REIA NEWSISSUE NINE: FEBRUARY 2012

ALSO IN THIS ISSUE:

VOTE FOR INDUSTRY TVNOMINATED FOR A LOGIE

LAST CHANCETO ATTEND THE NATIONAL AWARDS

REIA CALLS FOR GOVERNMENTTO ASSIST FIRST HOME BUYERS

CONSUMER SENTIMENTFAVOURS HOME PURCHASE

MEETING WITH THE PRIME MINISTER:

REIA CEO MEETS WITH THE HON JULIA GILLARD

WANT TO FIND OUT MORE ABOUT PROMOTING YOUR BRAND IN REIA NEWS?

CONTACT REIA MANAGER COMMUNICATIONS RHIANNON MCCLELLAND ON 02 6282 4277 OR AT RHIANNON.MCCLELLAND@REIA.COM.AU FOR FURTHER INFORMATION.

Welcome to the first edition of REIA News for 2012 and what is set to be a very full and exciting year for the real estate profession.

The REIA office has already had a busy start to the year with a focus on our Pre-Budget Submission. Our manager policy has been busy working on the REIA’s

submission to ensure that our issues are heard by Government. An in-depth overview of the document will be published in next month’s edition of the newsletter. A copy is also available on the REIA website (www.reia.com.au)

Another important event in our advocacy efforts is the REIA CEO’s invitation to meet with the Prime Minister last month alongside Mr Peter Strong from the Council of Small Business Australia (COSBOA). This is an important milestone for the REIA and the profession. A full overview of the meeting is included as this month’s feature article.

And now for the most exciting event on our calendar, the REIA National Awards for Excellence. With the national event just over a month away, we encourage all members of the profession to come along to this important

networking event, support their fellow nominees and take advantage of all the holiday mini-escapes that Darwin has to offer. We have provided all the information you need in this month’s edition to get your tickets booked and join us in Darwin.

I would like to thank our wonderful sponsors who make the national awards possible; Terri Scheer, realestateVIEW.com.au, Direct Connect and REI Super. I urge the industry to support these wonderful businesses so we can continue to hold a national awards event and honour the highest achievers in the industry.

Next month’s edition will include a complete overview of the national awards event.

Ms Pamela Bennett REIA President

PRESIDENT’S REPORT

WELCOMEFROM REIA’S PRESIDENT

It was a humid mid-summer Canberra afternoon when we drove through the Lodge gates, parked our car in the driveway and were met at the front door by the Prime Minister, Julia Gillard, on Thursday 19 January.

The roses were in bloom, the lawn freshly mown and tea was served in fine bone china cups. Not an everyday occurrence in the life of Real Estate Institute of Australia CEO Amanda Lynch but the opportunity to meet with the Prime Minister was too good to miss. Ms Lynch, as Deputy Chair of the Council of Small Business Australia (COSBOA), accompanied COSBOA CEO Peter Strong to a cosy “fireside discussion” on the situation facing small business in Australia.

After settling into the comfortable couch where President Obama had sat just weeks earlier, we had a very constructive half hour talking about the real small business issues facing small business people every day in Australia. Australia’s real estate agencies employ an average of 8-10 employees and REIA, which is a foundation member of small business advocate COSBOA, is in the heartland of small business.

Our membership of COSBOA is important to us in terms of a collaborative approach to issuesaffecting small business, such as taxation, regulation changes, changes to the ForeignInvestment Review Board guidelines, the National Consumer Credit Protection Act, access to finance for small business, superannuation, paid parental leave and Fair Work Australia.

“...the meeting is a strong indication of the importance the Government places on engagement with small businesses.”

The private meeting at the Lodge is a strong indication of the importance the Government places on engagement with Australia’s 2 million small businesses.

Prime Minister Gillard said the 21st century had been coined the Asia-Pacific century and it was important that small businesses have the agility to respond to the opportunities provided by our positioning within the region.

ON THE COVER

REIA CEOMEETS WITH THE PRIME MINISTER

Mr Strong presented a compelling case for an independent Small Business Commissioner to provide us with the firepower to match the small business agencies found in Japan, South Korea, Singapore, Laos, Brunei, Malaysia, Indonesia, Thailand and Cambodia, and the US. Australia and New Zealand do not have a dedicated small business agency; Australia has not had one since the closure of the National Small Business Service in 1976. Mr Strong also spoke about the need to simplify compliance procedures for small business through removal of red tape, citing in particular the collection of superannuation by small business which was time-consuming and was a role that could be taken over by the Tax Office.

Ms Lynch raised with the Prime Minister the pressures on small business in the areas of workplace relations and taxation. Prime Minister Gillard spoke about the

process that was in place as a result of the 2011 Tax Forum for the Treasurers of Qld and NSW to examine the harmonisation of state taxes and report back to COAG. Ms Lynch said that REIA would like this process extended to stamp duty reform and wanted the removal of small business ‘nuisance taxes’ like the fire services levy and insurance taxes.

“...REIA would like this process extended to stamp duty reform...”

Discussions then focused on the surplus of retail space and the problems faced by retailers with carparking and zoning issues. Mr Strong will raise these issues at the National Retail Council of Australia on which he is represented and he is working

with the REIA to convene a roundtable on retail issues at Parliament House in May.

The allotted time went quickly but much ground was covered. COSBA and REIA were pleased that there was a receptiveness to our issues by the Prime Minister and a commitment to hold further discussions with small business and develop a forward-looking set of initiatives to assist this important sector – which represents the largest group of employers in Australia – to adapt to and increase our share of the economic opportunities presented by the stellar growth of our region. REIA and COSBOA will continue to push these and other issues in our 2012-13 Federal Budget submissions and in our collaborative advocacy platforms.

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The regular monitoring of arrears is an important task for property managers to minimise potential loss of rental income for landlords.

If a tenant falls behind in their rent, it can be a very long and costly process to resolve, andproperty managers don’t want to be responsible for leaving the landlord out of pocket.

While landlord insurance is designed to cover loss of rental income in certain situations,claims can be invalidated or reduced if appropriate steps are not taken after a tenant hasfallen into arrears.

If a landlord needs to lodge an insurance claim for loss of rental income, the insurer will needto see that the correct notices

“...the property manager will need to send a termination notice...“

have been issued in the specified timeframes.

By monitoring arrears daily, property managers can issue the tenant with the appropriatenotices immediately.

If the tenant continues into rental arrears, the property manager will need to send a termination notice to the tenant which clearly states a vacancy date.

The number of days in rental arrears before a termination notice can be sent and the timebetween presenting the notice and requesting vacation varies around Australia, so it is

important for property managers to be familiar with their local tenancy laws.

If the tenant does not vacate the property by the date stated in the termination notice, the property manager will be required to submit an application to the relevant tenancy authority torequest a hearing. This can sometimes take up to two weeks.

“The tribunal has the authority to grant a procession order to evict the tenant...”

INDUSTRY ARTICLE

DON’T FALL BEHIND IN ARREAR MONITORING

The tribunal has the authority to grant a procession order to evict the tenant, however theymay allow one or two weeks to vacate the property.

“... the tenant may refuse to leave, so a return to the tribunal may be necessary.”

Even then, the tenant may refuse to leave, so a return to the tribunal may be necessary togain an eviction order. This requires a bailiff or sheriff to perform the eviction and changelocks.

While the landlord would have lost a significant amount of rent by this point, tenants can alsocause malicious damage to

the property in the meantime, resulting in another expense.

This is why landlord insurance is so important.

For further information, visit www.terrischeer.com.au or call 1800 804 016.

About Terri Scheer InsuranceTerri Scheer Insurance Pty Ltd (Terri Scheer). Terri Scheer provides insurance cover for landlords, helping to protectthem against the risks associated with owning a rental property.

These include malicious damage by tenants, accidental damage, landlord’s legal liability and loss of rental income.

Terri Scheer acts on behalf of Vero Insurance Ltd, the insurer which issues the insurance cover.

Terri Scheer has not taken into account the reader’s or their client’s objectives, financial situation or needs.

If you or your client is interested in any of Terri Scheer’s insurance products, the relevant Product Disclosure Statement should be considered first. It can be viewed online atwww.terrischeer.com.au or obtained by calling 1800 804 016. Based in Adelaide, Terri Scheer services all states,territories and capital cities.

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The countdown to the national awards is now on with the event just over a month away. Below we’ve provided a quick overview of everything you need to know in the lead-up to the national event.

EntrantsIf you are a nominee of the 2012 REIA National Awards for Excellence and you have not booked tickets, it is important that you book your tickets before 14 March 2012 to avoid missing out. Likewise, if you have not received any correspondence from REIA on your role and responsibilities on the day of the awards event, please contact REIA Manager Communications on 02 6282 4277 or at rhiannon.mcclelland reia.com.au. If you are not

sure if you are a nominee in the national awards, please visit the REIA’s Latest News tab on the homepage of the website on Monday. A full list of nominees will be announced on the website after the Real Estate Institute of Queensland (REIQ) holds its awards event tomorrow night.

Tickets and accommodationIf you have not yet booked tickets and accommodation for the national awards, you have just over a month to do so. Make sure you don’t miss out by booking today. Click here for further information.

Additional events and activitiesThe Real Estate Institute of the Northern Territory (REINT) has been kind enough to organise a range of activities and mini-escapes for you and your family to enjoy while you are in the top end.

In addition, don’t forgot about the Impex luncheon being held to coincide with the national awards and the study tour to Singapore commencing the week after the awards. For further information, click here.

NATIONAL AWARDSUPDATE

KEY DATES TO REMEMBER

_____________________________

14 March 2012Ticket sales for the national awards close._____________________________

14 March 2012Accommodation bookings for the national awards close._____________________________

22 March 2012National awards eventDarwin Convention Centre

In its Pre-Budget Submission REIA has called on the Government to address declining affordability for first home buyers by increasing the amount of the First Home Owners’ Grant and by allowing first home buyers access to their superannuation for the purchase of a home.

During 2011, activity in the construction industry continued to decline as the stimulus-related public building activity ran down and household demand, including first homebuyers, was subdued. Higher interest rates and constraints on availability of investment capital exacerbated the already acute housing supply imbalance. Higher

borrowing costs also slowed down the number of housing loan commitments, adding to deteriorating housing affordability and almost halving the proportion of first home buyers from the levels of mid 2009.

The graph below shows the number of loans issued to home

During this period, the number of home loans issued to home buyers increased 4.9 per cent while the participation of first home buyers increased from 16.7 per cent to 20 per cent.

Whilst housing affordability improved slightly in the

REIA CALLS FOR GOVERNMENTTO ASSIST FIRST HOME BUYERS

September quarter of 2011 as shown in the graph above the trend is for declining affordability. The November and December 2011 interest rate cuts will help housing affordability but will not be sufficient on its own to address housing affordability in Australia.

One of the most important housing policy instruments in assisting first home buyers

This article is brought to you by REIA Manager Policy, Jock Kreitals. Jock can be contacted at jock.kreitals@reia.com.au

with housing affordability is the First Home Owners Grant (FHOG), which was introduced in July 2000. The REIA is urging Government to review the amount currently provided as the relative size of the grant has declined markedly in relation to house prices. When the FHOG was introduced in July 2000, the Australian quarterly weighted average median house price

was $220,443. The Australian weighted average median house prices in the most recent quarter for which data is available, September 2011, was $521,238. The graph on the following page shows the contribution of the grant towards the purchase price has more than halved from 3.2% to 1.3% over the period.

The REIA is concerned that the overall level of homeownership in Australia has not shown significant improvements since 1995 and that first home buyers find it increasingly difficult to enter the housing market. The REIA thus proposes that the Commonwealth Government should establish a scheme which would encourage young Australians to contribute to voluntary superannuation by allowing access to these resources for the purposes of raising a deposit for a first home. The scheme would be an adjunct

to the First Home Savers Account but would allow flexibility for the saver to decide whether all or part of the voluntary superannuation payments was needed to augment the home purchase. The integrity of compulsory superannuation would be maintained by limiting the scheme to the voluntary

superannuation contributions of first home buyers.

In its submission, the REIA has called for the Government’s consideration of nine specific matters aimed at contributing to Australia’s continuing economic development, addressing the supply of rental housing,

improving affordability, ensuring adequate access to housing finance and improving the operating environment for small business.

For the past seven months a brand new TV show about the local property market has been airing on Channel 31: Melbourne Property TV.

Sponsored by the Real Estate Institute of Victoria (REIV), the programme has been nominated for an award in the 2012 Logies.

The program is the only weekly TV show about the residential property market, making it great viewing for people looking to buy, sell or lease. Each episode profiles a suburb in Melbourne, looks into some great homes on the market, and features a panel of property experts dissecting the latest news and issues. In the suburb profiles, local REIV

Members and other well-known local identities talk about what makes their part of Melbourne special. It’s a great way to learn about different parts of the city.

The program screens on Monday nights at 8.30pm. If you have missed an episode or haven’t seen the program yet, simply log on to www.reiv.com.au and watch it there.

Melbourne Property TV has also been available in regional NSW, ACT and southern Queensland though TV4 on Digital 64.

This nomination is extremely exciting for the profession and the REIV and is a great opportunity for you to vote for a program that showcases the work of the profession.

Show your support by voting for Melbourne Property TV in

the category of ‘Most Popular Factual Show’ in the 2012 TV Week Logie Awards. To place your vote, click on the link below.

Voting and competition close February 19, 2012

VOTE FOR MELBOURNE PROPERTY TVAND SUPPORT YOUR INDUSTRY

HOW TO VOTETo vote for your favourite TV program, click here.

Consumer confidence is an economic indicator of the health of the economy from the perspective of consumers. It takes into account the feelings of individuals with respect to their own current financial wellbeing and the health of the economy in the short term and longterm.

There are a number of different surveys carried out which reflect the degree of optimism that homebuyers, existing and potential, feel.

Published monthly Westpac – Melbourne Institute Consumer Sentiment Index is an average of five component indexes which reflect consumers’ evaluations of

their household financial situation over the past year and the coming year, anticipated economic conditions over the coming year and the next five years, and buying conditions for major household items.

Genworth, a lenders mortgage insurer, measures the sentiments of homebuyers using five components: the proportion of monthly income currently used to service debts, maximum loan to value ratio comfortable in borrowing, last 12 months repayment history, next 12 months repayment ability, and whether it is a good time to buy a home.

Mortgage Choice holds its National Consumer Sentiment Survey annually.

Over the past year, negative consumer sentiments were caused by rising costs of living, mixed domestic economic

conditions, and instability in global economy.

Rising costs of living were the biggest concern.

Mortgage Choice’s survey reveals that 55% of the respondents had dipped into their savings to help make ends meet, and 7% save more to combat the price hikes.

“Mortgage stress in Genworth’s Streets Ahead report is estimated at 25%...”

Mortgage stress in Genworth’s Streets Ahead report is estimated at 25% – a higher level than in the depths of the GFC. Despite the mortgage stress, 85% of borrowers experiencing mortgage stress were not behind

CONSUMER SENTIMENTFAVOURS HOME PURCHASE

in repayments, and 41% of the respondents make overpayments on their mortgage.

Genworth’s survey findings show that first home buyers are more optimistic than other consumers about the future despite high debt levels, with 40% of recent first home buyers surveyed putting more than half of their monthly income towards servicing debts.

To save for a deposit, potential first home buyers are cutting back on spending: 68% on luxury goods, 60% on clothes, 56% on groceries and other necessities, 56% on holidays, 33% on entertainment and 47% take on more work. For almost 25% of those who bought their home after 2000, it took five years to save for deposit.

Despite the two consecutive interest rate cuts in November and December of the last year,

the Westpac – Melbourne Institute Index of Consumer Sentiment fell 8.3% during December 2011 to increase 2.4% in January 2012.

“... the Mortgage Choice survey participants said they would be more likely to buy property if interest rates dropped further in the next 6 months.”

After the interest rate cut in November 2011, 26% of the respondents of the Mortgage Choice survey said that they would be more likely to buy property if interest rates dropped

further in the next 6 months and 17% would be more likely to buy if the interest rate stayed stable. ABS statistics revealed that in November 2011 the number of commitments for owner occupied housing finance rose 1.4%

According to ABS data, 70% of Australian households own their home – a level that has been stable since 1971. The Great Australian Dream of home ownership is not going to fade with 36% of Genworth’s survey respondents believing that it’s a good time to buy a home and 63% of Mortgage Choice survey respondents considering that property is safer than shares.

This article is brought to you by REIA Research Officer, Evgeniya Hawthorne. Evgeniya can be contacted at evgeniya.hawthorne@reia.com.au

Industry UpdateIndustry news from around Australia

NSW: Strata laws need to be simplified

Strata laws in NSW need to be simplified and the decision-making process updated, the Real Estate Institute of NSW (REINSW) has said in relation to a state government review of strata legislation.

(Source: Real Estate Business)

___________________________

QLD: Bligh’s Building Boost extended for three months

Following industry demand and significant momentum in applications in recent weeks, the Bligh Government will extend the $10,000 Queensland Building boost for a further three months.Deputy Premier and Treasurer Andrew Fraser said the Boost was beginning to make headway

in the housing industry, with a $10,000 grant available to all home purchasers buying or building a new home worth less than $600,000.

“Industry has come to me asking for an extension to the Boost and that’s what we’ll provide,” Mr Fraser said.

“They’ve said to me, and the recent application numbers show, that the Boost is increasingly gaining traction with potential buyers.

For further information,click here.___________________________

NT: Buildbonus scheme extended

The Chief Minister Paul Henderson today announced the Territory Government’s Buildbonus

grant scheme will be extended for a further six months to 30 June next year.

“We want to put the dream of owning a home within the reach of more Territorians by offeringthem a $10,000 incentive to purchase or build their own new home,” Chief Minister Henderson said.

“We’re also extending the scheme by increasing purchase limits, up from $530,000 to $600,000, making it more attractive option for more would-be buyers.

“The Buildbonus is targeted at stimulating construction and making the Territory a moreattractive option for investors to buy property.

For further information, click here.

Making NewsGeneral national news

Declining confidence

The NSW and Victorian property markets have been stranded by declining confidence, while resource-driven states are increasingly positive, according to new research from the Property Council of Australia and ANZ. The latest Property Council-ANZ Property Industry Confidence Survey, shows positive sentiment grew in the Northern Territory, Western Australia, Queensland and South Australia – all states with a strong resources base.

However, sentiment fell in New South Wales and Victoria – the states with the largest property markets – as well as the ACT and Tasmania.

The survey polled 2800 property industry professionals across all Australian states and territories in December 2011.

It found confidence across Australia rose slightly in the three months to December, from 104 to 107 on the survey index. A value of 100 represents a neutral position on the index.

For further information, click here.__________________________

Australia amongst the least affordable

Demographia has released the 2012 8th Annual International Housing Affordability Survey.

The survey covers the 325 urban markets of the United States, United Kingdom, Canada, Australia, New Zealand, Ireland, and Hong Kong in China.

The international comparison shows that Australia exhibited

the worst housing affordability of any national market outside Hong Kong.

Housing affordability improved in Australia last year, but the Australian markets remain some of the least affordable in the world.

_________________________

Rate cut impacts building sector

The first interest rate cut in two and a half years had an immediate impact on the new home building sector according to the HIA - JELD-WEN New Home Sales report.

For further information,click here.

Political WatchInformation and news from government

Growth plan gets go-ahead

The Australian and NSW governments have signed off on a program which paves the way for 30 years of sustainable growth in western Sydney.

Federal Environment Minister Tony Burke and NSW Planning and Infrastructure Minister Brad Hazzard announced the Sydney Growth Centres Strategic Assessment Program which will streamline delivery of new homes to meet growth, cut red tape for developers and provide certainty for communities.

A strategic assessment provides a big-picture study under national environmental law, the Environment Protection and Biodiversity Conservation Act 1999, of an area to assess how environmental values can be

best protected while allowing sustainable development.

For further information, click here.___________________________

APRA November banking statistics

The Australian Prudential Regulation Authority (APRA) released the statistics publication, Monthly Banking Statistics for November 2011. With this November 2011 edition, APRA is now publishing the Monthly Banking Statistics as a time-series publication with revisions to previously published data.

As such, a Monthly Banking Statistics back series publication has been issued outlining revisions from June 2002 to November 2011.

The October 2011 edition of the Monthly Banking Statistics, issued on 30 November 2011, has also been reissued with revisions.

For further information, click here.__________________________

Planners welcome new advisory forum

Australia’s peak planning body, The Planning Institute of Australia (PIA) has welcomed the establishment of a forum of highly qualified professionals representing various disciplines to advise the Federal Government on the future of Australian cities.

The PIA believes the new Urban Policy Forum will mean better implementation of planning policy and more productive and sustainable Australian cities.

The WorldProperty news from around the world

CH: China’s property market slows in 2011

China’s property market slowed last year as the government sought to bring down runaway housing prices amid fears of a speculative bubble.

The country introduced a range of measures aimed at curbing the real estate market last year, such as bans on buying second homes in some cities, hiking minimum down-payments and introducing property taxes.

Overall property investment rose an annual 27.9 percent to 6.17 trillion yuan ($980 billion) in 2011, slowing from growth of 33.2 percent in 2010, the National Bureau of Statistics said.

Meanwhile, housing sales -- excluding government subsidised homes -- rose 12.1 percent to 5.91 trillion yuan last year,

marking a slowdown from 18.9 percent growth in 2010.

“Our major progress is that speculative-based investment in the property market has been curbed,” statistics bureau chief Ma Jiantang told a news conference in Beijing.___________________________

US: NAR release home sales figures

The National Association of Realtors (NAR) released its pending home sales index figure and for the second month in a row, the index is up.

What’s more, the index has broken 100. That’s significant because the only other time the index has hit 100 in recent years is when the home buyer tax credit was available. “It is the natural, organic power of great affordability conditions and job

creation that is bringing the index level up,” says NAR Chief Economist Lawrence Yun. “This is a very encouraging sign.”__________________________

UK: Confidence is low but price rises expected

According to a recent UK survey by Zoopla, most homeowners expect property prices to rise in 2012, according to a new survey.

But despite the findings, confidence in the market has hit its lowest level in 12 months according to the same research.

The results showed that 55 per cent of respondents expected property prices to rise in 2012, but the figure was four percentage points lower than in January last year.

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