RENEWED SCORCHERS PARTNERSHIP - Surviving and succeeding in a tough market +PLUS - REIWA
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#74 NOVEMBER 2015 O FFI CIA L PU BLI C ATI O N O F TH E R E A L ES TATE INS TIT U TE O F WES TER N AUS TR A LIA RENEWED SCORCHERS PARTNERSHIP +PLUS Surviving and succeeding in a tough market COUNCIL ELECTION New REIWA President AFFORDABLE HOUSING Are Keystart loans at risk?
CONTENTS
contents
N E WS & F E AT U R E S
President’s Address 4
Message from the Chief Executive Officer 6
Hayden Groves is new REIWA President 8
David Airey retires as a successful industry leader 10
Councillor Ian Cornell retires with wise industry advice 14
Fascinating facts from REIWA archives 16
Are Keystart loans at risk? 18
Surviving and succeeding in a tough market 20
Will residential markets recover quickly? 23
Commercial clients still hard to find 27
Retail sector continues expansion 30
Albany calls for city agent 32
A DVO C AC Y
REIWA submission to Perth and Peel @ 3.5million 36
Off-the-plan sales commission update 37
Residential tenancy changes are happening 37
REIWA’s recent political engagement 37
E D U C AT I O N A N D T R A I N I N G
Review of the national Training Package 42
Update on proposed National Accreditation Scheme 43
Why you should use REIWA Training 44
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L E G A L , L E G I S L AT I V E , F I N A N C I A L Tougher investment lending 46 No word yet on Codes of Conduct 46 Lodgement of residential tenancy bonds made easier 47 PEXA takes off in WA 47 BondsOnline a boon for tenants 48 Legislative changes to FHOG and land tax 49 DAPs inquiry rules out third party appeals 49 Renew and maintain your business name 50 Advice for agents to tackle criminals 51 Deal or no deal - when agreements become binding 52 Selling property on behalf of a principal who is not the registered proprietor 54 Enduring powers of attorney 56 Tax tricks and traps for foreign investors 58 Summary of Competition and Consumer Act and Auction Code compliance program 60 Minimise your risk of misleading and deceptive conduct 64 In Brief 68 R E A L E S TAT E T E C H N O LO GY SmartShare gives money back to members 70 New reiwa.com One click campaign 71 TV sponsorship of Matt and Kim to the Rescue 72 Renewed partnership with Perth Scorchers 73 Real Estate Connect an inspiring conference 74 I N S I D E R E I WA Data duo to head new research unit 76 New finance manager finds REIWA books in good order 80 Enjoy practical advice from an experienced consultant 82 New manager to help develop your business 83 Industry excellence recognised at awards 84 Events trifecta “best in Australia” 86 Two winners of Kevin Sullivan Award 88 Auction champions hammer it out 90 REIWA welcomes new members 91 Calendar of Events 92 REIWA Councillors 93
NEWS & FEATURES 4 REIWA NEWS
PRESIDENT’S ADDRESS
By REIWA President David Airey DAVID AIREY
This is my final column as REIWA While I understand the need to have RENTAL AND SALES MARKETS
President. After four years as clear guidelines around leasing When I joined Council in late 2003, the
president and 12 years on the residential tenancies, I do worry about median weekly rent in Perth was $145.
REIWA Council, it’s time to move the increasing amount of paperwork, It’s now $410, having peaked at $480
on and make way for new Council legal training and staff time that now in 2013.
members, a president and office goes into what should be a fairly
From an investor’s point of view, that’s
bearers. straightforward process, especially
positive income growth of around
In leaving I reflect on the many changes when the system seems to tip towards
24 per cent per year. In the last three
we have seen in the property market unruly tenants too often.
years we have seen fewer than 2,000
over the 12 years since I first joined the available rentals grow to nearly 9,000
REIWA Council. A BRAVE NEW WORLD
today.
In terms of technological change,
PROPERTY MANAGEMENT today’s young real estate agents would The sales market has been through
CHANGES struggle to work in a 2003 office with a very robust period of growth,
I think the two most significant changes a slow desktop PC, monstrous monitor particularly between 2005 and 2008.
have been the new detailed set of with a flickering screen waiting for In late 2003 the Perth median price was
laws and responsibilities for owners of low resolution photos to gradually $220,000 and today it’s $530,000 - a
residential property, and the explosion download a pixel at a time. climb of 150 per cent after peaking at
of information technology that has $550,000 in March last year.
Two or three photos was a novelty back
transformed the way both agents and Members will recall the boom years
then but today 30 is common. And
the public engage in property. 2005 to 2008 when values jumped
people still used the fax machine!
Investment property owners have 40 per cent, more so with high priced
Along with the laptop, smart phone,
been significantly impacted by new homes, only to lose a lot of gloss after
ipad and high speed internet, the
laws relating to residential tenancies, the GFC and the peak for sales activity
offices we now work in are a world remains at September 2010.
the abolition of tenant contributions to
apart.
lease fees, new regulations for smoke
alarms, RCDs, security screens and Sellers and investors demand quicker FLUCTUATING MARKET
doors, locks, windows and even porch replies to calls and emails. Workplace Homes listed for sale have seen wild
lights. pressures on property staff have never swings with up to 18,000 in 2009,
And then there are the administrative been greater. down to 8,000 in 2012 and back to
changes such as tenants giving 30 days Buyers are now very savvy with access 14,000 currently.
written notice to end a lease despite to nearly all the same information as the First homebuyers have watched grants
that date being clear on the original selling agency, but without the selling come and go. The original $7,000 grant
lease, and so on. experience. introduced in 2000 was doubled in the
NEWS & FEATURES 5
GFC period to $14,000 and tripled for MY FUTURE
new-builds to $21,000. After four years as president, I look back QUICK FACT
That soon dropped back to $7,000 and on my time on Council confident that The WA Planning Commission
intends to amend the Metropolitan
then down to $3,000 for established the institute is in good hands and has a
Region Scheme to rezone 18.83
homebuyers in 2014. It will disappear bright future. hectares of Baldivis land adjoining
for established homes later this year but It has been my pleasure to represent Kwinana Freeway at lots 986 and 993
Baldivis Rd.
new-builds will attract a $10,000 grant. so many members over such a long
The stamp duty concession for first home time and a pleasure to have met and
buyers will remain up to $430,000 but talked with so many of you around
that limit used to be $500,000. the state from such a diverse range of
business environments and personal
REIWA IN GOOD HANDS backgrounds.
Throughout all of this technological I take this opportunity to thank all the
and economic change, REIWA as an Councillors who I have worked with and
organisation has evolved and adapted wish them all well.
to meet the needs of members and be
I now return to full-time real estate
at the forefront of change rather than
activity at my office in Claremont and will
reacting to it.
follow the progress of the institute with
This has us well placed in terms of the great interest.
reiwa.com website and the range of
Thank you all for your support over many
products and services tailored to suit
years and my very best wishes to each
member offices.
and every member.
I’m confident that the role we have
carved for ourselves in the WA
community is well regarded by the
public, business and government alike.
It’s a tribute to the Council, executive
and staff at REIWA that the institute holds
such a respected position in the political
landscape and such a good rapport with
government and opposition alike.
NEWS & FEATURES 6 REIWA NEWS
MESSAGE FROM THE
CHIEF EXECUTIVE OFFICER
By REIWA CEO Neville Pozzi NEVILLE POZZI
It was an extremely busy years, and in particular his guidance having now joined the program, we
September quarter for REIWA and understanding as we pursue a new expect the rebates to grow significantly
with our property management direction as an organisation. in line with member support of
and sales conferences being held Also retiring from Council is Ian Cornell reiwa.com.
concurrently for the first time. who, after 11 years service, has decided REIWA Council has signed off on the
Total attendance numbers for the two to make way for the next generation of criteria for an accreditation system
events exceeded 1,700 over the two industry leaders. applying to the various real estate
days which provided an opportunity to Ian’s significant knowledge of the specialities that are being adopted
see an impressive line-up of local and broader real estate market, as well nationally by all REIs and being certified
interstate presenters. as being the national chair of The by the REIA.
In addition, there were some 40 trade Professionals real estate group,
The various institute networks have
exhibitors providing members the has brought a refreshing view and
been heavily involved in establishing
opportunity to evaluate a wide range perspective to the many matters
the criteria for initial attainment
of real estate service providers and discussed at Council.
of accreditation and the ongoing
products.
EVENTS requirements.
Also, the annual Awards for Excellence
gala dinner and presentations were The reiwa.com Awards Ball was also The attainment of accreditation in a
held on the evening of 17 September held on 15 August with more than particular real estate specialty will
with more than 400 members and 1,100 members and their partners entitle a member, including associate
sponsors attending this prestigious attending a night of recognition of sales members, to use post nominals in all
event. performance, networking and great advertising and promotional material
entertainment. and will be recognised on reiwa.com.
Seventy nominations were received
for the 16 specialist categories. The We’ve also been very fortunate to secure
ADVOCACY AND POLICY
winners of the various categories will North America’s No. 1 real estate broker
participate in the national awards Dolly Lenz who was our guest speaker at On the advocacy and policy front, it’s
being staged during March 2016 in a special reiwa.com presentation at the been an extremely busy period with the
Melbourne. Crown on 12 October. institute actively progressing a number
Dolly has sold more than US$10.85 of policy issues for members including:
AGM billion worth of property during her • Code of conduct review
On 24 September the institute’s Annual esteemed career and is repeatedly • Residential Tenancies Act -
General Meeting was held followed sought after to sell some of New York’s compliance cost submission
by a cocktail reception where the most exclusive real estate, including
• Off-the-plan commission sales
significant contribution made by two Rupert Murdoch’s recent purchase of a
• Perth and Peel @ 3.5million
long-standing Councillors, David Airey Manhattan apartment for $57 million.
and Ian Cornell, was recognised. It has been very gratifying to note the
REBATES amount of support we’ve received from
I would like to make special mention of
our president David Airey who retired Members subscribing to the reiwa.com the institute’s networks in formulating
after serving 12 years on the institute’s SmartShare partnership program our policy positions on the issues above
Council. My role has been made received their rebate cheques in August and I’m pleased with the response
significantly easier due to the support for the period January to June. we’ve received from government on
I’ve received from David in the last three With more than 180 member offices our various submissions.
NEWS & FEATURES 7
BUSINESS PARTNERS
REIWA would like to thank the following partners for their generous
support of the Institute and its members.
Life and Benefits – Life and Disability Insurance Specialists
NEWS & FEATURES 8 REIWA NEWS
HAYDEN GROVES IS
NEW REIWA PRESIDENT
REIWA has a new boss
On 15 October the newly
constituted REIWA Council voted
ABS ESTIMATES
in Hayden Groves as the institute’s HOUSING VALUES
new president to lead WA’s real
estate sector and represent the Data from the Australian Bureau
industry before the government of Statistics shows the value of
and public. Australia’s 9.5 million residential
dwellings increased $425.5 billion
Hayden has owned the Dethridge
over a year to a record $5.5 trillion
Groves real estate agency in Fremantle
during the March quarter 2015.
since 2004, having previously
worked in the firm for many years as a The ABS estimates the mean price
successful sales representative. The of dwellings across Australia was
independent agency manages a rental $576,100, an increase of $8,400 over
portfolio of about 450 properties. the quarter.
Hayden has a triennial license, an NSW dwelling values increased by
honours degree in politics, has studied almost $260 billion in the year to
law and is a licensed auctioneer. Hayden Groves March while WA values rose by
$17.7 billion.
He has served on the REIWA Council
since 2010 and has been deputy He and his wife Philippa have four young
president since October 2013. He is children. QUICK FACT
also a past president of the Real Estate
Hayden is a strong advocate for the The WA Planning Commission intends
Employers' Federation WA, a role to amend the Metropolitan Region
abolition of stamp duty to be funded by
that saw him successfully advocate Scheme to rezone 11.367 hectares of
an increase in consumption-based taxes.
for WA agents before the Fair Work land in Champion Lakes at the corner of
He has also called for the retention Champion Drive and Lake Rd.
Commission for a review of the Real
Estate Award. of negative gearing when Australia
debates the findings of the much-
He has already made his presence felt
anticipated taxation white paper.
on the national stage as the currently
serving deputy president of the Real Hayden said that while the WA real
Estate Institute of Australia. estate market will be relatively soft for
the next year or so, he wanted to ensure
ISSUES that REIWA members and the general
Hayden originally lived in Victoria and public received the best services and
moved to WA in 1993, having travelled property information possible as they
west for a Christmas family reunion that negotiate this uncertain property cycle.
became a permanent visit when he was Hayden will be assisted in his role by
inspired by Perth’s weather and relaxed Damian Collins from Momentum Wealth,
culture. who was elected as his deputy.
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NEWS & FEATURES 10 REIWA NEWS
DAVID AIREY RETIRES AS A
SUCCESSFUL INDUSTRY LEADER
Retiring REIWA president David ups and downs of his four years as institute
Airey has successfully raised the president:
profile of WA’s real estate sector
during his record four year tenure Do you believe you’ve achieved your
at the helm of the institute, and is goals during your tenure as REIWA
satisfied that the industry is well president?
governed and in a strong position to Yes, I think so. You can always do better,
thrive in a recovering market. of course, but I wanted REIWA to be
David was the longest-serving president better known to the public and better
in the institute’s 97 year history and served understood. I think market stats, media
on REIWA Council for 12 years. and interaction have been the key to that.
Apart from the presidency, he worked What do you believe were your greatest
simultaneously as REIWA’s deputy achievements during your time as a
president and president of the Real Estate Councillor and institute president?
Institute of Australia from 2009 to 2011.
Well, I didn’t set out to be anything
David worked on the REIA board from
other than a Councillor so to be elected
2006.
president was an honour. But the credit
He has served on most REIWA goes to the REIWA Council team I’ve Former REIWA president David Airey
committees and networks, beginning worked with and the chief executive
in 1979 as a Councillor in the Education officer and REIWA staff. Any of my
Committee (nee Training Network) and achievements or perceived success has Hah, well I’ve had a few funny and some
in recent years contributing his industry come about through the people who would say embarrassing moments, many
knowledge to the Commercial, Strata, have supported and helped me. in front of a TV camera, but I can’t think
Finance and Audit and Risk Management of anything that really stands out. I’ve
networks. What was the biggest disappointment
forgotten to bring things to meetings a
during your time at the helm of REIWA?
CAREER few times, like glasses, agendas and files.
None really. I’ve enjoyed my time on I forgot to go to the finance meeting once
David, 65, has been selling property Council and apart from a few issues as well. I’m sure my colleagues have a few
for more than 42 years. He began his some years ago, there have been no more stories.
real estate career in 1973 when at the disagreements or problems during
age of 23 he joined Peet & Co as a sales my presidency. It’s a united team and What were the most controversial
representative. everyone working together. However, I’m reforms or policies introduced during
He obtained his agent’s licence in 1976, disappointed that despite lots of effort, your time representing property sector
becoming a branch manager that year. In meetings and dialogue, we weren’t able interests on Council or as president?
1978, he teamed up with Geoff Potter to to get the State Government to retain the Hmmm … the changes to the Residential
form Airey Potter & Associates. First Home Owner Grant for established Tenancies Act were hard to sell to a few
He is a licensed auctioneer, managing homes. The government kept chipping members but we knew we’d fought for
director of Airey Real Estate based away at it but they left the $10,000 better outcomes with the government
in Claremont and has been a REIWA subsidy in place for new homes. I’ve than what was originally proposed. While
member since 1978. said many times that I think it’s unfair and we weren’t happy with the big change
inequitable to first homebuyers. to option fees, the reality is it could have
Q&A been worse. The Commerce Department
What was the highlight or funniest
REIWA News spoke to David about the people are very reasonable and good
moment of your REIWA presidency?NEWS & FEATURES 11
listeners to our concerns. We’re in a much used to do. There’s mountains of reading available rentals have impacted hard on
better regulatory place today than ever and information to consider. I’m sure many agencies. I think we’ll have a very
before with both the government and I that emails will be the death of us all strong market once the local economy
think the opposition also. eventually, but they have to be dealt recovers. Agencies need to position
with. There’s a meeting or function for themselves for different economic times
Was it difficult fulfilling your presidency the president every few days and you and work on their strengths. Great
roles at REIWA and the REIA while at the need a partner who can handle those opportunities exist to grow businesses
same time managing your business and demands as well. And a good babysitter through mergers and acquisitions, and
family life? if you’ve got young kids. Luckily mine that will feed into better fee income and
Yes, with hindsight it was too much. Being are grown up. I’ll continue to provide better agency business.
at the REIA helm for 27 months from April whatever advice, help or assistance I can
2009 to June 2011 while also on REIWA to Hayden Groves. What do you believe are the major
Council as deputy was very demanding. legislative or regulatory challenges
I became quite ill in January 2011 from As a Councillor and long-serving facing the WA real estate industry?
a combination of overwork, stress and president, what are the most significant Both the Commerce Minister and the
travel, and ended up in hospital. I realised changes you’ve seen in the operation Commerce Department have been very
that I needed to call time and I managed of REIWA and its representation and reasonable in allowing REIWA to have
to depart the REIA by June. administration of the WA property input to legislation and regulations for real
industry? estate practice and the wider property
Four years as president was a record. Technology changes have been immense industry. Our input has been considered
Did you expect to devote so much and reiwa.com has seen incredible and respected by the department. A
of your life to improving the industry changes and growth to keep up with the strong regulatory environment is vital
when you first joined REIWA? competition and make sure members for the public to have confidence in real
No, never. In fact, I’m amazed that has support their own product. REIWA under estate agents, sales reps and the property
happened and I can now see why no Anne Arnold as CEO was completely industry, especially with building, off-the-
one else did four years as president in the reinvented with new governance and plan sales and so on. I’m a very strong
last 97 years! It’s very demanding and policies from the board down, and I advocate of sensible regulation and
I think three is probably the maximum I believe our reporting and standards are greater education for those working in
would recommend to anyone. But, hey, run as well as many public companies. our industry. Legislative challenges are
it’s been an honour and a privilege so I’m Under Neville Pozzi this has improved and not so much the issue as enforcement of
not complaining. You have to remember strengthened to the extent that REIWA breaches of consumer laws by the ACCC.
that after my first two years we had several has a very high level of respect in the The State Government is working to get
new Councillors and the then deputy lost community and at the highest levels of rid of superfluous red tape regulations
his seat, so there was nobody ready to government. and I hope this will allow our industry to
step up. Those circumstances may never become more self-regulated. That means
occur again. What do you believe are the major agents and their staff need to be well
market challenges nowadays trained, not just to sell but to provide a
Can you offer any advice for your confronting WA’s property sector? better standard of service to the public.
successor as REIWA president on how I’ve never seen such a lack of confidence We will only earn respect through open,
best to manage the role as industry in the business community and with the honest practices.
leader? public as we seem to be experiencing at
It’s vital to make sure your office is well present. The mining downturn has had What are the major reforms you’d like
managed by a competent person a huge impact on every WA business to see in terms of business practice and
and forget about being a salesperson and our members have felt it. Lower government legislation?
yourself. You can’t do all the jobs you sales numbers and the huge increase in A simple one would be to abandonNEWS & FEATURES 12 REIWA NEWS
the need for a licensed agent to hold to represent the industry as a whole. The as I’m often told! The West Australian
an auctioneer’s license. As an agent we government would certainly notice and newspaper covers all our local property
are already licensed and regulated. It’s probably listen a lot harder. All these stories as well as a column in the Weekend
a costly duplication. Payroll tax affects groups need to cooperate as a collective West on property matters. REIWA Market
70 per cent of WA real estate agencies and not worry about point scoring Reports have become regular fare on
and it’s a costly burden. The government because that will only serve to divide our radio and TV channels 7, 9 and 10 have
can’t do without the tax but I would like industry in the eyes of government. been hungry for property news. I must
it to look at some concessions for small give a special mention to the team at
business. Land tax, council and water What are your career goals following Today Tonight, the only local current
rates have grown disproportionally and your tenure as REIWA president? affairs show that does some good local
are a huge burden to commercial tenants Are you planning to continue your real estate stories that give great exposure
renting shops and business premises. involvement representing and to REIWA and also me. I give them a lot of
Many commercial property owners don’t advocating for the real estate industry credit for REIWA’s big lift in recognition.
care and pass on the costs to tenants. I or commit more time to your business?
think it’s time to consider whether some Well, I’m at an age when many people How long do you believe it will be
of this burden can be shared. I question want to retire or at least slow down, but before we will see some real growth
why land tax should not be paid by the I’m certainly not going to stop work. and activity return to the Perth market?
property owner, rather than passed on I’m in the process of making changes Despite low interest rates and plenty of
to the commercial tenant. I know that in our business so that my son Warwick finance, we have a patchy market in Perth
would not be popular but it needs to can take the lead role in the day-to-day but buyers under $500,000 are active
be considered along with all the items running of the company. I’ve also and the lower the price, the quicker the
that make up outgoings. I’m not a fan recently taken on the role of chair of the sale. As the price creeps up it gets slower
of government regulation but if small Salvation Army WA Advisory Board and and slower. Million plus deals are fewer
business suffers any more then the that involves a bit of time and input. But in number but they are happening when
State will suffer as well. Some aspects I love real estate and it’s a huge part of the property is priced competitively and
of commercial tenancies regulations my life so I can’t walk away yet. My long- is well presented. These properties take
for retail shops may be worth adopting suffering wife Megan is keen to travel and longer to sell and buyers are very patient.
for all commercial and industrial leases. we are holidaying soon in New Zealand. Buyers are looking for homes in good
Controversial? Very! Then I’m off to the US and we have two areas and value for money. Investors are
trips to Europe booked next year, so put off buying in a market with 8,000 or
Are you satisfied with the level of travel will be right up there. Plus we have 9,000 rentals, unless it’s a fire sale price. I
property industry cooperation and five adult families between us with seven think we’ll see very strong growth in Perth
fraternity in WA, and do you have any grandkids, so we’re pretty busy. property once the Sydney and Melbourne
recommendations on how the real markets cool and our local economy
estate sector can better represent or Are you satisfied with the way the media recovers. But with the huge supply of
lobby on behalf of agents, their staff has reported on WA’s real estate sector new apartments and dwellings coming to
and homebuyers in general? and its liaison with you when you were market, it’s hard to see that happening in
Well, it can always be improved. REIWA REIWA president? less than two or three years.
has worked hard with industry partners Where do I start? I owe the WA media
such as the MBA, HIA, Property Council, a big thank you. Radio is my favourite
UDIA, API and the Planning Institute to media. I like its spontaneity and live radio
have dialogue on the issues that affect is unforgiving - no ‘oops let’s do it again’
us all - common ground, in other words. that I get with TV. I’ve worked a lot with
This would be a formidable group if 6PR, in particular with Harvey Deegan
formed into a property industry alliance and Peter Bell. I’ve got a face for radio,Strata insurance
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COUNCILLOR IAN CORNELL RETIRES
WITH WISE INDUSTRY ADVICE
Respected northern suburbs real his time as a Councillor and deputy The Council has one employee, that
estate principal Ian Cornell has leader: being the chief executive officer. With
retired from REIWA Council after As an apolitical peak body, we must disastrous effect, I’ve seen Councillors
11 years during which he worked treat whichever government of the day go beyond this and flirt with the idea
tirelessly to advocate the interests with the same respect. However, the that they can deal with and accomplish
and improve the working lives of mutability between the two leading results through direct involvement with
WA property managers. political parties is interesting. One REIWA staff. Council intervention with
Ian, who is WA group chair of The of them listens and the other, in my REIWA personnel will almost always
Professionals, began his property opinion, pays lip service at best. REIWA have disastrous outcomes.
career 40 years ago and jokes that he impacts positively on the operation
What was the funniest moment of your
is still looking forward to working or at of businesses and with its members
REIWA deputy presidency and time
least observing another 40 years of real affects the lives of tens of thousands of
served on Council?
estate practice. WA people annually. It’s difficult not to
accept that on a number of occasions, Some of the wittiest and most humorous
CAREER with only limited dialogue, damage happenings have occurred at the
Ian is a licensed real estate agent, has resulted from changes made which strategic meetings outside metropolitan
auctioneer, principal and director of generally precluded institute advice on Perth. However, sadly or otherwise I
Michael Johnson & Co in Duncraig, Mt the basis of one size fits all. must adopt the stance that ‘what goes
Lawley and Morley. on tour stays on tour’.
Are you satisfied with your
He has served more than 20 years What are the major changes you have
achievements during your time as a
on the board of directors for The seen in real estate industry practice
Councillor?
Professionals and was also a founding since you first joined REIWA and were
member of the Real Estate Employers Changes at REIWA are more
elected to the Council?
Federation. evolutionary than revolutionary so any
significant changes take some time to It is disappointing to have witnessed
Ian was REIWA’s deputy president in and experienced a decline in integrity
come into effect. It is this time lag that
2011-12 and helped steer the industry and respect among fellow real estate
goes a long way toward minimising any
through significant legislative and agents in a disruptive way. The
immediate disruption. Strong industry
regulatory change over the past unabashed and systemic soliciting of
governance is vital and is a mantra
decade. employees and sellers is blatant and
for Council to live and breath. Every
He devoted much of his time as a Councillor should have contributed after erodes the confidence of the public
Councillor to the Property Management a long stint and, after the debating of and industry peers. REIWA’s role of
Network, a sector of the profession issues, made the industry stronger and sheriff has been made deficient since
which he believes to be “the most REIWA a more resilient entity. the ACCC decided they know best in
cooperative and thus proactive of all the matters of protocol, ethics and integrity!
REIWA brain trusts”. What are your views on the Such intervention distorts.
organisational structure, management
Q&A and operation of REIWA after so many What do you believe are the major
years of close liaison? challenges nowadays confronting
REIWA News asked Ian what he WA’s property management sector?
believes were the most significant The critical element is for Council and
executive to be and act as one. Council What I suggest we will see confronting
changes he saw in REIWA’s
must never enter into operational issues many agents in the immediate future
representation and administration
and should remain focussed on strategic is an insurance issue. The litigation
of the WA property industry during
initiatives for the executive to develop. directed towards agents, bogus andNEWS & FEATURES 15
Former REIWA Councillor
Ian Cornell
otherwise, is the ever increasing claims off managing property themselves. The more than 95 per cent of the sales
involving property management, both plethora of legislation, regulation and transactions, there are many threats
by owners and tenants. Firstly with tenancy awareness is a minefield for and challenges in the electronic space
questionable management practices those who aren’t entirely acquainted. that could see our involvement lessen.
and also with defective maintenance Statistics show a general shift from We used to be the gatekeepers of
issues which can be the cause of self management to agencies that information, but now that same data is
preventable injury suffered by tenants. professionally manage property available to the public at a small cost.
How important is PI insurance along services. However, it is our skills centred around
with ensuring a prompt response to all experience and negotiation which
tenant concerns? What do you believe are the major cannot be replaced and can make an
challenges facing the WA real estate otherwise stressful process pleasant
Several years ago you expressed industry? and memorable for sellers and buyers.
concern about a shortage of property Accreditation on a national level should
managers and inadequate promotion be sought as a priority for all agents and How have you coordinated the
of property management as a career their staff. The mobility of personnel role of REIWA deputy president
by the industry. Do you believe that is across the borders of Australia should and Councillor with your business
still the case? not be inhibited or regulated because dealings and family life?
Some of this was generated by outside of a political state boundary. By way I thank my wife Kate for her unyielding
markets over which we have little of example, ASIC has taken over the tolerance, my partners for their
control. For example, the attraction to regulation of mortgage brokers. Based generosity to enable me the time for
the mining areas put extreme pressure on discussions with a few firms in that REIWA, my fellow Councillors for their
on both personnel and financial return. sector, many brokers consider the humour and veracity, and my staff for
The road to a property management changes beneficial both to the public smiling at the extra work it generated.
career has no directional signage and and their profession. I appreciate that it’s easy to plateau as
it’s still a concern that many people find you get older but you need to keep
their way accidentally rather than by What reforms would you like to see being mischievous.
pursuit. The burnout rate is high and in terms of business practice and
although the technologies available government legislation? With your retirement from Council,
allow property managers to look after No more legislation or regulation. what are your career goals and do
an increasing number of properties, Government should consult with REIWA you plan to continue advocating the
personal contact remains paramount more often and listen to the industry, interests of the property sector?
and demanded by landlords. which is not self-centred and generally I believe protection and advancement
takes a broad perspective. We are a of the profession, which is in my DNA,
Do you fear that more property service industry which can speak for will prevent me from walking away.
owners might choose to manage sellers, buyers, owners and tenants. Our business at Michael Johnson &
their own properties instead of Co hasn’t reached an optimum level
commissioning a professional agency, Do you have any recommendations and there is still plenty of growth to be
due to digital advances such as on how the real estate sector can achieved. There are also challenges
property management apps? better represent or lobby on behalf of from bureaucrats and others of which
To the contrary, really. The agents, their staff and homebuyers in we need to be constantly aware and
professionalism and ongoing training general? robustly involved to prevent.
of REIWA members and property The real estate agent must remain
managers is attracting owners away and be recognised as relevant to
from the perception that they are better the transaction. While we conductNEWS & FEATURES 16 REIWA NEWS
FASCINATING FACTS FROM REIWA
ARCHIVES
REIWA’s Archiving Committee is and recording it in an easy-to-access, DONATIONS
still meeting regularly to finalise searchable format. If any of you have interesting artefacts
the archiving of important institute that you’d like to share but more
records. CENTENARY 2018
importantly donate, we’d be delighted
The main stayers of the committee, Les As some of you may be aware, on 20 to receive them.
Wearne, Paul Druitt and Bryan Mickle, December 2018 we will celebrate the
Donations can be in the form of
have been sifting through decades centenary of REIWA.
photographs, publications, certificates,
of historical information under the There is much to be done in preparation trophies or any other collateral that
guidance of Jon Readhead. for what will be a year-long celebration others may find of interest when
Jon is our consultant archivist from to commemorate the achievements and looking back over the various decades
the Royal Perth Yacht Club who has milestones of our organisation. of REIWA.
significant experience in ensuring Planning is well underway and one of Please contact Kate Gorce-
important records are preserved and our first objectives before the end of Macham on 9380 8221 or
maintained. 2015 is to make application to the State kate.gorce-macham@reiwa.com.au if
Much of REIWA’s historical detail is Library of Western Australia with a view you would like to discuss a donation.
recorded in minute books dating back to an exhibition showcasing 100 years
to 1918. We’ve been fortunate enough of the institute. INTERESTING ARCHIVAL FACTS
to secure the resources of REIWA staff In 2016 we’ll be sorting and selecting Did you know the following?
member Sonja Prokop who has spent archives, preparing an historical
• REIWA used to be known as the
considerable hours extracting key timeline and considering inclusions for
Auctioneers’, Land & Estate Agents’
information from the minute books our centenary publication.
Association of Western Australia
(ALEAAWA) from 20 December
1918 to 25 October 1944
• It was reported to an ALEAAWA
Council meeting on 8 March 1923
that “an unlicensed auctioneer
had been reported to the Police
Department and his sign removed”
• The first social event of the
ALEAAWA appears to have been
a bowling match organised
to bring members together,
as resolved by ALEAAWA
Council on 14 February 1924
• The first meeting of REIWA Council
was held at 215 Hay Street (the old
building) on 22 March 1977
• The first meeting of REIWA Council
was held at 215 Hay Street (the new
building) on 2 August 2012.NEWS & FEATURES 17
“Of all national assets,
archives are the
most precious; they
are the gift of one
generation to another
and the extent of our
care of them marks
”
the extent of our
civilization.
Sir Arthur Doughty, July 1916
The archiving of REIWA records
has uncovered some fascinating
reminders of years gone by, including
evidence that a bowling match was
the first organised social eventNEWS & FEATURES 18 REIWA NEWS
ARE KEYSTART
LOANS AT RISK? Keystart chief
executive officer
John Coles
Concern has been expressed years, with an average of 80 per cent KEYSTART RESPONDS
within WA’s real estate and land below the median land price for Perth. REIWA News asked Keystart chief
development industries about REIWA has congratulated the executive officer John Coles if he agreed
State Budget revenue measures government for surpassing its target and with ERA observations that because
that might see Keystart sell off welcomed the new 2020 benchmark to Keystart’s loan book is skewed towards
some of its loan book to the private deliver adequate affordable, social and higher risk home owners, there are risks
sector, raising questions about community housing. for the state in the event of a downturn
the stability of affordable housing in the state economy:
loans to low income earners. ERA FINDINGS
Mr Coles said Keystart’s arrears are
Keystart, established in 1989, is now The Economic Regulation Authority substantially less than the industry
worth about $5 billion and lends money released the final report of its inquiry benchmark and therefore it has been
to first homebuyers and other owner- into microeconomic reform in June, demonstrated over a long period of
occupiers who qualify. finding no compelling reason for time that its clients are not higher risk
For example, singles with an income Keystart to be publicly owned if the homeowners.
up to $95,000 and families earning up private sector could perform the same
to $135,000 may be eligible for a loan role of managing financial risk. Will the sale of part of the Keystart
requiring a 2 per cent deposit and no The ERA expressed concern that loan book have any impact on the risk
mortgage insurance. Keystart’s loan book is skewed towards profile of the loan book maintained by
higher risk homeowners and poses Government?
KEYSTART SUCCESS a State risk if there’s an economic Risk mitigation will be a strong
The WA Government has exceeded downturn without an adequate consideration in finalising the appropriate
its target of providing 20,000 new compensation buffer from the interest option for partial divestment of loans.
affordable dwellings over the past five rates being charged on loans. While the project may result in a change
years and has increased its benchmark The State Government has clarified that in the average loan-to-value ratio of
to 30,000 by 2020. it has no plans to sell off or restructure Keystart’s loan book, it will reduce
Under the government’s affordable the business but will sell or securitise a the overall level of credit risk Keystart
housing strategy, low income earners portion of the KeyStart loan book, with is exposed to. Like other mortgage
have been provided with 10,000 low industry players concerned this might financiers, Keystart holds appropriate
deposit Keystart home loans, 5,400 impact on the affordability of interest capital reserves to ensure it is
social housing properties, 2,700 rates charged to homebuyers. appropriately provisioning for credit risk
discounted private rentals and 1,900 and this will be reviewed and adjusted to
The State Treasurer announced as part
shared equity homes. take account of the transaction.
of the 2014-15 Budget that securitisation
State Government data show Keystart of part of Keystart’s loan book would Will the sale have any impact on the
has provided nearly 60,000 low-deposit be further investigated as part of the interest rate charged by Keystart to
loans over the past 25 years, with 86 second tranche of the Government’s homebuyers?
per cent of current borrowers being first asset sales program.
It is standard practice that the terms and
homebuyers. The Department of Housing The Government is currently conditions of borrower’s loans will not
and its partners have delivered 15 per cent undertaking this evaluation before a change as part of any divestment. While
of all WA land supply over the past five decision on strategy is made. details are yet to be determined, it is notNEWS & FEATURES 19
intended to impact upon the interest loan book would not impact upon
rate charged to borrowers. the criteria or process for writing new
loans. Indeed, by reducing Keystart
To find a buyer for part of the loan debt this would assist the Government
book, will it have to be the most to continue to write new Keystart loans
risk secure portion of the Keystart in a sustainable way.
portfolio and how will that market
force not impact on the stability of It’s estimated that additional loan
the residual loan book or be able to guarantee fees will cost Keystart
provide adequate dividends to the $125,484,000 from 2015 to 2019.
WA Housing Authority? Will this impact either the amount or
See my answer to the earlier question structure of affordable low-cost loans
about Keystart’s loan book risk that Keystart will be able to provide
profile. This project is currently in the for low income earners?
planning and assessment stage. Risk The loan guarantee fee is not being
management and financial distribution passed on to the homebuyers and does
impacts will be considered before a not restrict funding sources.
final decision is made by Government.
Are you confident that Keystart can
Has Keystart yet determined which maintain its excellent results over the
portion of its loan book will be past five years and achieve its revised
securitised or is there a criteria that benchmark of providing 30,000 new
describes what sorts of assets will be affordable dwellings by 2020?
considered the most suitable for sale? The work done so far on the project
This will be covered in the next stage gives no reason to suggest that past
of the process and it will be interesting performance cannot be maintained or
to see the range of options we receive that there is any threat to the 30,000
from third parties. affordable housing units target which is
a whole of Government target.
Can you give an assurance to land
developers and real estate agents
that securitisation of part of the loan
book won’t tighten the criteria for
borrowers at a time when low income
earners in particularly are having
difficulty finding an affordable home?
The intent of the exercise is to provide
long term continuation to the scheme
and avoid volatile criteria changes.
Divestment of part of the KeystartNEWS & FEATURES 20 REIWA NEWS
SURVIVING AND SUCCEEDING IN
A TOUGH MARKET
Times are said to be tough on the ASK AN EXPERT always will be a need for people to
mean streets of WA’s residential More than 14,000 WA properties were have housing, whether it’s a first time
property market, with sales reps at listed for sale in winter, compared to purchase, a new build, an upgrade, a
the coalface battling to lure buyers 11,000 in June 2014, and in June there downsize or a shift across.
who have enough confidence to were 5,552 WA property sales, down
purchase their first home, upgrade 35 per cent on a year earlier. What have visitor numbers been like
or invest. at home opens?
There is no doubt that competition
Average days on market for traditional is fierce to find a buyer - particularly There is definitely a decline in the
private treaty transactions stretched to compared to the boom market enjoyed numbers at home opens but there are
71 days in August, the longest in three since many younger sales reps began still plenty of buyers around. They are
years, and there is a perception that their careers. just cautious and reserved.
sales are as scarce as hen’s teeth.
So can a sales representative make a The Perth market has just gone back to
Doomsayers believe values will keep decent living nowadays and is it still
falling because immigration has dried normal, that’s all. Utopia is over for now
possible to keep a smile on the dial of your
up and young people in particular are so roll up your sleeves, get in there and
agency principal by securing transactions
resigned to life as a tenant or in the spare ground and pound.
that keep the listings ticking over?
bedroom at their folk’s place.
REIWA News spoke to Sales Are sales reps receiving negative
NEGATIVE MARKET INFLUENCES Representatives Network chair feedback from sellers frustrated by
Gloomy headlines and weak confidence Paul Di Lanzo: the lack of buyer interest at their
have created a soft real estate market that asking price?
Which price brackets are selling more
puts pressure on sales reps whose job it is If you prepare your seller for a price
or less and what are the economics
to satisfy vendors, buyers and their boss.
or policies that are influencing these that may not be what they expect, or
Distribution of the First Home Owners trends? you price it super well initially, you will
Grant has shifted away from the established encounter this far less. To reduce this
From what I can see, properties are
market with FHOG applications down 21
selling in most price ranges including happening to you, use case studies to
per cent in the year to June, and the number
the high end despite commentary that show the seller that they are not alone in
of people migrating into WA has tumbled
they are not. the price correction that is happening
in recent years.
The pending change to the first and give them strong information.
State debt has soared and WA’s
homebuyer grant is definitely having an If there is no interest in a property in the
unemployment rate has been
effect on established properties in the first two weeks, it’s usually price. Shift
discouraging. Tens of thousands of direct
$450-550,000 price range as people
and indirect jobs have been shed in the the price and if that doesn’t change
move toward building new.
resource sector, with China shaky and your response then you know it’s just a
talk of commodity prices remaining weak The end to the mining boom has seen serious lack of buyers.
for years to come. properties affected across all price
spectrums but, remember, where one It’s not about giving a seller’s home
Such reports have created negative
sector has downturned there are always away. It’s about finding out where it sits
sentiment in the buyers’ market despite
other sectors of the labour market that in the market, and if the seller doesn’t
the proportion of income required to
are performing well. Some people are want to sell at market price then you
service an average mortgage in WA
dropping 1 per cent to 24.4 per cent in making more money now than they have your answer. But you had better be
the June quarter, as well as record low were during the boom! thoroughly marketing the home before
interest rates that are tipped to remain Doesn’t matter what is happening you tell the vendor exactly what the
cheap for some time yet. in the world. There has been and market is willing to pay.NEWS & FEATURES 21
Do you believe sellers have waiting for a buyer to turn up is
yet fully come to terms with not good enough!
the new market and price
expectations? Do you agree with some
industry experts who say reps
I think sellers are starting to come
should dress up as Superman,
to terms with it but we still have
involve sports personalities,
some way to go. Agents also
host suburb movie nights and
need to come to terms with it as
similar marketing ploys to draw
some are still pricing homes with
attention to their listings?
the market of six months ago in
their mind. Not to offend anyone who
does this, but would you buy
The Perth market is starting
off a salesperson dressed as
to find its feet and I can see
Superman when choosing
a bottoming out of the price
the biggest asset in your life?
coming for this cycle.
Movie nights are a great way of Sales Representatives
Have you heard any reports of thanking your current clients and Network chair Paul Di Lanzo
the tough market conditions also attracting new ones, so I’m
forcing reps out of the all for that. of super-efficient work than 10 hours of
industry? Using sports personalities just being there.
This is something on a lot of can have its merits in certain Be structured and be precise and don’t
peoples’ lips. It will see some situations but do you need all the forget to make time for your family and
people leave the industry, for gimmicks or do you just really loved ones.
sure. need to adopt a great pricing
However, to me this normal Perth and marketing strategy and work Which mediums are reps finding
market is a time when you can in tandem with your seller to the most effective in their property
make a name for yourself. If you guide them through? marketing to draw potential buyers in
sharpen your skills and have the Your strategy should be so well the current market … digital internet or
courage to take it on head-first, thought out that every move traditional print and media?
then why should you leave? involves tactics to attract the I could talk on this very point for hours.
buyer, deal with the buyer and I believe you need a 360 degree
Has it proved more successful get the best result for your seller. campaign that covers all mediums.
to draw buyer interest with A great strategy plus tactics
greater spending on traditional I always say this … if a buyer isn’t on
equals results.
marketing such as ads and is the internet actively looking today,
that cost-effective for sellers in Do sales reps have to give up how would they know your home is for
the current weak market? more of their private time to sale? There are two types of buyers -
succeed in the current market? conscious buyers on the internet and
This is so simple to answer …
yes! You are in competition so I must say that working longer unconscious buyers who may not be
make sure your listings stand and harder is a given in this active, pulled out of looking or didn’t
out. Competition for buyers is so market, but you have to be smart know they wanted to buy another house
strong that you need to strongly about the hours you spend right now.
market a home. Taking photos, doing the right things. You can So do a premium campaign based on
sticking it on the internet and do 10 times more in three hours digital media and print media. Yes, printNEWS & FEATURES 22 REIWA NEWS
media still works and we still get buyers Do you have any tips on how sales If not, how long do you believe it will
looking in the paper, especially the reps can generate better turnover in take before WA’s real estate market
older generation. Stop at any coffee the current weak buyers’ market? has achieved balance?
shop on Saturday morning and see how I think sales reps need to be honest with My gut feeling is that we are starting to
many people are still reading the paper. a seller from the time they appraise the head towards a balanced market now,
Signage, local market flyers, database property. I also think sales reps need to but it could still take another six months
work and the big one for me which start becoming 30 day sellers. In other to reach its perfect balance.
is social media. Viral campaigns are words, create a strategy to sell a home
After 18 years in the property industry,
delivering us 10 times more views in 30 days.
my instinct says we are in for a period
on a property than any other form of After all, well priced, well marketed over the next couple of years at least of
marketing. But don’t promote property properties always sell within that little or no growth. In other words a flat
on your personal page. YouTube video timeframe and usually for the best price. market, which is not unexpected after
channels are great too but be careful of The simplest approach to this is taking 10 years of growth.
what you do and remember that stuff an approach where you pre-frame your
stays out there forever. People need to realise that the price of
sellers for a price change after 14 days in
real estate is not going to continually
You can only ever guarantee a great the market before you list.
rise every year but will have sustained
price if you find as many buyers It needs courage and directness but a period of normal or flatter growth.
as possible and get more of them someone has to give it to them straight. However, over a 10 year period you will
emotionally connected to the home If it’s not sold within the first 14 days then
see growth regardless of what happens
to create more offers. Simply getting something is wrong, in my opinion, and
in the world.
one or two buyers through a home after 21 to 30 days your listing is already
and saying you got a great result is not stale in today’s market. Real estate is and has always been a
working in your seller’s best interest. long-term growth proposition. Like
So why change your price after 40 or
planting a tree.
What is the opinion of most sales reps 50 days when the market has gone?
toward the growing auction sales Remember, technology has sped up
process? our market so much that the hot buyers
come and go fairly quickly and you are
Most agents say that auctions don’t
left to scratch around for the warmer or
work here in WA. Why? Because most
cold buyers after that. QUICK FACT
agents don’t understand them so The Metropolitan Redevelopment
therefore can’t educate a seller on its As we enter the summer months, do Authority is considering submissions
merits. you believe sales reps will see buyer for a planned redevelopment of more
than 10 hectares of land in Armadale
It’s a beautiful process if you learn it and enquiries lift to traditional levels? bounded by Forrest Rd, Fifth Rd and
use it well. In my opinion there is only Traditionally, everyone says that more Green Avenue. The MRA anticipates
the plan will deliver as many as 820
ever two ways to sell anything in the stock comes to market in spring and to new dwellings between two and eight
world … price it or auction it! There is a some extent it is very true. There is now storeys in a transit-oriented urban
growing number of agents successfully a number of buyers who I’m finding are renewal project offering higher density
living around the Armadale train station
selling nearly all their stock with the waiting for that to happen. However,
and toward the town centre.
auction method and I think its popularity it will mean more competition for the
is growing strongly. same number of buyers.You can also read
