Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Deanne Lamprey from First National Real Estate Burnie expects the local property market to weaken over the remainder of 2011, on the back of a falling market during the first half of the year due to an oversupply of overpriced homes sitting on the market. “This creates prime conditions, especially for investors to capitalise on lower house prices, increasing rents and improved yields,” Ms Lamprey said in the First National Property Market Outlook Mid Year Update released this week. According to the Update, in the main, property prices across all segments (house, apartment/strata and land) are expected to drop, or flatten out, with movements kept mainly to below 1 per cent. “While there has been an increase in investment properties on the market, there has been no resultant increase in investment purchases,” Ms Lamprey said. “Dealing with government decisions in relation to taxes and levies represents a key challenge for the Burnie property market. Introducing exit taxes on the sale of investment properties may see a flood of these properties come onto the market, pushing prices downs.” Ms Lamprey said limited planning land releases are serving to keep land prices stable. The rental market is expected to remain steady, with any movements kept to less than 1 per cent. “Movements in vacancy rates are subject to interest rates,” Ms Lamprey said. “Unless there are significant changes to interest rates in the near future, vacancy rates should remain fairly steady. Continued low vacancy rates will keep pressure on weekly rents. “There has been a rise in lease breaks mainly due to work transfers to another area, but there has been a steady stream of new renters coming into the area which has helped keep rates stable. The winter time may see a spike in available rentals, but they will tighten up once spring arrives.”
Ms Lamprey believes investor activity will increase by mainly between 1 and 5 per cent, driven by affordability and low vacancy rates. “However, upgraders are expected to represent the strongest growth in activity as a result of people upsizing and getting out of their first home,” Ms Lamprey said. “The first home buyer market has stalled completely even in the light of investors selling to free up capital and the movements in the upgrader market.” 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,” Ms Lamprey said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.” Ms Lamprey considers Stamp Duty should be abolished altogether, as it is an inefficient tax and does not serve the property market in any real positive sense. “Although it does help fill the coffers of Government,” Ms Lamprey said. “Property prices have risen significantly in the past 9-10 years and the Stamp Duty scales have remained the same. If Stamp Duty was abolished altogether this would definitely stimulate the housing economy and contribute to making housing more affordable.” Ms Lamprey said Government should also not consider replacing the stamp duty with another form of tax, like an across-the-board land tax or death duties. “The introduction of a new tax coupled with the rising costs of electricity, water/sewerage charges and the possibility of further interest rate rises will put a strain on households,” Ms Lamprey said. “And any talk of abolishing negative gearing should cease immediately as it would act as another disincentive for investors.” Ms Lamprey believes lower immigration levels would certainly impact on the property market and the Government should not look at lowering them. “The population has remained stagnant for a few years with families leaving the state in search of ‘greener pastures’,” Ms Lamprey said. “New immigrants are supplementing what the state is losing and in turn bringing skilled labour to the state which it seems to be lacking according to recent media reports.”
The exclusion of any of these proposed policy changes from the recently announced budget may be an indication that the Government does not intend to take such matters any further. - copy ends – Issued by: First National Real Estate. For further information or to receive a copy the 2011 Property Outlook, Deanne Lamprey from First National Real Estate Burnie on 03 6431 4544