Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
David Whittem from Capital First National expects the O’Connor/Canberra property market to steady for the remainder of 2011, on the back of a falling 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 Whittem said in the network’s Property Outlook 2011 Mid Year Update released this week. “Housing affordability, the threat of interest rates increasing, reducing consumer confidence and tight lending criteria from major banks will help to moderate the market in the coming six months.” In the main, property prices across all segments (house, apartment/strata and land) are expected to remain relatively flat, with any movements kept to a maximum of around 5 per cent. “Lessening demand as a result of rising prices and reducing numbers of investors in the market are helping to steady the market,” Mr Whittem said. “The premium that the ACT government wants to place on each new unit where there is a change from single residential use to a multiple unit site may stop developers from building in the areas zoned for redevelopment and this will have the knock on effect of those affected properties having a decrease in value.” Mr Whittem expects the rental market to remain strong, with vacancy rates tightening and trending downwards, decreasing by between 1 and 5 per cent, while weekly rents are expected to remain flat. “High demand for rental properties due to O’Connor’s close proximity to the CBD, ANU and CSIRO will keep pressure on the rental market through to the end of 2011,” Mr Whittem said. According to Mr Whittem, Upgraders are expected to represent the strongest growth in activity in the Canberra market and any growth in investor activity is seen as a result of better rental yields and returns and the easing of bank lending criteria.
“However, investors are monitoring closely, and wary of changes to, negative gearing and other tax reforms, which may impact on their intention to become active again,” Mr Whittem cautioned. 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. Mr Whittem 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 Whittem said. Lower immigration levels would certainly impact on the local Canberra property market – but impacts could be both positive and negative, according to Mr Whittem. “Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices,” Mr Whittem 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 Whittem 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, David Whittem, Capital First National on 02 6249 6422