REIA NEWSISSUE ONE: MAY 2011

THE FEDERAL BUDGET: WHAT ARE THE IMPLICATIONS FOR THEHOUSING MARKET? ALSO IN THIS ISSUE:

PROPERTY PURCHASE: ARE WOMEN OUT IN FORCE?

THE GREAT DEBATE: WHAT HOUSING BUBBLE?

TAX FORUM: WHAT CAN WE EXPECT ON PROPERTY TAXES?

HOUSE PRICE MOVEMENTS: WHY ARE THERE SO MANY VARYING ESTIMATES?

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

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

I would like to welcome all readers to the first edition of REIA’s new monthly newsletter, REIA News.

REIA is entering an exciting era led by the board and new CEO, Amanda Lynch, and it is only fitting that as your national lobbying body, we provide you with an interesting newsletter centered around the issues that are important to you and the real estate profession.

Each month, we will provide you with a document that addresses what is happening in your state or territory, real estate news from around the world and important news from Parliament House.

The newsletter will include in-depth analysis on important issues from REIA Manager Policy, Jock Kreitals, REIA Manager Communications, Rhiannon McClelland and REIA Research Officer, Johan Rojas.

As your representative to the Government in Canberra, it is appropriate that our first edition is focused around the Federal Budget and the impact that this will have on the profession.

The Budget wasn’t quite the spectacle that we were expecting which is good in some ways and not in others; no changes to negative gearing on property but no focus on housing affordability.

Over the last month, the softening of house prices and the general state of the property market has been in the spotlight.

REIA felt that it was important to explain the change in median house prices to ensure that the doomsayers are set straight on the natural cycle of house prices in Australia; our media release titled ‘Decreased house prices can be attributed to natural cycle’ can is available by clicking here.

In this edition, we have also addressed the issue of varying median house price figures to provide readers with an understanding of different sources and how they vary.

We would like to thank our Real News readers for your loyalty. We hope that that REIA News is an enjoyable and informing read.

PRESIDENT’S REPORT

WELCOME:TO AN EXCITING NEW ERA FOR REIA

In addition to providing cover for landlords, landlord insurance has unique benefits for property managers and their agencies:

Less riskAn insured rent roll can help to protect you and your agency from professional indemnity claims.If a tenant injures themselves in a rental property as a result of neglected maintenance work, they may decide to sue their landlord.

‘If the landlord has appropriate insurance, they will be covered for legal liability.’

If the landlord has appropriate insurance, they will be covered for legal liability for occurrences on the property that cause death or bodily injury.

But, if the landlord doesn’t have insurance, the tenant may direct their claim towards you and your agency.

Less stressMost property managers dread the thought of having to tell a landlord that something has happened to their property.

It’s much easier to pick up the phone and tell a landlord that a loss has occurred when they have insurance cover in place.

Peace of mindDespite your good intentions and the strict procedures you have in place, things can still go wrong.

You can select the very best tenants for your landlords, but they can still lose their jobs or

suffer financial difficulties that leave them unable to pay their rent.

‘...they can still lose their jobs or suffer financial difficulties.’

Similarly, you might inform your landlords when maintenance work is required on their property, but you cannot control whether they will act upon this.

In these situations, landlord insurance provides peace of mind that your landlords – as well as you and your agency – will be protected.

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

INDUSTRY ARTICLE

INSURING YOUR RENT ROLL:WHY IT SHOULDN’T BE OVERLOOKED

Read, know and understand. When was the last time you read through your organisation’s insurance policies? It’s critical that all policies and coverage options are reviewed on a regular basis.

Following the devastation caused by floods in Queensland, northern New South Wales and Victoria, it is crucial for businesses to assess their continuity plans and how to prepare for the unexpected.

‘...an organisation can work on mitigating potential losses in the future.’

By taking the time to read through policies in detail, an organisation can work on mitigating potential losses in the future.

Key points to keep in mind when reviewing documentation includes:

• How will the policy respond to a particular event?

• Do you understand the implications of one coverage option over another?

• Does your policy address all your business concerns?

FloodsIn the case of natural disasters, if flood is a real exposure and is required, this would need to be investigated with your broker as policies often do not automatically include flood cover.

You’ll also need to consider an adequate predetermined flood limit cover and a flood specific

deductible appropriate for your business.

‘...an organisation needs to clearly understand what type of cover they have...’

It has become paramount that as the insured party, an organisation needs to clearly understand what type of cover they have and how it will respond in the event of storm damage versus a flood.

Currently, there isn’t a standard definition of flood for insurance purposes and it can vary from policy to policy with different insurers.

In general terms a flood is often defined as the release of

INDUSTRY ARTICLE

INSURANCE ADVICE:PLANNING FOR THE UNEXPECTED

water from a natural course such as a river, dam or stream onto otherwise dry land. This differs to storm water run-off which may be described as a body of water making its way to a water course.

ExpertiseAgainst this backdrop of policy terminology, it’s important to deal with an experienced insurance broker who can identify potential exposures and develop a plan to manage the risks by way of insurance where appropriate.

With Aon, you get the benefits of secure insurers, quality cover, experienced brokers, in-depth industry knowledge and competitive premiums.

Thinking aheadSo how does one avoid future and unexpected events? Well, it’s never too late to take stock and plan for the remainder of 2011 and beyond – with an insurance health check.

‘It’s never too late to take stock and plan for the remainder of 2011...’

In terms of your coverage the following are some key points to consider when assessing your insurance options:

• Most importantly, establish a relationship with a trusted insurance broker who understands your industry and your business insurance requirements.

• Make sure you are fully covered – underinsurance can be costly.

• Understand the full replacement value of your assets, new for old. Obtain a current property valuation if necessary.

• Value and protect your trading income.

• Identify the hazards and risks to your business to adequately risk manage against them to avoid potential for a claim.

• Make sure you understand your policy, what’s covered and how it will respond in the event of a claim.

• Always ensure past claims are disclosed in full to your insurance broker and insurer.

Aon – here to helpAs your broker, Aon is here to provide you with professional guidance and assistance, and to liaise with the insurer on your behalf.

Visit our website at www.aon.com.au/realestate for more information or call your local Aon representative on 1300 734 274.

Real Estate Institute of Australia (REIA) management entered the Federal Budget Lock-Up with the expectation that we would be criticising the Government for changes to negative gearing on property, but not so.

To our surprise, the Budget wasn’t quite the horror Budget that most expected, with a fairly even mix of positive and negative implications for the real estate profession and housing market.

‘...the Budget wasn’t quite the horror Budget that most expected.’

Unfortunately, housing affordability has been ignored by the Government.

This is disappointing, given the critical state of housing affordability in Australia and that first home buyers now make up only 15 per cent of the purchasers’ market when this figure was as high as 30 per cent in October 2009, during the time of the First Home Owner Grant Boost (FHOG Boost).

In the recommendations REIA put to the Government in our Pre-Budget submission, we called for a review of the First Home Owner Grant (FHOG) but also thought outside the square and proposed first home buyers be granted access to their superannuation to make purchasing a home more achievable.

The only indication that the Government has

‘Unfortunately, housing affordability has been ignored by the Government.’

considered the plight of those looking to purchase an affordable home is a ‘suburban jobs initiative’ which will be implemented to encourage the creation of employment precincts in outer metropolitan suburbs and provide support for regional areas to plan for future growth in housing supply.

The Government will also wind-down the Housing Affordability Fund (HAF) in 2012-13; REIA called for a review of the HAF in its Pre-Budget Submission to assess its effectiveness.

For ease of understanding, REIA has broken the issues that will

ON THE COVER

THE FEDERAL BUDGET:WHAT ARE THE IMPLICATIONS FOR THE HOUSING MARKET?

have implications for the real estate profession and housing into three categories; property specific, property related and small business.

Property specific• No change to negative

gearing arrangements• No change to Capital Gains

Tax (CGT) arrangements• No change to the assistance

currently provided to first home buyers (retention of the FHOG).

• The Government will spread the roll-out of the National

Rental Affordability Scheme (NRAS) over a longer period of time.

• No expenditure by Department of Climate Change and Energy Efficiency for roll-out of mandatory disclosure of Energy Efficiency Ratings (EERs).

• Restoration of the treatment of GST on new residential developments

Property related• Inflation and underlying

inflation to increase

WHAT IS BEING SAID POST-BUDGET?“Difficulties accessing affordable credit will be made worse as this Budget puts upward pressure on interest rates and the Commonwealth borrowings of $135 million a day crowds out small businesses seeking finance. Burgeoning red-tape burdens are made worse with new disincentives and punishing reporting requirements for independent contracting and new compliance complexities for employer-supplied vehicles.”

Bruce Billson, Shadow Minister for Small Business

‘The Budget is silent on the crisis in affordable housing. The only good housing news in the budget reflects the Greens win on preserving the National Rental Affordability Scheme. Apart from that, the housing affordability agenda has stalled.’

Senator Scott LudlamAustralian Greens

2010/11 2011/12 2012/13

Budget surplus - cash balance($billion) -49.4 -22.6 3.5

Consumer Price Index(percentage) 3.25 2.75 3.0

Unemployment (percentage change) 5.0 4.75 4.25

Private investment in dwellings (percentage change) 2.5 1.5 3

“Unfortunately, the Budget fails to deliver any dedicated policies to alleviate Australia’s chronic housing shortage, which at around 200,000 dweliings and growing, continues to place pressure on the households budget of home buyers and renters”

Andrew Harvey, Senior Economist, Housing Industry Association

“The Government’s investment in skills and employment alone is welcomebut may not be enough to lift business and consumer confidence, and bolder leadership is likely to be needed over the coming period to secure Australia’seconomic future.”

Wilhelm Harnisch, Chief Executive Officer, Master Builders Australia

“ A more productive economy, along with a larger and more skilled labour force,needs affordable housing.

A growing population deserves affordable homes and housing choice”

Peter Verwer, Chief Executive, Property Countil of Australia

“We welcome tonight’s announcement as the first step in the development of a National Urban Policy, but we are concerned that housing is merely a footnote in the budget”

Caryn Kakas, Executive Director ,The Residential Development Council

THE FIGURES

QUICK LINKS• REIA Budget Overview• REIA Budget Media

Release• REIA Pre-Budget

Submission

• Implementation of a ‘suburban jobs initiative’

• Funds allocated to Training to meet skills shortages

• Funds allocated to investment in regions

Small business• Tightening of FBT for

employers• Changes to the company tax

rate• Deduction on a motor

vehicle• Simpler depreciation to

longer-life assets• Write-off of assets under

$5,000• Paid Paternity Leave• Continuation of the Small

Business Support Line

REIA has put together a more in-depth overview of each of these points to assist you, download by clicking here.

A new report released by RAMS suggests that Australian women are not waiting to find the perfect man.

The research has assessed lending applications of clients and RAMS Chief Operating Officer, Susan Bannigan said there is a growing trend towards sole home loan applications from women.

“The last year has seen the number of sole home loan applications submitted to us by women reach an almost 50% nationwide split with sole male applicants who usually make 70% of sole applications,” she said.

RAMS formal research does not clarify whether females applying for loans are applying on behalf of them and their partner or whether they are entering the property market on their own.

However, anecdotal evidence from the lender suggests the trend towards sole female property ownership varies across states.

Cheryl Haywood, Principal of RAMS Southern Vales in South Australia said “I’ve dealt with a number of single female refinance deals as newly single women reposition themselves as the household owner as a result of a marital or relationship breakdown. These kinds of deals are becoming more and more common.”

Jenny Karabatsos, Business Manager at RAMS Alphington in Victoria says she has noticed the change at her local office, “Over the last year we’ve seen a definite increase in the number of women visiting us to talk about sole application home loans. The majority tends to be for owner occupier loans but there is also an

increase in the number of women buying for investment purposes.”

There is no formal research showing actual figures of the percentage of women purchasing, however, there is enough anecdotal evidence to draw the conclusion that females play a very important role in the purchase of a home.

REIA sought further information on this issue from John Runko, CEO of Independent Property Group (2011 REIA Hall of Fame Awardee for Large Residential Agency of the Year and Communications Award), Peter Sissons, Managing Director of Sissons Estate Agents (2011 REIA Hall of Fame Awardee for Small Residential Agency of the Year) and Tim Heavyside, Director of Fletchers Real Estate (Winner of the 2011 REIA Residential Salesperson of the Year).

PROPERTY PURCHASE:ARE WOMEN OUT IN FORCE?

John Runko, CEO, Independent Property Group

“A recent sample of almost 600 property transactions conducted by Independent Property Group this year, revealed that contrary to popular opinion, the gender balance of women buying property in Canberra remains relatively unchanged.

Of the sample size, 49% of properties were bought by couples, 34% were bought by men on their own and 17% were bought by women on their own. If anything, the trend had swung more to single people buying on their own, with only half the sample properties being bought jointly by couples.

Although men bought twice as many of the sample properties on their own than women, women are certainly having a greater influence in the buying decision of couples than they have had in the past.”

Peter Sissons, Managing Director, Sissons Estate Agents

“For quite some time, the major decision-maker has been the female.

Men tend to regard a purchase as buying a house and are more analytically focused in their decision-making process, whereas ladies regard their purchase from a point of view of it being a home and emotion plays a more significant role when it comes time to make a decision.

Over recent times we have seen more young single ladies and female divorcees purchasing in their own right.

Presentation, maintenance and cleanliness play big parts in a ladies’ decision-making process, as in our experience they prefer not to incur additional work in fixing up a property after they purchase.“

Tim Heavyside, Director Fletchers Real Estate

“Success stories of young females who purchase all forms of real estate, are now commonplace. With more power, education, confidence and cash, more and more women are buying real estate either alone or with a partner as the main decision-maker. Women tend to see potential and look at homes from a practical angle.

I would say that people looking to buy consist of an even mix of gender.

However, when a couple is purchasing together, 90% of the time it is the wife or the girlfriend who have the power to ‘tip the balance’. There is a saying in life, ‘happy wife, happy life’. I know that’s the case in my marriage!”

WEIGHING IN:

REIA CEO, Amanda Lynch will participate in a live panel discussion on Tuesday 7 June at the Wesley Centre in Sydney, regarding the much-debated housing bubble.

The so-called housing bubble has been a topic of much discussion over the past few years and the debate aims to put all the opposing opinions on one stage and have a not-to-be-missed discussion about house prices and where the market is headed.

Those participating in the debate are:

• Amanda Lynch, Chief Executive Officer, Real Institute of Australia (REIA).

• Harley Dale, Chief Economist, Housing Industry Association (HIA).

• Shane Oliver, Chief Economist, AMP Capital Markets.

• Dr Tony Hayek, Chief Executive Officer, Blue Wealth

Property Group.• Professor Steve Keen,

Associate Professor University of Western Sydney N.S.W.

• Kris Sayce, Editor & Chief, Money Morning Publication.

• David Collyer, Campaign Director, Prosper Organisation.

Master of Ceremonies for the event will be Mr David Hayward, Chief Executive of The Money Institute.

As a member of the real estate profession and subscriber of REIA News, you have the opportunity to see the debate for just $40.00 (normally $50.00).

For background information on REIA’s position and research conducted by the Institute. click here.

THE GREAT PROPERTY DEBATE:WHAT HOUSING BUBBLE?

SEE THE DEBATE FOR JUST $40As a subscriber of REIA News, you can purchase a ticket to this event for just $40.00.

Details are as follows:

When: 7th June, 201Start time: 11.30am Finish time: 2.00pmWhere: Wesley Centre, 220 Pitt St, SydneyInfo Hotline: 02 8004 2444Register online: (Limited seats available) . Click here to register.

Professor Steve Keen, University of Western Sydney & Debt Watch

“Rising mortgage debt caused the house price bubble; now that debt has peaked, the same force that drove house prices up will drag them down.”

AND THE OPINIONS ARE...

TO SEE THE OPINIONS OF ALL PARTICIPANTS IN THE GREAT DEBATE, CLICK HERE.

Harley DaleChief Economist, Housing Industry Association

‘“House price crash talk isn’t new and it continues to be more successful than any other topic in generating sensational headlines that scare the living daylights out of people.

There are many challenges facing the Australian residential sector, including the need to aid entry level buyers and rental households.

The focus should be on what needs to be done to alleviate upward pressure on dwelling prices.”

Amanda LynchCEO, Real Estate Institute of Australia

“Many analysts have focused their attention on the house price-to-income ratio in Australia and observed that it is high compared to other countries, even at levels similar to those in the US beforeprices crashed.

However, this ratio is not an accurate and sufficient indicator of housingovervaluation, and other house price determinants need to be considered.”

In early April, the Federal Government announced that it will hold a Tax Forum on Tuesday 4 October and Wednesday 5 October at Parliament House in Canberra.

The forum, which stems from a commitment linked to the support of Independents to form a minority Labor Government following the 2010 election, will have sessions to discuss, amongst other things, state taxes - including property taxes.

REIA has been lobbying the Federal Government that state-based property taxes are inequitable, inefficient and an unstable source of revenue and has suggested that replacing property taxes with other more efficient taxes would provide considerable economic benefits.

‘In 2007, the incoming Labor Government showed an initial zest for reform...’In 2007, the incoming Labor Government showed an initial zest for reform and commissioned the comprehensive review Australia’s Future Tax System (Henry Review).

Regrettably, GST was not part of the considerations, which hampered the Henry Review’s considerations.

The review noted that state- based property taxes are highly inefficient and an unstable source of revenue for states and should be replaced by an alternative broad-based tax such as a land tax.

This would be the most efficient means of raising revenue. Thereason given is that land is an immobile resource and land tax generates a more stable source of revenue.

Additionally, according to the Henry Review, stamp duties are highly inequitable because they discourage transactions of residential property and people from changing their place of residence as their personal circumstances change.

‘...stamp duties are highly inequitable because they discourage transactions of residential property...”

TAX FORUM:WHAT CAN WE EXPECT ON PROPERTY TAXES?

The Henry Review also made the following recommendations regarding property:

• The replacement of negative gearing and capital gains taxes with the introduction of a 40 per cent discount for income from rental properties.

• The replacement of the current Capital Gains Tax (CGT) arrangements with an accrual-based system.

• Owner-occupied housing should be tax exempt.

The Government, in its response to the Henry Review just one year ago did not accept any of these and specifically rejected the following:

• Introducing a land tax on the family home;

• Reducing the CGT discount, and;

• Applying a discount to negative gearing deductions.

It could be argued that with a number of difficult current issues to deal with, including carbon pricing, a low standing in the polls, and a precarious hold on power, the appetite of the Government for any serious immediate reform in regard to property taxes is not likely to be high.

Nevertheless, REIA will be strongly presenting its case for reform of state property taxes.

The REIA will point out that reform of state property taxes will lead to economic growth.

‘REIA will be strongly presenting its case for reform of state property taxes.’

Modelling undertaken shows that by removing conveyancing and insurance duties and reducing land tax and funding the shortfall by a federal and/or state broad based tax, GDP growth of 1.7% would result. REIA will be seeking a commitment to reform over the longer term as the economic benefits are clear.

REIA will also be seeking maintenance of existing arrangements regarding CGT and negative gearing.

Economic growth provided by reforms to property taxation should be of interest to all governments as we cannot rely on the Chinese boom to provide the impetus for growth for ever.

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

The media quotes many sources when reporting on the latest movements in house prices, meaning one could be excused for thinking that they cannot all be correct. REIA explains why they are correct and how they differ.

‘One could be excused for thinking they cannot all be correct...’

Movements in house prices are very hard to measure accurately as each house differs from the next in regards to location, size, aspect, build quality, number

of bedrooms/bathrooms, improvements and so on.

Several property data providers – REIA (Real Estate Market Facts report), APM, RPdata, ABS and Residex publish house price movements.

As can be seen in the table of house price movements (to the right) for the December quarter 2010, estimates vary greatly by each data provider.

The differences arise from differences in methodology and the sources of data.

All property data providers collect data from the Valuer Generals’ or Land Titles’ offices in each state and territory.

With the exception of NSW, SA, and ACT, the REIA collects property data from the Real Estate Institutes, which, in turn collect data from their corresponding state departments.

‘Movement in house prices are very hard to measure accurately as each house differs from the next.’

In summary, the approaches employed are:

REIA – House price growth rates are based on “raw” median price. The median price is the middle value of property sale prices in their ascending order.

RP Data-Rismark – Applies hedonic measures that are based on regression techniques to control for compositional changes and quality change. This methodology requires detailed information on the

PROPERTY PRICE MOVEMENTS:WHY ARE THERE SO MANY VARYING ESTIMATES?

characteristics of the homes sold i.e. land size, location, number of bathrooms/bedrooms, etc.

APM – Employs a stratified median price method to control for compositional changes in the sample of transactions.

ABS – Employs a stratified median price method similar to

methodology employed by APM but with some modifications.

Residex – Uses a repeat sales method which consists of examining purchases and sales of the same properties over time.

These differences in methodologies, along with the differences in data sources,

explain the discrepancy of price growth estimations between REIA and the rest of property data providers.

The REIA’s property price estimates provide a good assessment of the dynamics of the property market in Australia, as they show not only the most recent property market trends but also the historical trend of property prices since 1980, providing a useful source for short-term and long term analysis of property price movements in Australia.

For further information on REIA reports and REIA data spreadsheets, click here.

The REIA collects NSW, South Australia and ACT property data from APM, the Department for Transport, Energy and Infrastructure and ACTPLA, respectively. REIV collects property data from real estate agents, REIQ from the Department of Environment and Resource Management, REIWA from the Western Australia Department of Land Administration, REIT from real estate agents and REINT from the Australian Valuation Office for the Valuer-General of the Northern Territory.

House Price Movements - December Quarter 2010

City RP data APM ABS REIA

Sydney -0.5% 1.1% 1.6% 1.1%

Melbourne -1.0% 2.1% 1.3% 6.9%Brisbane -1.1% -1.4% 0.7% 0.6%

Adelaide 1.1% 0.2% 1.1% 1.4%

Canberra -1.7% 1.7% 1.9% -1.0%

Perth -2.4% -1.5% -3.2% -1.8%

Hobart n/a 2.6% 1.1% 0.7%

Darwin -1.4% -0.4% 0.0% 1.3%

Australia -0.9% 0.7% 0.7% 2.4%

This article is brought to you by REIA Research Officer, Johann Rojas. Johan can be contacted at johann.rojas@reia.com.au

Industry UpdateIndustry news from around Australia

Land release the goal for the ACT Budget

ACT Treasurer Katy Gallagher has handed down the ACT Government’s 2011-12 Budget.

The ACT Treasurer said affordability is important and to continue to address the supply of affordable housing in the territory, in 2011-12 the Government will release 5,500 dwelling sites on 2011-12, and a total of 18,500 over the next four years.

REIQ: RBA economic outlook

The Real Estate Institute of Queensland (REIQ) and Aon are proud to present Dr Tony Richards, head of the Reserve Bank of Australia (RBA) economic analysis department at the 2011 Principal Licensee Luncheon on May 27 at the Sofitel Hotel Brisbane.

Dr Richards oversees the RBA’s analysis of the domestic and international economies for the monetary policy process and will be providing an overview of economic conditions at the luncheon.

Dr Richards began his career in the Reserve Bank, before spending ten years at the International Monetary Fund in Washington DC and his academic and policy research has been published in leading international economic and financial journals. He holds a Bachelor of Economics with Honours from Sydney University, a Masters in Public Administration from Harvard University, and a Ph.D. in Business Administration from the George Washington University.

The REIQ invites you to join us at the exclusive REIQ member price.

For the most accurate economic insight of 2011, don’t miss this

event. Click here to register your place.

NT Budget delivers for housing

The NT Budget 2011-12 Budget has placed a focus on helping families to get ahead.

The Henderson Government said the 2011-12 Territory Budget delivers BuildBonus, a $10,000 grant to homebuyers to purchase or build a new home to the value of $530,000 to help families get ahead and stimulate more housing construction.

BuildBonus applies from the release of the Budget for contracts signed to the 31 December 2011, where construction has commenced from 3 May 2011. The scheme aims to stimulate new home construction, particularly for unit developments in the pipeline.

Making NewsGeneral national news

New national building standards

Last week, the Gillard Government announced the start of new building accessibility standards, which will ensure all new and upgraded public buildings in Australia will be accessible to people with a disability.

The Disability (Access to Buildings - Premises) Standards 2010 (Premises Standards), is an important milestone in the Government’s National Disability Strategy. The start of the national Premises Standards marks a huge improvement for access to buildings for people with disability, Attorney-General Robert McClelland said. From this month, the new Premises Standards will apply to any application for a building approval for a new public

building or upgrade of an existing public building.

For further information, click here.

Business Expectations Survey shows weakness in business conditions

The May 2011 Commonwealth Bank - ACCI Business Expectations Survey found most actual and expectation indicators for business deteriorated over the March quarter compared to the same time last year, except the indexes of Wage Growth, Non-Wage Labour Costs, Employment, and Investment in Plant and Equipment.

Overall business sentiment remained soft in the March quarter amid a spate of severe natural disasters, the appreciation of the Australian dollar, the prospect of rising interest rates

and taxes and continuing global uncertainties.

While the index of Expected Economic Performance rebounded from its recent trough in the March quarter, the index remains significantly below the level recorded in March 2010.

For further information, click here. Report of the Senate Economics References Committee

The Senate Economics Committee has handed down a report on competition in the Australian Banking Sector.

REIA put a submission forward to the Inquiry.

To view the report, click here.

Political WatchInformation and news from government

Government announces Federal Budget

The Treasurer, Wayne Swan, said the 2011-12 Budget will get Australia back in the black, get more people in jobs and spread the opportunities of the mining boom to more Australians. The Government will return the budget to surplus in 2012-13, according to the Treasurer.

Access to finance for small and medium business

Last week the the Parliamentary Joint Committee on Corporations and Financial Services handed down its report as a result of the Inquiry into Access to Finance for Small and Medium Business.

The committee made a number of recommendations that, if implemented, will improve the

financial environmental for small business in Australia.

To view the REIA’s media release on this issue and see the reccomendations made in the report, click here.

Climate Change Minister announces changes to solar credits

The Minister for Climate Change and Energy Efficiency, Greg Combet, announced adjustments to the Solar Credits arrangements in light of continued strong growth in the industry, the impact of this on electricity prices, and the impact of the Solar Credits on demand for other clean energy technologies such as solar hot water heaters.

From 1 July 2011, the Solar Credits multiplier will provide households with upfront support equivalent to around a third of

the out-of-pocket costs for a typical 1.5 kilowatt (kW) solar panel system, before taking into account ongoing electricity cost savings and any state or territory based feed-in tariff incentives.

It could be useful for real estate professionals to have background information on this topic when selling a home with roof-top solar panels.

To download the fact sheet, click here.

ACMA reminds industry about privacy obligations

Australian Privacy Awareness Week was held from 2-7 May and the Australian Communication & Media Authority (ACMA) have taken the opportunity to remind relevant industries that privacy is very important

Political WatchInformation and news from government

when dealing with consumer information.

REIA have kept provided information via our previous newsletter format, Real News, on what your obligations are as a property professional.

If you would like to refresh your understanding of what is required of you by law when dealing with consumer information, click here.

ABS House Price Index

The Australian Bureau of Statistics (ABS) last week released the House Price Index for the March Quarter 2011.

Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities decreased 1.7% in the March quarter 2011. The capital city indexes decreased

in Melbourne (-2.5%), Sydney (-1.8%), Brisbane (-2.5%), Adelaide (-1.0%), Canberra (-0.4%) and Darwin (-1.0%), and increased in Perth (+0.5%) and Hobart (+0.4%).

For further information, click here.

ABS Building Approvals

ABS Building Approvals show that the total number of dwellings approved rose 9.1% in March 2011, in seasonally adjusted terms, after falling 5.3% in February. Dwelling approvals increased for the month of March in Victoria (26.8%), New South Wales (8.5%), Tasmania (5.8%) and Western Australia (3.4%) while South Australia (-22.5%) and Queensland (-15.0%) recorded decreases in seasonally adjusted terms. In seasonally adjusted terms, approvals for private sector houses fell 0.8% in March with

falls in Western Australia (-8.4%), New South Wales (-5.6%) and South Australia (-2.1%) while there were rises in Queensland (8.2%) and Victoria (3.7%).

For further information, click here.

ABS Consumer Price Index

The Australian Bureau of Statistics (ABS) last month released the Consumer Price Index for December 2011.

The Index rose 1.6% in the March quarter 2011, compared with a rise of 0.4% in the December quarter 2010. This is the largest quarterly rise in the CPI since June quarter 2006 when the CPI increased 1.6%. .

For further information, click here.

The WorldProperty news from around the world

US established house sales on the increase

According to the National Association of Realtors (NAR), sales of existing homes within the US property market are on the long road to recovery in March.

With sales bottoming out last July, news that the number of transactions completed over the course of the month increased is sure to be welcomed by investors.

A seasonally-adjusted 3.7 per cent growth in single-family, townhomes, condominiums and co-op sales was recorded in March.

Lawrence Yun, NAR chief economist, said that he expected the improving sales pattern within the US market to continue.

“Existing-home sales have risen in six of the past eight months, so

we’re clearly on a recovery path,” he said.

However, Mr Yun noted that a number of potential home buyers are still facing difficulties when it comes to obtaining a mortgage.

China reportedly tightening rules for property trusts

A leading Chinese newspaper, has this month reported that among new requirements, property developers may be ordered to set aside more cash before they sell their projects to investors via trusts.

If implemented, these new requirements would make it even harder for property developers to get funding. The China Banking Regulatory Commission, the banking watchdog, has clamped down on off-balance financing as well

since the second half of last year, ordering banks to bring their off balance-sheet trust loans back onto their books. In March alone, at least 35 property trusts were launched, totalling 9.8 billion yuan ($1.5 billion), double February’s level, the Beijing Times said.

Rents hit the roof in Mumbai, up by 11%

Rising realty rates may have resulted in a sharp decline in property sales, but it has led to a growth in rental value in Mumbai and other metropolitan cities in the country. Mumbai and the outskirts of the city has seen an 11% growth in rental value in the past year, according to a study conducted by private real estate portal, 99acres.com.

Affordable landlords’ insuranceRental Protection Plus AdvantageWe know that your clients don’t want to think about damage to their

investment property, tenants who don’t pay the rent or people sustaining

an injury on their property, but unfortunately these things do happen.

What landlords’ insurance covers

^ Accidental damage covers loss by tenants to carpets, curtains and internal blinds

Damage by tenants

This cover provides payments to assist your clients to repair malicious damage caused by tenants. Accidental damage is covered for loss caused by tenants to carpets, curtains and internal blinds.

Theft by tenant

This covers theft by your clients tenant or their visitors.

Loss of rent

Loss of rent covers situations where the building can’t be lived in after damage or loss. It covers the rent your clients lose when damage caused by a previous tenant prevents them from renting out the property. Loss of rent also protects your clients if their tenants can’t access the building in which the property is located.

Rent default

Rent default is based around the tenant’s actions. For example, if they leave without notice, fail to pay the rent or refuse to leave when served with eviction notices.

Contents

Even if your client rents out their property unfurnished, they need to consider cover for their property such as carpets, internal blinds, curtains, light fi ttings and other furnishings for fi re, theft, burglary, storm and water damage in addition to deliberate, accidental^ and malicious damage.

Liability

Covers claims made against your client for injury suffered on their property. Liability includes costs awarded against your clients and any legal costs they have to pay.

24hr claims hotline

In the unfortunate event that your client has to make a claim, simply call our 24 hour claims lodgement hotline on 1800 105 900 to speak with one of our dedicated customer service consultants.

This advertisement is a general description of cover only, full details are set out in the PDS available at www.propertymanagers.aon.com.au

© 2010 Aon Risk Services Australia Pty Limited ABN 17 000 434 720 AFSL No. 241141

Apply now!

1800 105 900www.propertymanagers.aon.com.au

Your client can choose higher limits if they wish. Just let us know and we’ll arrange it.

RRIS

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