Greetings and a happy new year to all members. Is the clock running faster than ever before or is it just me? It’s already April! It’s the traditional autumn real estate season under way but boy hasn’t the market changed from this time last year where auction clearance rates,the barometer that we all follow, was up around 80% and last weekend just under 60% with increasing stock. If you don’t know it already, the market peaked about July last year and the economic clock has just gone past twelve o’clock in the NSW property cycle. In fact Corelogic data reports Sydney metro has come off 3% after a whopping 76% price rise in the last 7 years. That’s a soft landing and a small price adjustment in what has been an amazing growth phase.
Thanks to A.P.R.A. the Australian Regulator on bank interest rates that stepped in to cool the market down by applying macro and micro parameters in obtaining finance, they have done their job. First home buyers are winning at auctions for the first time in many years and the overall interest from locals and foreign investors for property has subsided. So what the future for interest rates? Enter Reserve Bank governor Philip Lowe, who answered this very question last week by stating… “In a nutshell: no, at least not immediately. Australia’s jobless rate remains higher, at 5.5 per cent, compared with the US’s 4.1 per cent. And wages here remain moribund. But yes, it’s also true that global interest rates do tend to move, if not in lock step, than at least in a similar direction over time” It may take some time yet, but interest rate rises are coming. And that will be quite the spectacle.
The biggest hurdle as I see it this year and beyond will be the ability to obtain finance, despite what equity positions you may hold. There is even talk that the big 4 are not going to consider 100% of rental income when assessing personal cash flows and that this figure maybe around 60-70% of your portfolio revenue. Ouch! For those on moderate to low incomes like retiree’s this could hinder borrowing capacity. Rental yields in NSW are at their lowest in years (average 2.9% in metro areas) and are only just starting to recover but it’s still early days. The game of property ownership and property investing has changed quickly and you may need to rethink your strategy or change it by getting sound advice on your personal circumstances.
So what’s install this year for POANSW? There are 2 major pieces of legislation affecting our members. First up the Residential Tenancy Review Bill will be released for public and stakeholder comment. This affects anyone in the residential lettings circles. Secondly The Boarding Houses Act 2012 is due to be placed under the 5 year mandatory review. Boarding house ownership and management has always been a focus point for POA. Both of these represent about 95% of the make up of our members area of interest. POANSW will be at the forefront as one of the key stakeholder consultants in NSW liasing with the state Government policy makers. It will be an interesting year on this front as this year is the year of political party campaigning for the March 2019 state elections. Housing, housing affordability, negative gearing and tenants rights will be a core focus. There is also going to be a big focus on landlords meeting “minimum standards” of health and safety of their property. I was featured in a media story about this which you can access. POANSW will be inviting members to special workshops and focus groups on this front and seeking feedback and comments from boarding house operators.
POANSW was recently called for by The NSW Environmental and Planning department and invited to a round table meeting on the combustible cladding regulation 2017.This has become a centre piece of attention especially in strata buildings after Grenfell Tower block in London caused 71 deaths and over 70 injuries. NSW Planning wants to tighten policy and POANSW has voiced their point of view giving recommendations in its submission paper. Thank you Mark Dodgson (a licensed builder and POANSW committee member) for writing the submission and giving your thoughts on this important matter of building safety. Download here:
We have some fantastic workshops, seminars and networking events we are planning for this year. Some very useful collaborations, offers and services will occur this year that will add more value to members. Commencing with major seminar, and announcing our new affiliated sponsor, Small is the New Big led by Ian and Christine Ugarte. Please see invitation to the New Generation Boarding house seminar development to be run on the 2nd May 2018. Your members only login area on our website has the new 2018 calendar for meetings and events and of course reminders will go out prior. We are also building a new members only access page where you can see a library of our government policy submissions and our media releases. This will give you an understanding and insight into our lobbying efforts.We will advise you when this is ready to view and you can access the new page using your existing password.
On a more serious note, for many years POANSW has been lobbying Office of Fair Trading to appoint one of our committee members to serve on The Rental Bond Board. This appointment is a ministerial one and there are only 2 non -government stakeholders allowed on the board. Currently this is held by The Tenants Union of NSW (representing tenants advocacy) and receive millions in funding from grants mainly tied to Rental Bond money interest and The Real Estate Institute of NSW(representing real estate agents) who receive no funding or grants. The Rental Bond Board Constitution states that tenants and landlords should benefit from Rental Bond interest collected, however in the history of the Rental Bonds Act from 1977 all schemes ,grants and services provided by the NSW Government has been geared towards providing tenant legal services. There is clearly an imbalance. Despite several requests in the past and of late The POANSW has never received a cent in funding to carry on its important work in assisting private landlords. Private landlords provide up to 80% of rental accommodation in the market place and this is growing as NSW expands in population and accommodation needs. Late last year after writing to the minister POANSW was denied any opportunity to be on the board or a grant of any sort to continue carrying on its good work. The answers we received from the minister’s office which included quotes like “we want to keep the status quo” and “we find no evidence that the current system is not working” doesn’t sit well with us at all. As such we have written to both I.C.A.C. and the Auditor General’s office requesting a full investigation into the distribution of Rental Bond Interest.
As they say, watch this space!