What is AML/CTF?

AML/CTF refers to anti-money laundering and counter-terrorism financing scheme governed by the Anti-Money Laundering and Counter-Terrorism Financing Act (Cth) 2006 (Act).

AML/CTF legislation was first introduced to Australia in 1988 and has governed financial institutions, gambling services and payment providers since 2006. Now the government has expanded the AML/CTF laws to incorporate services of lawyers, accountants, real estate agents, professional service providers, and dealers in precious stones and metals. The core purpose of the Act and the framework is to uncover, deter and disrupt illegal activities of money laundering, counter-terrorism financing, fraud and proliferation financing.

When does this apply to Real Estate industry?

From 1 July 2026, agents who provide a service to sell, purchase or transfer of real estate (Designated Service) are legally obligated to comply with the AML/CTF legislation. Under the Act a Designated Service commences at two separate points in the transaction. The first is when the Form 6 appointment is signed with a client, and again when a contract of sale is executed.

What does this mean for you as a buyer?

As a buyer, this means you will be required to provide range of personal information and other information about your intended purchase to the selling agent, and your buyer’s agent (if applicable). You should note questions relating to AML/CTF assessment go far beyond the normal verification of identity and you should expect to answer questions and provide documentation such as:

• Your identity, occupation and countries you are linked to;
• The source of your funds for the intended transaction;
• The services you are seeking from the agent and why;
• If you have ever been a politically exposed person or have relatives or close associates who are or were politically exposed persons; and
• If you are purchasing the property under a company or trust, who the ultimate beneficial owners are and supporting document to demonstrate this.

Can I opt-out of this?

No, an agent cannot act on their client’s behalf until they have completed their AML/CTF assessment and those required in relation to the counterparty in the transaction. Every real estate professional in Australia providing a Designated Service must comply with these laws. How is my personal information and data stored and protected? The agent/s involved with your transaction are legally obligated to store your personal information and data for a minimum of 7 years. The agent/s must also collect and store data pursuant to the Privacy Act (Cth) 1988. If you are concerned about your privacy, the REIQ recommends you speak with the agent/s to understand how they will store and protect your data.

I have already completed this with my bank and/or my lawyer; why am I doing this again?

The Act requires multiple AML/CTF assessments across a variety of professionals. Unfortunately, this leads to duplication of client checks across providers such as banks, lawyers, accountants and real estate agents. Although the laws do allow for potential sharing of information amongst these professionals, this can be complicated and is not always possible.

proudly supplied to agency by Queensland peak real estate body the REIQ

Australian housing values grew 22.1% last year and the market is showing signs this extraordinary rate of growth – not seen since the 1980s – is slowing across most of the capital cities.

Yet as the rate of dwelling value appreciation slows, capital city and broad ‘rest of state’ markets are yet to peak, causing plenty of speculation about whether this will occur in 2022 and mark the start of a downturn. 

CoreLogic’s Research Director Tim Lawless explains when a market has peaked, the biggest factors impacting Australia’s housing in 2022 and the trends property watchers should be keeping an eye on this year.
 
When to call a peak in housing values

“To categorise a market peak across a region, we would generally be looking for a consistent trend in negative monthly movements,” Mr Lawless says.

“To date, the quarterly trend remains positive across the major regions, with the only exception being Darwin houses, which is the only capital city housing sector to record a negative quarterly change. 

“The Darwin reading can be more volatile than other cities due to the small size of the market, so it may be too early to call a peak in this market even though the quarterly growth rate has turned negative.”
  
Peak vs peak rate of growth

“Although we can’t see any evidence that specific housing markets have peaked, it is clear that most markets have moved through a peak rate of growth,” Mr Lawless says.

“What I mean by that is the point at which markets achieved their biggest monthly growth rate. We saw most of the capitals moved through a peak rate of growth around March last year.”

•    Sydney’s monthly growth rate peaked at 3.7% in March and has since reduced to 0.3%
•    Melbourne’s monthly growth rate peaked at 2.4% in March, reducing to -0.1% in December (the first monthly decline since Oct 2020)
•    Perth’s monthly growth rate peaked at 2.7% in February.  After recording only a single month of decline (-0.1% in Oct 2021) the monthly rate of growth has reaccelerated to reach 0.4% in December
•    Hobart’s monthly growth rate peaked at 3.3% in March and dropped to 1.0% in December
•    Darwin moved through a peak rate of monthly growth in April at 2.7% (0.6% in December)
•    Canberra moved through a monthly peak in March at 2.8% (0.9% in December)

Market exceptions and future expectations

“The only broad regions avoiding a slowdown in the pace of growth in housing values are Brisbane, Adelaide and regional Queensland,” Mr Lawless says.

“These markets are benefitting from a healthier level of affordability compared with the largest capitals along with a positive demographic trend and consistently low advertised stock levels.” 

“We could see our two biggest capital city markets Sydney and Melbourne hit their peak later this year although the timing is highly uncertain and depends on a broad range of influences.”

Three main factors that determine when and if a market peak will occur

“There are a lot of moving parts that will affect the trajectory of housing outcomes,” Mr Lawless says.  

The three biggest factors to impact market movements are: 
•    Policy-related factors such as interest rates and credit availability 
•    Market factors like the trend in advertised stock levels and housing affordability 
•    Economic factors such as labour market conditions and wages growth

“Arguably, the surge in COVID cases associated with the Omicron variant could push some of these policy tightening decisions back, with APRA or the RBA unlikely to tighten their policy settings with so much uncertainty associated with the latest case numbers,” Mr Lawless says.

“There is also some downside risk from a delayed economic recovery associated with less spending activity and heighted uncertainty, although a slower than forecast economic recovery implies rates would stay lower for longer.” 

Key signals that a market is approaching its peak

“Normally, housing growth trends will gradually slow before moving into a correction phase, which is what we are seeing at the moment. However, this isn’t always the case. During periods of shock such as the GFC or early in the pandemic, housing trends turned quite sharply into negative territory,” Mr Lawless says.

Other signs to watch for include:
•    rising advertised stock levels
•    affordability constraints
•    weakening auction clearance rates
•    softening vendor metrics such as longer days on market and larger levels of discounting

“It’s fair to say we are currently seeing a softening in all of these metrics, albeit from an historically high base,” Mr Lawless says.

“We also consider macro factors, which could have an impact on housing demand such as the potential for higher interest rates or tighter credit policies. Both of these factors have a high level of uncertainty at the moment, especially considering the latest wave of COVID cases associated with Omicron which could weigh down economic activity.”

What to expect following a market peak

“Once a market peaks, the typical trend is that values will experience a period of decline,” Mr Lawless says.

“The duration and severity of the decline is dependent on a broad range of both macro and micro factors.”
 
Since the late 1980s, Australia has experienced national downturns that have ranged in severity from a 1.0% peak to trough decline in 2015-16, a temporary correction following the first round of credit tightening via APRA’s 10% speed limit on investment lending, to the most recent 8.4% decline experienced during the 2017-19 downturn.

At a capital city level, the most severe downturns have followed periods of exuberance such as the mining infrastructure boom in Perth and Darwin where housing values in Perth fell by 20.0% over 64 months (moving through a peak in June 2014 and finding a floor in October 2019). 

In Darwin, dwelling values fell 32.7% over 69 months (May 2014 to February 2020), although both downturns were preceded by a spectacular upswing in values. 

The above article is 100% from CoreLogic the national real estate data organisation RP Data.

https://www.corelogic.com.au/news/peak-peaking-peaked-how-read-australias-housing-market?utm_medium=email&utm_source=newsletter&utm_campaign=20220117_propertypulse