Ben Kinglsey

The Victorian Government’s new investor land tax grab – announced in its State Budget yesterday – will hurt aspirational and hardworking property owners the most, according to the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA).

Analysis of the new policy has found that a Victorian investor will land holdings worth $1 million will be slugged about $2000 in extra land tax per year – or about $20,000 over the next decade – however, the tax will continue to increase along with land values throughout that time, so the cost to investors will likely be much higher.

PICA Chair Ben Kingsley said the policy would result in hardworking Victorians paying for the government’s incompetence for decades. “This is what happens when you have so much debt as well as continued economic mismanagement and self-serving governance,” Mr Kingsley said. “Victorians will be paying for the government’s incompetence for not just years, but for decades. “It’s a classic case of which policy is going to cause the least amount of political damage, so, they go after the aspiring and hardworking Australian, but aspiration in Victoria is officially dead under the Labor Government.” PIPA Chair Nicola McDougall said the new land tax grab appeared to be modelled on the Queensland Government’s similar failed policy last year.

“It does seem like the Victorian Government has taken an illogical page out of the Queensland’s Government’s ill-fated and investor-focused land tax playbook from last year, and we all know how that worked out for them,” Ms McDougall said.

“This absurd policy will no doubt lead to the exodus of investors in Victoria who are already struggling with significantly higher mortgage repayments that dwarf any increases in rent over the past year.”

Mr Kingsley said investors will desert Victoria in droves – just as they did in Queensland last year – with renters set to pay higher rents because of the policy folly.

“Victoria has the highest stamp duty of any state and territory in the country, so, this policy is like rubbing salt into a wound,” Mr Kingsley said. “Anyone looking to buy property in Victoria will look elsewhere, because this policy says that Victoria is closed for business. “Borderless investors will simply shop elsewhere where they are not being slugged by sky-high stamp duty and land tax, which will have a hugely detrimental impact on rental supply.” Ms McDougall said it was illogical that any State Government would implement such a policy during a prolonged critical undersupply of rental properties.

“It beggars’ belief that at a time of record low vacancy rates, rising rents, and increasing overseas migration – many of whom will initially choose to live in Melbourne but may find nowhere to rent – that the Victorian Government would even consider implementing such a ridiculous policy,” Ms McDougall said. “This is yet another example of politicians having no understanding of how bad policy impacts investor behaviour, especially those aspirational and hardworking property owners who are set to be slugged the most by this latest financial impost.”

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Mr Koulizos replaces outgoing chairman Ben Kingsley, who stepped down after five successful years at the helm of PIPA. Mr Kingsley remains on the PIPA board of directors.

M Koulizos was first elected to the PIPA board in 2015 and is a South Australian property academic at both TafeSA and the University of South Australia.

Affectionately known as the “Property Professor”, Mr Koulizos brings more than 20 years of real estate and investment teaching to the chair position as well as personal experience as a successful investor and property developer.

“I am honoured to be elected as the PIPA chairman, especially as the association is going from strength to strength thanks to the stewardship of outgoing chairman Ben Kingsley over the past five years,” Mr Koulizos said.

“While PIPA’s membership and brand is growing solidly, our fight for regulation in the property investment advice space continues with far too many investors still losing significant sums of money due to unscrupulous spruikers masquerading as advisers.”

Mr Koulizos’ aims for 2018 includes a greater focus on the education of PIPA members to ensure they continue to uphold the very high expectations of all of their clients and to set the benchmark for property investment advice best practice.

Melbourne-based PIPA board director David MacMillan has been elected as the association’s deputy chairman.

The PIPA board also elected Sydney-based Paul Glossop to the board of directors. Mr Glossop is a licensed buyers’ agent and also has formal qualifications in education and architecture.

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Ben Kingsley

Australian property investors remain bullish about the long-term benefits of residential real estate, shrugging off concerns about stricter lending conditions property price bubbles and oversupply, the third annual Property Investment Professionals of Australia (PIPA) Property Investor Sentiment Survey has found.

The national survey, which gathered insights from 742 property investors, shows that more than 70% of respondents think now is a good time to invest in property, with 61% looking to purchase a property in the next six to 12 months (up from 58% last year).

However, concerns over changes to investor lending policies are looming large, with 43% of respondents reporting an adverse impact in their ability to secure finance, compared to 32% in 2016.

Rising rates on interest only loans were also a key concern, though the majority of investors (55%) with interest only loans said they would not struggle to meet new principal and interest repayments.

As borrowing costs rise, investors are on the hunt for a better deal. More than 23% said they would consider refinancing their loan for an interest rate differential of 0.5 percentage points, while another 23% would consider refinancing for one percentage point.

According to the survey, only 15% of investors have put their buying plans on hold due to concerns around a property price “bubble”. Similarly, investors have shrugged off speculation about negative gearing and capital gains tax changes, with only 14% putting their investment plans on hold.

The survey also shows that only half (52%) of property investors are currently negatively geared, with a majority (62%) of these expecting to become positively geared within five years.

PIPA chair Ben Kingsley said that the survey results confirm that investors remain committed to property as a favourable investment option over the long-term.

“It has been an eventful time for residential property investors since we published our last survey in 2016. Similar to last year, most property investors are looking past short-term challenges and are remaining focused on the long-term wealth benefits that are available from residential real estate.

“The survey also affirms that a lot of the speculation about negative gearing misses the mark. Most investors understand that negative gearing is only a short-term cash flow position, not a property investment strategy. And only a very small minority are attracted to real estate for these tax concessions,” Mr Kingsley said.

Brisbane remains top capital city pick

Despite being the most preferred destination for property investors, Brisbane has lost some appeal, with the proportion of investors favouring it falling from 49% to 43% over the past year. However, the city remains far ahead of any other capital city when it comes to investor interest. After Brisbane, Melbourne is the second most popular investment destination (32%), followed by Sydney (7.8%), Adelaide (6.6%) and Perth (5.5%).

“Property investors are becoming savvier. Many of them continue to look outside of our biggest property markets of Sydney and Melbourne, which are coming close to the peak of their cycles,” said Mr Kingsley.

“The two key reasons that Brisbane still attracts investors are affordability and the potential for attractive yields. Brisbane is investing in infrastructure to make the city more liveable and investors are betting on this.”

Calls continue for regulation and improved professional standards

Although investors are becoming more sophisticated, with 33% having a set strategy for investing, they overwhelmingly (84%) consider that more investment education about the risks and potential benefits of investing in property is needed. Even higher numbers (90%) believe that the property investment industry should be regulated and licensed in the same way as many other professionals.

“Unlike financial planning and mortgage broking, the provision of property investment advice still remains unregulated. PIPA is committed to raising the professional standards of this industry and will continue to lobby the government to regulate property investment advice and educate investors to help them make informed investment decisions,” Mr Kingsley said.

PIPA’s 2017 Property Investor Sentiment Survey – Key stats at a glance

• 742 survey respondents
• 70% of investors believe now is a good time to invest in property
• 61% of investors are looking to purchase in the next 6-12 months
• 43% of investors confirm changes to investor lending policies have impacted them
• 75% of investors are not worried about possible changes to negative gearing
• 90% of investors believe people who recommend property investment should be regulated and licensed

A copy of the 2017 Property Investor Sentiment Survey Report is attached. For full survey results visit http://www.pipa.asn.au/news-and-events/pipa-annual-investor-sentitment-surveys

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Ben Kingsley

With the 2017 Federal Budget looming, the Property Investment Professionals of Australia (PIPA) is urging the government to take a sensible approach to housing affordability policy.

As the peak body for the property investment industry, PIPA has long campaigned for greater education around property investment as well as regulation of property investment advice and remains dedicated to supporting a healthy, sustainable property investment industry.

PIPA chair Ben Kingsley held discussions on housing affordability with government representatives in April. He said the association welcomed the federal government’s decision to rule out changes to negative gearing and hoped this was reflective of a well-considered approach to addressing affordability issues both on the buying and renting sides.

“Housing affordability is challenging, but there’s no easy fix. We welcome the government’s focus on this issue but urge them to adopt sensible measures that reflect the national market needs, rather than any of the radical changes that have been floated by some corners of the market such as axing negative gearing and SMSF property investment.

“PIPA supports thoughtful and varied solutions that promote supply and cool demand and consider the long-term viability of the market and broader economy.”

Mr Kingsley said no policy would ever reduce the price of quality property in the inner suburbs of major capital cities due to continued strong demand versus limited and geographically-constrained supply. However, he believed strategic policies could work to encourage more supply in urban locations.

“Potential polices that could stimulate supply include measures that encourage developers to build more family-friendly accommodation, such as three or four bedroom units. Incentives to encourage the release of bulk land lots in new greenfield areas could also boost supply.”

As for the demand side, Mr Kingsley emphasised that regulation and education remained key.

“Property investment advice needs to be regulated. This would remove spruikers and speculators from the market. Educating investors about the real and current risks of property investment and ensuring they are not pressured into poor investments would help to moderate demand and avoid budding investors getting their hands burned.”

The economic benefits of the Australian property industry

According to data from CoreLogic, residential housing stock alone is estimated to be worth $6.9 trillion, which is more than three times Australia’s total share market capitalization of $1.7 trillion and our total superannuation pool of $2.2 trillion.

“Any policy changes that could impact the value of this asset class, need to be thoroughly considered,” Mr Kingsley said.

“The residential property cycle plays a significant role in the country’s overall economic performance, as we’ve seen by the recent strong stamp duty receipts in New South Wales which have helped to fund the state’s robust infrastructure program.”

Mr Kingsley also reinforced the role property played in building everyday Australians’ wealth.

“While high property prices can be incredibly frustrating for those trying to enter the market, we need to remember that property is a key feature of many everyday Australians’ wealth creation strategies,” he said.

“Property is an accessible, trusted source of wealth that can help just about anyone build a better future. We need to be very careful when it comes to playing around with measures that could hurt the value of these assets.”

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Ben Kingsley

With the provision of property investment advice continuing to go unregulated by the Federal Government, the Property Investment Professionals of Australia (PIPA), is experiencing strong demand for its property investment advice course as practitioners from a range of backgrounds seek to incorporate qualified property investment advice into their service offering.

Over the year to September, the number of students enrolled in PIPA’s QPIA (Qualified Property Investment Adviser) course increased by 36 per cent, with 233 students currently enrolled in the specialist qualification.

PIPA Chair Ben Kingsley said it was encouraging to see professionals opting to proactively increase the professionalism of the property investment industry.

“Although property investment advice still remains unregulated, we are committed to driving higher standards to protect consumers and ensure they benefit from the wealth creation benefits that well-selected, strategic property investment can bring.

“Property has become a favoured investment class among Australian investors and one that requires as much due diligence as any other asset. We are seeing practitioners from a range of backgrounds, including mortgage broking, financial planning and real estate services, formalise their property investment knowledge to offer a professional, qualified service.”

Mr Kingsley said there were several catalysts driving the trend.

“In many cases it’s inbound demand from clients looking for assistance with their property investment strategies. In other cases, we hear that practitioners are simply becoming aware of clients’ less than strategic approach to property investment and they’re looking for a way to help. There is also growing recognition that property investment advice is simply very complementary to a range of professions.”

Enhanced professional development focus

As PIPA’s membership grows, the association has been focusing on growing its team and professional development offering to enhance support for members.

Nicola McDougall has joined as the association’s new part-time Corporate Affairs Manager while Peter Mastroianni has been appointed as PIPA’s part-time Members Officer.

Ms McDougall, who also sits on the PIPA board, brings a decade of experience in property research, analysis and journalism. She will work closely with Chair Ben Kingsley to raise the profile of the association and grow its professional development offering.

Ms McDougall will also work in close partnership with Mr Mastroianni, who will be responsible for membership recruitment and engagement, ensuring PIPA continues to grow and evolve to meet its members’ needs.

In line with its enhanced focus on professional development, PIPA will launch its inaugural member breakfast series in Sydney this week, followed by Melbourne and Brisbane. The events will offer members an exclusive capital city market review from CoreLogic expert analysts Tim Lawless and Cameron Kusher, and an association update from Ben Kingsley.

“As the association grows, we are focused on building out our professional development offering to provide members with more networking opportunities and valuable insights to support them to service Australia’s property investment community,” Mr Kingsley said.

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Ben Kingsley

The release tomorrow of Housing Finance data for July by the Australian Bureau of Statistics (ABS) will be an important economic indicator for the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) in considering the need for further action on residential mortgage lending practices.

The Property Investment Professionals of Australia’s (PIPA’s) chair Ben Kingsley predicted a third consecutive rise in investment property lending[1] for July, given historically low interest rates and strong levels of market activity.

“All indications are that housing market activity during this period has been strong, especially in the unit space as completions start to gain in number. The Reserve Bank and APRA will naturally be watching this closely given the evidence of further price increases in most location across Australia.

“Housing finance data is a good indicator of where the market is headed, but it’s important that APRA and the RBA look closely at the data and really understand where the heat is coming from.

“For example, if the number of borrowing commitments from investors for established dwellings has increased significantly, more may be needed to calm investor activity. On the other hand, if finance for new builds has increased, market intervention may not be necessary, because of the lag time in which the data flows through. In other words, if construction approvals are slowing then lending data will soften over time. It’s a fine line our regulators are treating between slowing demand versus jobs and economic growth, short to medium term.”

[1] Seasonally adjusted estimates

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PIPA speaks out on proposed negative gearing policy.

The Property Investment Professionals of Australia (PIPA) has warned that the Australian Labor Party’s (ALP’s) proposed policy changes to negative gearing are hinged on insufficient economic modelling and broad assumptions.

“The models are dangerously misleading. Such major reform requires comprehensive and detailed modelling. Until there is real evidence to support such a policy, which industry experience tells us doesn’t exist, the opposition should be very careful about changing negative gearing and capital gains tax provisions.”

“Our message is clear – $6.5 trillion[1] worth of Australians’ wealth is tied up in property. That’s roughly three times that held in superannuation and equities. Don’t play with this unless you know what you’re doing.”

Mr Kingsley said the ability to claim expenses associated with a geared business or investment was a principal foundation of the Australian tax system.

“This policy should not be changed in isolation, outside of a complete review of the nation’s taxation policy,” he said.

“Property investment plays an important role in supporting Australians in their pursuit to be self-sufficient retirees and reduce the burden on the public purse to support an ageing population. Moreover, the property market is a significant contributor to economic activity, providing one in four jobs in our economy.

“Labor’s proposed removal of negative gearing on established housing is a poorly-informed policy that will drive property price reductions, increase rents, stifle new property construction, rather than encourage it and cause job losses. Is that a good policy?”

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According to the Property Investment Professionals of Australia’s (PIPA) 2015 Property Investor Sentiment Survey, which gathered insights from more than 1,000 property investors, well over half of investors (63%) believe now is a good time to invest in property and 60% are looking to purchase a property in the next 6-12 months.

Only 20% of investors say that concerns over a property bubble have caused them to put their property investment plans on hold.

PIPA chair Ben Kingsley said the survey results confirmed that investors are taking a longer-term, more sophisticated approach to property investment.

“Property investors are looking past the noise and remaining focused on the long-term investment rewards that well-selected property can deliver,” he said.

“While Sydney’s housing market has become overheated, savvy investors know there are plenty of markets outside of Sydney where there are still opportunities to be found. And with interest rates still low by historical standards, it is still a good time to invest in the housing market, if you’re doing your due diligence and seeking advice from professionals.”

According to PIPA’s survey, an overwhelming majority of investors (74%) consider metropolitan markets are the most appealing place to buy right now. And Brisbane was identified by 58% of investors as being the state capital which currently offers the best investment prospects.

A number of issues are keeping investors awake at night

A third (32%) of property investors say that recent changes to lenders’ policies have impacted on their ability to secure finance for an investment property. However, 37% say it hasn’t impacted them and 49% reported buying an investment property in the last year.

A tightening of lending by banks to property investors is – by a small margin – the biggest concern for investors. Some 20% say it is the most important challenge (out of eight identified in the survey). This issue was only slightly more important to investors than a correction in property prices (top concern for 19%) or a possible removal of negative gearing (16%).

When it comes to negative gearing, the survey found that only around half of investors (54%) have negatively geared property and tax considerations are the most important reason for investment for just 7% of investors.

“Many investors are not negatively geared and for those that are, their properties will eventually generate positive incomes and greater tax revenues,” Mr Kingsley said.

“This suggests that investors see the removal of negative gearing as being bad for the market as a whole – if not necessarily for themselves.”

Property professionals are becoming more important

The survey results show that property professionals are becoming more important. Of those surveyed, two thirds (66%) secured finance for their last investment property from a mortgage broker.

“Mortgage brokers are an important source of finance advice for investors. They tend to better understand the investment lending landscape and offer great choice to investors,” Mr Kingsley said.

Investors also seek advice from many other sources, including lawyers/conveyances and accountants and there is strong interest in using property investment advisers.

More regulation and education are needed to protect investors

The survey found that a significant 67% of property investors believe Australia needs a more comprehensive education program for property investment and 91% believe that people who recommend property investment should be regulated and licensed.

“Unlike other asset classes, property is not classified as a financial product by ASIC and the provision of property investment advice remains unregulated,” said Mr Kingsley.

“PIPA is continuing to lobby the federal government to bring property investment advice into a regulatory framework and we remain dedicated to supporting a healthy, sustainable property investment industry where education and regulation support good outcomes for all involved.”

PIPA’s 2015 Property Investor Sentiment Survey – Key stats at a glance

• 1063 survey responses
• 63% of investors believe now is a good time to invest in property
• 60% of property investors are looking to purchase in the next 6-12 months
• Only 20% of investors say concerns over a property bubble have caused them to put their plans on hold
• 32% of investors say changes to lenders’ policies have impacted them
• 66% of property investors secured finance for their last deal via a mortgage broker
• 91% of investor believe people who recommend property investment should be regulated and licensed

Click here for a copy of the 2015 Property Investor Sentiment Survey Report and full survey results .

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PIPA Chair Ben Kingsley said increasing interest rates for existing investors appeared to be an opportunistic move by banks that could have potentially harmful flow-on effects to the broader property market.

“Increasing borrowing costs for investors, and in some cases owner occupiers, who bought into the market some time ago seems unfair and detracts from what should be the common goal of creating a balanced property market,” Mr Kingsley said.

PIPA believes more targeted measures to slow new investor lending, such as decreasing and restricting borrowing power for new investors in locations where the market was particularly heated, could be a better approach.

“Above all, the industry needs to be united in slowing investor activity in some markets. While PIPA fully supports responsible lending, we believe going forward APRA should take a more transparent approach, rather than continue its current closed door tactics.”

According to Mr Kingsley, APRA’s pressure tactics to force individual lenders to lock out investors, or increase interest rates, have raised both concerns and question marks for the industry.

“While real estate can absolutely be a powerful investment class, people must recognise that not every property in every market will deliver appropriate returns, and in a heated market, the odds are really against you.

“PIPA is urging the government and regulators to join forces and open this debate to the broader industry. Let us all contribute to this discussion and invest in measures that will create a more balanced property market for the long-term, and strengthen this invaluable component of our economy,” he said.

As the peak body for the property investment industry, PIPA has long campaigned for greater education around property investment as well as regulation of property investment advice.

“PIPA remains dedicated to supporting a healthy, sustainable property investment industry, where education and appropriate regulation come together to support good outcomes for all stakeholders involved,” Mr Kingsley concluded.

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Many banks, including the big four, have tightened their lending to property investors over the past couple of weeks, as a result of APRA’s intervention, either changing their lending criteria or charging investors more to take loans with them.

Ben Kingsley, Chair of PIPA, said APRA’s approach was not the sound solution to cooling the Sydney and Melbourne property markets for the long-term.

“While we welcome and endorse a responsible approach to lending, we are concerned about APRA’s market intervention and don’t believe their lender-by-lender approach is the most effective means to control the property market,” he said.

“We recognise that marketplaces like Sydney and Melbourne are posing concerns, as new and existing investors are potentially speculating in trying to capitalise on boom conditions, and we have been active in warning consumers to be careful about this.

“However, there are plenty of other property markets in Australia and these measures are an unfair imposition on investors who want to invest in other parts of our country.”

Mr Kingsley said there were two more immediate measures authorities should take to create a more sustainable property investment industry.

“The government, APRA, ASIC, RBA and the state consumer affairs departments need to join forces and invest in a consumer education campaign to explain to Australian investors the truths about property investment. Only with a clear understanding of the market can investors make more informed decisions,” he said.

“Not every property makes a sound property investment and in this upswing cycle there will be many who will lose money.  We need to teach Australians about this as well as encourage them to seek professional investment advice to limit this from happening.”

In addition to consumer awareness and education, Mr Kingsley said the current market conditions had reaffirmed the need for a comprehensive regulatory framework for property investment.

“I can guarantee you, once losses are experienced in the next few years, those consumers will want to blame someone and will look to blame the government for not protecting them – even if they made their investment decision themselves or bought via a property spruiker.”

“The government needs to be proactive and make progress on putting a minimum standard of education or qualification in place for those providing property investment advice, so we can be sure that Australian investors, who are looking for support to make well-informed investment decisions, can receive the same level of appropriate guidance provided to anyone investing in other assets, such as equities, to avoid a post-boom mess.”

Mr Kingsley added that the property investment industry was an invaluable contributor to economic growth that deserves appropriate recognition and consultation.

“The property investment industry employs tens of thousands of workers, both directly and indirectly and is an important component of the Australian economy. The government and regulatory bodies need to come together and invest the appropriate time and resources so that we can develop a more well-balanced, sustainable property industry for the future.”

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