Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Russell Burton from First National Real Estate Burton Groves expects the Adelaide property market to weaken further over the remainder of 2011, on the back of a falling market throughout the first half of the year with supply exceeding demand. “This creates prime conditions, especially for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Burton said in the First National Property Market Outlook Mid Year Update released this week. “Rising stock levels, together with reasonable buyer demand will help to steady the market in the coming six months,” Mr Burton said. According to the Update, in the main, property prices across all segments (house, apartment/strata and land) are expected to trend downwards with any movements kept to between 1 and 5 per cent. “Reduced demand coupled with a lack of consumer confidence is impacting negatively on house and apartment/strata property prices, while the large supply of land and drop in building approvals is keeping land prices steady,” Mr Burton said. Mr Burton believes the rental market is expected to flatten with vacancy rate movements kept to less than 1 per cent, given they are already low and there is still a high demand for rentals. “High demand, stimulated by immigrants and students, will keep upward pressure on weekly rents, which are expected to increase by between 1 and 5 per cent,” Mr Burton said. Growth is expected to come from Investors, lured by the prospect of improved rent returns, good buying opportunities, increased second buyer activity and easing of bank lending criteria. “While investor activity is expected to increase by between 1 and 5 per cent, it is upgraders who represent the strongest growth in activity for the Adelaide region,” Mr Burton said.
The Government’s move to introduce a carbon tax is not supported by First National members, primarily as a result of concerns about the impact on confidence, the economy, saleability of existing housing stock, and values. “However, more customers will seek energy efficient features when looking to buy a new home, due to the rising household energy costs and the challenge of maintaining a healthy home budget as energy becomes more expensive, and energy efficiency takes on more significance in the buying decision,” Mr Burton said. “A carbon tax will also potentially decrease demand for homes that are not currently adapted for energy efficiency.” Mr Burton considered Stamp Duty should be abolished altogether, as it only serves to stifle the property market and is an unfair and unequitable tax. Removing stamp duty from the home purchase equation will make buying a home more affordable. “Stamp Duty should only be abolished, however, as long as the mooted plans for replacing it with other taxes such as a broad-based land tax, including the family home, or death duties are not carried through,” Mr Burton said. “And any talk of abolishing negative gearing should cease immediately.” The exclusion of any of these proposed policy changes from the recently announced state budget may be an indication that the Government does not intend to take such matters any further. Mr Burton said a key change for the property market, which will impact quite significantly, is the number of local government authorities throughout the state and territory who are amending their planning regulations to allow for higher density developments which should see activity increase. - copy ends – Issued by: First National Real Estate. For further information or to receive a copy the 2011 Property Outlook, Russell Burton from First National Real Estate Burton Groves on 08 8265 5511