as well.”
Tidy up the garden
Landscaping and garden maintenance always takes time, so why not use your time in isolation to get some exercise and tidy up the garden, top soil the lawns or plant out a brand new garden bed or veggie patch, says Harvey.
“First impressions count to buyers if you are considering selling,” he adds.
Plant a herb garden or veggie patch
“I just moved house in February, and hadn’t yet planted a herb garden, so that has been one of the first things I’ve done in isolation,” says Morgan.
It may not add value to your home per se, she says, but it will add to the comfort and amenity, particularly if you are forced to work and play indoors for extended periods of time.
“I think getting out in my garden, even if it’s just a few pots, does help my mental health, as does feeling like I’m actually in control of something – that is. I can grow something that we can then eat – even if it’s a small thing.”
There’s always somewhere in the house that needs a refresh through painting, according to Harvey.
“Why not use the break to get some painting done and turn it around in two or three days and then get the house back to normal?” he suggests.
Painting is an affordable way to improve the appearance of your property, if you have the funds available, adds Hogg.
“Stick to neutral colours and try to lighten the look and feel of the property,” he says.
“Tile paints are popular at the moment, and combined with new cabinet handles, will help transform tired old bathrooms and kitchens into something special for only a few hundred dollars.”
Polish the floorboards
This is messy, but fresh looking floors are a great way to create a tidy and stunning look, says Harvey.
Flooring can have one of the biggest impacts in a home, and will be a satisfying task to complete.
You can do-it-yourself too, in just a day or so. Jump online or head into Bunnings (it’s still open) to get some instructions and the equipment you need, including a sander, polish and a brush, and set to work!
Get additional data points installed
We could be working and schooling from home for some time, so this will likely come in handy in the coming months, as well as in the long term.
“I completely underestimated the need before schooling and work moved into the home,” says Morgan.
Getting additional data points installed will, again, add to the amenity and comfort of your home, says Morgan, particularly if you’re stuck there for many more months, rather than strictly adding value.
These are extraordinary times for us all. The COVID 19 pandemic is impacting the health of our loved ones, the way we live our lives and the businesses we rely on daily. And here at Washington Brown we are determined to do our bit to help.
Commitment to our clients
Supporting Australia’s property investors is the backbone of what we do. That’s why we’ve launched Washington Brown’s 50/50 Plan to help increase your cash flow when you need it most – NOW.
Put simply – we will be offering all clients the opportunity to pay only 50% of the report now and 50% in 6 months time.
You see, claiming depreciation on your property’s wear and tear from last year, could put money in your pocket this year. But you’ll still need a property depreciation schedule to do so.
Inspecting your tenanted investment property may not be possible under the current climate. We will be assessing each property on a case by case basis and advising you on the best approach to achieve the maximum depreciation.
This may result in an inspection not being needed because, after decades of collecting data from properties around the country, Washington Brown has sufficient information to continue to prepare most depreciation schedules.
For a limited time, this is an acceptable practice according to the Australian Institute of Quantity Surveyors (AIQS), due to the unprecedented circumstances we all find ourselves in.
Supporting both our clients and employees
Washington Brown has been in business for 40 years. We are committed to supporting both our clients and employees during this difficult time.
If you are an existing client, rest assured you will continue to be able to access all previous reports via your own protected online portal WBme.
Our aim at Washington Brown has always been to make property investment more affordable. We hope to do this now more than ever.
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