Thane Group Newsletter – June 2018

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NEWSLETTER – June 2018

BUSINESSES AT THE COLD FACE

THANE FINANCE

The Australian Dollar is currently sitting at 74 cents to the US Dollar. It has had a fairly static ride in the recent quarter, however coming down on a steady decline since January. This is good news for our exporters and the economy in general.

The volatility has decreased over the recent quarters or at least the dollar is gaining predictability. We see no major changes in this range within the coming months.

Source: www.xe.com/currencychart (XE Corporation)

THANE CONVEYANCING

Here are some interesting statistics from Landgate showing property transaction activity.
Total Document Lodgements, by Month
Financial Year 2017 2018 % previous month % last year
Jan 20,925 21,122 0.94%
Feb 22,017 20,715 -1.93% -5.91%
Mar 25,154 22,546 8.84% -10.37%
Apr 20,193 21,183 -6.05% 4.90%
May 26,615 25,227 19.09% -5.22%
June 27,462
The majority of months show that 2018 lodgements are still less than those of 2017.
Mortgage Lodgements, by month
Financial Year 2017 2018 % previous month % last year
Jan 4,746 5,636 18.75%
Feb 5,709 5,397 -4.24% -5.47%
Mar 6,669 5,833 8.08% -12.54%
Apr 5,343 5,582 -4.30% 4.47%
May 6,889 6,625 18.69% -3.83%
June 7,485
If you compare these figures with the total documents lodged in the first table,
mortgages make up virtually 26% of all documents each month.
Electronic Advice of Sale Lodgements, by month
Financial Year 2017 2018 % previous month % last year
Jan 4,274 4,359 1.99%
Feb 4,628 4,351 -0.18% -5.99%
Mar 5,301 4,754 9.26% -10.32%
Apr 4,059 4,362 -8.25% 7.46%
May 5,235 5,098 16.87% -2.62%
June 4,751
These figures are good indicators of actual property sales registered at Landgate.

Conclusion:  All three tables show that over the last few months lodgements have fluctuated in very similar percentages which indicates no steady increase in activity yet. However, what is encouraging is the fact that all the May figures are 16-19% up on the previous four months.

Source: https://catalogue.data.wa.gov.au/dataset/business-activity

THANE FINANCIAL PLANNING

Mixed results were felt by major markets across the world over the previous quarter, largely due to uncertainty regarding interest rates, inflation, trade conflict and further political risks.

The ASX in particular has experienced both sharp gains and losses over the previous quarter.

A strong decline was felt mid-way through the first month of the quarter, as a result of uncertainty surrounding US trade policy associated trade conflict (causing a decline in commodity prices) in addition to the pressure felt within the finance sector due to the Royal Commission.

In comparison after a poor performance in March, the second month of the quarter performed well as a result of increasing commodity prices and gains within the health care sector. Following this strong gain, the final month of the quarter has experienced both gains and losses amidst further uncertainty regarding global policy.

Sources: https://nabam.nab.com.au

www.asx.com.au

THANE ACCOUNTING & BOOKKEEPING

Leaving tax planning to the last minute could cost you plenty, because many of the most lucrative tax deductions are not easily organised in the last week of June. As a general rule, the approach should be to pay any tax-deductible expenses now, so that the deductions can be made this year to reduce taxable income and put off any non-deductible costs to the next tax year where possible. For workers, this means buying things such as tools, uniforms and office supplies before the end of financial year. For investors, it can mean carrying out any rental property maintenance before June 30, paying annual landlord’s insurance premiums, or prepaying interest on investment loans.

A tougher tax time is looming for Australia’s real estate investors, with the ATO introducing some harsh rule changes. A new government ban on deductions for landlords’ travel-related expenses and the axing of many depreciation deductions for investors who bought second-hand properties since May last year could cost investors thousands of dollars for each property. There is however still potential for lucrative tax deductions for those who prepay expenses before June 30, as long as they only claim what they should, because the Australian Taxation Office has warned it will be watching property closely. This year it is thought that the ATO will focus on excessive claims for interest expenses, incorrect claims for new property purchases and holiday homes that were genuinely not available to rent and were mainly used by their owners, family & friends.

Changes to superannuation rules last year had given all workers a chance to make extra personal super contributions before June 30 and claim a deduction for them, however the caps are lower, so you need to be careful you don’t put too much in. Since July 2017, the maximum limit for tax deductible super contributions is $25,000 per person, including salary sacrifice and employers’ compulsory 9.5% contributions. Taxpayers should also be aiming to make tax deductible payments such as donations, subscriptions and income protection insurance premiums well before June 30.

Source: https://www.news.com.au/finance/money/tax

THANE PROPERTY

As of late, you will have seen a number of headlines regarding the positivity and movement of the Perth Property market. However, the most applicable we have found to be was “the Perth market could finally be on the brink of stabilising as both activity and sale prices improve”. We can confirm at the end of the May quarter, that after continuous falling prices in the market, we are at last seeing some small improvements.

SALES

Perth’s median house price stabilised in May 2018 – still sitting at $520,000 (on average). In comparison to three months ago in February 2018, the median house price is actually up by 1.1% according to REIWA statistics. We predict even though the Perth market is still “slow”, it is definitely in “recovery mode” and a steadying of the market is on the horizon.

RENTALS

Rental demand is on the up with the Perth vacancy rate sitting at 5.3% (the lowest it’s been since July 2015). This is positive news considering the vacancy rate sat at 7.3% around December last year. Data has shown that rent has steadied and is still sitting on average at $350 per week, and listing levels are declining. We do not predict that the market will allow for rent increases, however, we do see that the market is improving for both landlords and tenants simultaneously, in that rental activity is increasing and rent levels have stabilised and do not look to fall any further.

Perth Weekly Sales & Rental Figures Snapshot|10 June 2018

Overall, there are key drivers for the recovery of the market being the slowdown in housing construction and the slight improvement of economic conditions. Improved economic conditions have given people greater confidence to buy property, whilst the slowdown in construction has meant the oversupply in the property market is slowly decreasing. Moving forward, the overall sales market should remain steady with no further price drops and in the rental market should in essence follow through from this as the number of properties listed for rent decline. On the whole, we do not see rents increasing during 2018, however, note that the massive discount in rental pricing should slowly start to cease.

Sources: https://reiwa.com.au/about-us/news/stable-prices-in-perth-signal-turning-point-for-the-market

https://m.yourinvestmentpropertymag.com.au/market-report/wa/wa-excerpt-from-the-2018-june-market-report-250706.aspx

https://m.yourinvestmentpropertymag.com.au/market-report/wa/wa-excerpt-from-the-2018-may-market-report-249312.aspx

THE ECONOMY AT A GLANCE

Source: Reserve Bank of Australia. Data are the latest available as at 6 June 2018.

A NOTE FROM THE PRINCIPAL

As you can see from the above information, the West Australian economy is somewhat consistent, if not stagnant and becoming very predictable. The period of slow growth in the housing market and less than moderate activity will continue in the following quarter, with no real reason for relief in the medium term. The Australian dollar continues to stay relatively firm at 74 cents. However, most would agree that some movement downwards would be useful and somewhat expected.

*Disclaimer: This newsletter and or its attachments or the content of the newsletter or attachments do not represent the views, intentions or advice of any business component of the Thane Group.

This newsletter and its attachments are not intended in any way to formulate any part of advice formal, personal or otherwise. 

This newsletter is designed for the information only purposes of its recipient and therefore is not intended for re-circulation.