Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Brian Thomas from First National Real Estate Armidale expects the Armidale property market to moderate for the remainder of 2011, on the back of a rising market over the first half of the year. “This will create an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields,” Mr Thomas said in the network’s Property Outlook 2011 Mid Year Update released this week. “However, housing affordability, the threat of interest rates increasing, reducing consumer confidence and tight lending criteria from major banks will serve to moderate the market to some extent in the coming six months. “In the main, property prices across all segments, for houses, apartment/strata and land, are expected to remain flat, with any movements kept to a maximum of up to 1 per cent.” Mr Thomas believes the rental market is expected to remain strong, with vacancy rates holding at between 0.5 and 1.5 per cent, while weekly rents will trend upwards, increasing by between 1 and 5 per cent as a result of increasing tenant demand. According to Mr Thomas, investor activity is expected to increase by between 1 and 5 per cent, driven by affordability and high returns. “However, investors will monitor closely and be wary of changes to negative gearing and other tax reforms, which may impact on their levels of interest,” Mr Thomas said. First home buyers are expected to represent the strongest growth in activity for the Armidale region. 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 budge,” Mr Thomas said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property. “Although, this could be an each-way bet, but until the tax is introduced and the impacts felt, it is difficult to predict the outcome on property transactions.” Mr Thomas considers Stamp Duty should be abolished altogether, as it would deliver on the promise to eliminate indirect taxes such as Stamp Duty when the GST was introduced. “This should only happen 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 Thomas said. “And any talk of abolishing negative gearing should cease immediately, as any changes to negative gearing may prove detrimental to the real estate industry.” Lower immigration levels would certainly impact on the property market – but impacts could be both positive and negative, according to Mr Thomas. “Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices,” Mr Thomas said. “However, existing infrastructure is sagging under the pressure of the current population.” The exclusion of any of these proposed policy changes from the recently announced NSW state budget may be an indication that the Government does not intend to take such matters any further. “It is hoped that the change in NSW government will see some changes in planning policy to enable developers to release more land at a more affordable development cost and with reduced red tape,” Mr Thomas said. “There is, however, a budget loss to be recovered and this may impact on the ability of the new government to effectively move forward with their plans.” - copy ends – Issued by: First National Real Estate For further information or to receive a copy of the 2011 Property Outlook, Brian Thomas, Principal from First National Real Estate Armidale, on 02 6772 1277