Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Peter Watson from First National Real Estate Frank Fracey expects the Berwick and Pakenham property market to steady further over the remainder of 2011, on the back of a moderating market during the first half of the year. “This creates prime conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Watson said in the First National Property Market Mid Year Update 2011 released this week. “Financial uncertainty combined with rising living and utility costs are slowing the market down, although conditions are still good for homebuyers, particularly investors,” Mr Watson said. The State Budget decision to lower stamp duty prices for first home buyers should help stimulate this segment of the market. “Consumer confidence, as a result of uncertainty about economic, global and market conditions is causing people to feel more vulnerable, so they are saving more and spending less, all of which is impacting on the property market,” Mr Watson said. In the main, Mr Watson expects house prices to remain relatively flat, with the relative affordability of the location keeping the market slow down to a minimum. He believes the rental market is expected to strengthen, with weekly rents trending upwards, increasing by between 1 and 5 per cent due to demand exceeding supply and creating a rise in prices. According to Mr Watson, investor activity in the region was expected to increase by between 1 and 5 per cent. “Growth is expected to result from better rental yields and weekly returns,” Mr Watson said. “However, it is first home buyers who are expected to generate the strongest growth in activity for the remainder of 2011, gaining momentum from early 2012 as the lower stamp duty begins to take effect.”
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. “But, more customers may 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,” Mr Watson said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.” Mr Watson considers Stamp Duty should be abolished altogether, but not if it is replaced by some other form of tax such as a broad-based land tax or death duties. “Stamp Duty unfairly penalises those who choose to invest in property rather than securities and replacing it with a broad-based land tax makes home ownership even harder to achieve for those entering the market on limited incomes, placing greater demand on state funded housing,” Mr Watson said. “The notion of taxing someone on their death is also unfair and uncompassionate and any talk of abolishing negative gearing should cease immediately as it unnecessarily creates market nervousness.” Lowering immigration levels would certainly impact on the Berwick and Pakenham property market – however, there could be both positive and negative outcomes according to Mr Watson. “ For real estate prices, it was considered that immigration should be increased, but for liveability, they should be decreased as the current infrastructure is probably unable to support more people in the state,” Mr Watson said. The exclusion of any of these policy changes from the recently announced Victorian state budget may be an indication that the Government is not intending to take the matters any further. Mr Watson said the biggest challenge for the Berwick and Pakenham property market is overcoming slow implementation of planning policy framework, particularly in the process of getting precinct structure plans finalised in a timely manner so growth area developments can proceed as demand dictates. - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Peter Watson from First National Real Estate Frank Facey on 03 9707 6000