Canberra ACT by First National Real Estate

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e e Y - at

id d M p

firstnational.com.au

CONTENTS 2011 Property Market Outlook Mid-Year Update EXECUTIVE SUMMARY

MARKET TRENDS

GROWTH

CHANGING MARKET CONDITIONS

Canberra Outlook

NATIONAL OUTLOOK

NEW SOUTH WALES OUTLOOK

VICTORIA OUTLOOK

QUEENSLAND OUTLOOK

SOUTH AUSTRALIA OUTLOOK

WESTERN AUSTRALIA OUTLOOK

TASMANIA OUTLOOK

NORTHERN TERRITORY OUTLOOK

Sources

First National Real Estate 2011 Property Market Outlook

Executive Summary First National Real Estate has once again surveyed its 450+ member network to update its 2011 Property Market Outlook with this Mid-Year Update. This update serves to contrast actual market conditions experienced against the predictions of economic commentators and property market analysts. First National Real Estate members are broadly distributed across Australia, throughout cities, suburbs and country towns. Their survey responses have been compiled to develop a picture of the Australian property marketâ&#x20AC;&#x2122;s performance over the last six months, and their outlook for the coming six months. There is an overall Australian outlook, followed by a state-by-state outlook and then, most impor tantly, a local level outlook that provides an in depth overview of what the residential and rental proper ty markets are doing. What is evident from the first six months of 2011 is that the Australian property market is fundamentally resilient, having stood the test of the Global Financial Crisis â&#x20AC;&#x201C; the only country that can lay claim to this. While the property market has levelled out, and consumer confidence has deteriorated, the industry is primed to face the next set of challenges. Conditions have been tough, resulting in 10,000 agents leaving the industry in the past 12 months, but dedicated real estate agents, principals and industry representatives have been creative and strategic in conducting their business over the last few years, so they are in a strong position to move forward today. The biggest challenge the industry currently faces is to restore consumer confidence, where there is growing nervousness, due to overall uncertainty about the marketâ&#x20AC;&#x2122;s direction here in Australia, as well as overseas. Consumer confidence has dropped to a nine year low, which is largely a consequence of three consecutive rate hikes by the Reserve Bank of Australia (RBA), rising costs of living and largely discredited discussion of a property bubble. One cer tainty is that 2011 is the year of the investor. Current market conditions are ideal for investors with rapidly rising rental returns, low, relatively stable interest rates, growing wages, strong employment and low vacancy rates.

First National Real Estate 2011 Property Market Outlook

Executive Summary Australia’s ever-present housing shortage will result in even lower rental vacancy rates and higher rents – a clear signal for investors that the market, from their perspective, is improving. Australian home buyers are preoccupied with thoughts of rising living and utility costs, the introduction of new taxes such as the carbon tax and mooted changes to established rules and regulations such as negative gearing, land tax, and the possible reintroduction of death duties as a replacement for stamp duty etc. In addition, there is considerable uncertainty surrounding house prices – will they increase or decrease, or even remain steady? Should people buy or sell now, or wait in case the market conditions change in their favour? House prices are expected, in the main, to remain relatively steady, although there may be fur ther declines in some areas as well as upper price ranges, and potential for growth in others. This is generally a result of Australia’s buoyant economy and ongoing tight housing market. Rising interest rates and deteriorating affordability will, however, cap any price gains. To date, house prices have broadly tracked income growth, so affordability has remained relatively unscathed. Should this hold, housing prices could gain about 5 per cent a year in the medium term, which is the same as the growth some experts forecast for household income. However, housing affordability is finely balanced. Any further interest rate rises may reduce affordability, which may ultimately dampen any improvement in the residential property market. There is the ongoing uncertainty around Australia’s dependency on China and the mining boom as well as global economies – the UK and US are still trying to gain a toehold with their economies, and Greece and Japan are both struggling to overcome their economic woes. Natural disasters throughout Australasia have also contributed to an almost unprecedented set of conditions that are making Australians very cautious. Domestically, the Australian consumer is also uncertain about what is going on with immigration levels, interest rates and employment. According to the First National Real Estate survey, while more than 60 per cent of the network’s member agents expect interest rates to increase, there is a wide ranging and mixed response about how much rates will increase before the end of 2011 – anything from 0.2 per cent to 2 per cent is anticipated, further emphasising the degree of uncertainty.

First National Real Estate 2011 Property Market Outlook

Executive Summary What should be remembered about interest rates is that they are still 1.6 per cent below their 2008 peak and are still only 12.1 per cent of disposable income (well below the 13.5 per cent peak of 2008). Nonetheless, media commentary remains tightly focused on the environment of rising rates and their potential to impact negatively on house prices. Interestingly, research shows that when interest rates rose one per cent over six months between 2007 and the first half of 2008, price growth kept accelerating. The more the RBA lifted rates, the faster the growth got. The onset of the GFC is what finally slowed the market. In fact, analysis of 30 years of Australian housing data shows that periods of rising interest rates are followed by accelerating or steady house price inflation. As long as these conditions continue, house prices should remain relatively steady and rising incomes should gradually balance any over-valuation that may arguably be in the market. But any movements in interest rates, especially if upwards, may tip this precariously balanced equation. While that will not necessarily be welcome news for some, it will be positive for others, in par ticular investors and home owners. All this uncer tainty is affecting the dynamics of the Australian property market, where consumers are generally de-leveraging and becoming cashed-up, saving at rates not seen for nearly 40 years. Credit card debt is rapidly being reduced, mortgages paid down ahead of time, and, for many, discretionary spending is on hold. The end result is the property market is taking a ‘wait and see’ approach until they can see more cer tainty in economic and market conditions. Even well-known and respected economic forecaster, Charlie Nelson, agrees that Australians are in a holding-pattern at the moment. Mr Nelson, who spoke at First National Real Estate’s recent Australasian Convention in Coolum, said, “Australians will go back to spending but not until their asset bases have recovered to preGFC levels.” “Household debt is no longer growing, credit card debt is growing sustainably and house prices have recovered from their 5 per cent drop in the GFC,” Mr Nelson said. “Household savings ratios have been increasing since 2006 and more people feel they have no major financial concerns. “Willingness and ability to spend are increasing.” But Mr Nelson says it is only when the “elephant in the room, uncertainty, moves on” that more normal conditions will prevail.

First National Real Estate 2011 Property Market Outlook

Market Trends Residential Falling house prices at several points of this year, alongside soft financial figures and building approvals triggered a drop in sentiment in the residential market. According to member agents responding to First Nationalâ&#x20AC;&#x2122;s Property Market Outlook Mid-Year Survey, around 92 per cent said the market had steadied or fallen (see table below). Type of Market - First Six Months 2011 National

ACT

NSW

QLD

TAS

VIC

Falling

53.7%

50%

42.8%

83.3%

100%

75%

33.3%

45.4%

Steady

38.6%

50%

51.0%

11.1%

25%

53.3%

36.3%

Rising

7.5%

6.1%

5.5%

13.3%

18.1%

This trend was expected to continue for the remainder of 2011, although the market was expected to steady fur ther and any falls were to be kept to a minimum. Type of Market - Next Six Months 2011 National Falling

29.2%

Steady

54.7%

Rising

16.0%

ACT 100%

NSW

QLD

TAS

VIC

28.5%

38.8%

37.5%

100%

20%

55.1%

44.4%

62.5%

16.3%

16.6%

60%

72.7%

20%

27.2%

First National Real Estate 2011 Property Market Outlook

Market Trends Property Prices In the coming six months, the majority of our members believe house prices will remain flat, or decrease, with only a small portion saying they may trend upwards. House Prices â&#x20AC;&#x201C; Next Six Months 2011 Across the board, any movements in house prices are expected to be within 10 per cent, but the majority of survey respondents anticipate them to be less than 5 per cent. National

ACT

NSW

QLD

Flat

50.9%

50%

55.1%

55.5%

37.5%

Downwards

32.0%

22.4%

38.8%

62.5%

Upwards

16.9%

22.4%

5.5%

50%

TAS 100%

VIC

46.6%

63.6%

33.3%

18.1%

20%

18.1%

Tasmanian members all believe house prices will trend downwards. Apar tment/strata property prices in the coming six months are a mixed bag, with some states and areas expecting them to trend upwards, some downwards and some for them to remain flat. Apartment Prices â&#x20AC;&#x201C; Next Six Months National

ACT

NSW

QLD

Upwards

20.7%

50%

28.2%

11.7%

12.5%

Downwards

33.6%

50%

15.2%

58.8%

62.5%

Flat

45.5%

56.5%

29.4%

25%

TAS

VIC

28.5%

36.3%

75%

14.2%

54.5%

25%

64.2%

36.3%

Price movements for Apartment/strata property prices are expected, in the main, to be below 5 per cent.

First National Real Estate 2011 Property Market Outlook

Market Trends Land Prices According to the survey, most of our members expect land prices to remain flat, with some predictions for prices to head upwards, and some downwards. Victoria is the only state where the majority of members say land prices will trend upwards. Any movements in land prices are expected to be mainly less than 5 per cent with some saying they may be as much as 10 per cent and a minority predicting movements of between 10 per cent and 20 per cent. Land Prices – Next Six Months National

ACT

NSW

QLD

Upwards

19.4%

50%

20.8%

5.8%

12.5%

Downwards

25.2%

50%

16.8%

41.1%

37.5%

Flat

55.3%

62.5%

52.9%

50%

TAS

VIC

42.8%

9.0%

25%

28.5%

27.2%

75%

28.5%

63.6%

Prices:

Rental Market Rents are currently growing faster than house prices, driven by a shortage of rental stock. In the first quar ter to March 2011, rents rose on average: • 7.6 per cent in NSW • 6.5 per cent in Victoria • 2.8 per cent in Queensland With tight rental vacancies and ongoing demand for rental accommodation we expect this trend of increasing rents to continue.

First National Real Estate 2011 Property Market Outlook

Market Trends According to our membersâ&#x20AC;&#x2122; surveyed, the majority expect weekly rents to increase while vacancy rates will reduce even further or remain flat. Movements in weekly rents and vacancy rates are expected to be mainly less than 5 per cent, although there are some who believe it may be as much as up to 20 per cent. Weekly Rents â&#x20AC;&#x201C; Next Six Months National

ACT

NSW

QLD

TAS

VIC

79.6%

50%

83.3%

58.8%

62.5%

50%

100%

90.9%

4.1%

5.8%

12.5%

35.2%

25%

Prices:

Upwards Downwards Flat

3.8% 16.5%

50%

9.0%

According to recent statistics, rents climbed by 2.9 per cent over the 12 months to March 2011 and by 4.8 per cent over the last quarter. Weekly rents for houses increased by 3.3 per cent and for units by 2.0 per cent over the 12 months March 2010 to March 2011. As an indication of where opportunities exist for investors, the following table highlights rental growth of median rentals for each state:

First National Real Estate 2011 Property Market Outlook

Market Trends Median Rent Growth â&#x20AC;&#x201C; Next Six Months City

Rental Growth

Property Type

5.3%

All

22.2% 19.6% 15.6%

House House House

4.5%

All

18.2%

Unit

4.4%

All

20.4% 17.2% 16.7%

House House House

Darwin

3.7%

All

Adelaide

2.8%

All

13.6% 12.0%

House Unit

Canberra

2.5%

All

Melbourne

-0.9%

All

13.5%

Sydney - Woollahra - Burwood - Ashfield Hobart - Sorell Perth - Nedlands - Claremont - Cottlesloe

- Adelaide - Port Adelaide/ Enfield

- Mornington Peninsula - Cardinia - Mornington Peninsula Brisbane

Median Rent 2010

Median Rent 2011

$900 $460 $450

$1,100 $550 $530

$220

$260

$685 $725 $750

$825 $850 $875

$423 $250

$480 $280

Unit

$260

$295

10.6% 10.0%

Unit House

$235 $300

$260 $330

-1.0%

All

First National Real Estate 2011 Property Market Outlook

Growth Members surveyed believe the strongest growth in their region will come primarily from investors, followed by upgraders, then first home buyers and lastly from retirees. Growth Markets – Next Six Months National

ACT

NSW

QLD

TAS

VIC

Investors

41.9%

50%

41.6%

33.3%

37.5%

50%

33.3%

72.7%

Upgraders

32.3%

50%

29.1%

50%

37.5%

25%

26.6%

18.1%

FHB’s

14.2%

16.6%

5.5%

33.3%

9.0%

Retirees

11.4%

12.5%

11.1%

25%

6.6%

Investor activity is expected to increase across the board, with all member survey respondents saying they anticipated growth in this segment. Investor Growth Rate Expectations – Next Six Months National

ACT

NSW

QLD

20%

15.3%

42.8%

51.1%

53.8%

28.3%

TAS

VIC

13.3%

20%

50%

60%

40%

26.6%

30%

0-%

19.1%

1-5%

51.0%

5-10%

23.4%

24.4%

23.0%

14.2%

25%

1020%

6.3%

4.4%

7.6%

14.2%

25%

100%

10%

Investor growth is expected to be driven mainly by better rental yields and returns, increased second buyer activity and easing of bank lending criteria.

10 First National Real Estate 2011 Property Market Outlook

Growth What Will Drive Investors – Next Six Months National

ACT

NSW

QLD

TAS

VIC

Yields

89.6%

100%

91.8%

92.8%

100%

81.8%

75%

2nd buyer

71.6%

16.6%

69.2%

66.6%

50%

76.9%

60%

40%

63.6%

66.6%

53.8%

42.8%

46.1%

62.5%

66.6%

Criteria

50%

All of above

46%

100%

50%

44.4%

As upgraders become more active, members expect opportunities will also be created for first home buyers to re-enter the market. However, any movement by investors and upgraders may be diminished if Government continues to talk up proposed policy changes such as discontinuing negative gearing, introducing an investor exit tax, abolishing stamp duty and replacing it with a broad based land tax that would be applicable to family homes, or, replacing stamp duty with death duties. It is hoped that because these proposals were not included in the recent budget, they are nothing more than ‘trial balloons’ intended to gauge public opinion.

First National Real Estate 2011 Property Market Outlook 11

Changing Market Conditions The Governmentâ&#x20AC;&#x2122;s proposed changes to some property market policies will have far-reaching effects for many in the industry and some are quite polarising. In the main, however, our members are not in support of many of them. The table below outlines their response to some of the key policy changes being discussed. National %

ACT %

NSW %

QLD %

SA %

TAS %

VIC %

WA %

88.4

100

93.8

94.4

100

92.3

45.4

92.2

100

89.3

100

87.5

100

85.7

100

98.0

100

95.8

100

92.2

50.0

91.4

100

87.5

100

77.3

100

94.4

62.5

100

73.3

63.6

Donâ&#x20AC;&#x2122;t support - Carbon tax - Stamp duty vs land tax - Stamp duty vs death duty - Dispose of neg. gearing

Do support - Abolish stamp duty

76.6 per cent of members said they expected a carbon tax would increase the percentage of customers seeking energy efficient appliances when looking to buy a new home. One of the greatest changes in how the property market operates in Australia relates to the increasing importance of social networking tools in marketing properties and information gathering. Some reports say that Australians spend more time using social media per month than any other country â&#x20AC;&#x201C; and First National members have been quick to recognise the relevance of this medium for their clients. Social networking tools are expected to play an even greater role in the marketing of proper ties in the last six months of 2011 with 54.2 per cent of survey respondents indicating they plan to begin using, or increasing the use of, these tools, while 21.9 per cent said they might. Disclaimer: There are many uncertainties in forecasting movements in the market such as government policy changes, interest rate changes and global economies. Therefore, the forecasts in this report should be taken to be indicative of anticipated market directions. First National Real Estate takes no responsibility for actions taken on the basis of this report and encourages all vendors and buyers to conduct their own research.

12 First National Real Estate 2011 Property Market Outlook

Canberra Outlook The Canberra proper ty market is expected to steady for the remainder of 2011, on the back of a falling market over the first half of the year. 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. Property Prices 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. 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 proper ties having a decrease in value

Rental Market The rental market is expected 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 Oâ&#x20AC;&#x2122;Connorâ&#x20AC;&#x2122;s close proximity to the CBD, ANU and CSIRO will keep pressure on the rental market through to the end of 2011.

Growth 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 â&#x20AC;&#x201C; which may impact on their intention to become active again.

First National Real Estate 2011 Property Market Outlook 13

Canberra Outlook CHANGING MARKET CONDITIONS Interest rates are expected to remain unchanged until the end of 2011. The Governmentâ&#x20AC;&#x2122;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. Members consider that 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 broadbased land tax, including the family home, or death duties are not carried through. Lower immigration levels would certainly impact on the local Canberra property market â&#x20AC;&#x201C; but impacts could be both positive and negative. Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices. However, existing infrastructure is sagging under the pressure of the current population.

14 First National Real Estate 2011 Property Market Outlook

National Outlook First National’s State Chairmen are divided on the type of market it has been over the last six months, confirming the variety of market conditions nationally. Half say it has been steady and the balance say it has been falling. However, there is a consensus among the Chairmen that, for the remainder of 2011, the market will remain relatively steady (83.3 per cent) with some potential for price falls in Victoria. The main reasons cited being market uncertainty, consumer nervousness and affordability pressures. There is also consensus that the rental market will continue to tighten, putting further pressure on weekly rents and providing excellent yields and returns for investors – which all Chairmen agree will see an increase in activity for this segment of the market. Interest rate movements of up to 1 per cent are anticipated: • SA and WA chairs said they will likely remain unchanged • Tasmanian, Queensland, Victorian and NSW Chairs say they expected them to increase; and • the NT Chair said he expected them to decrease

Property Prices First National expects property prices to remain relatively flat across the board with potential for falls in house prices in Victoria and apartment/strata property price falls in Queensland. • 83.3 per cent of Chairmen expected house prices to remain flat (NT, Tasmania, SA, Queensland and NSW), while Victorian house prices could fall. Should this eventuate, it is seen as more a correction of Victorian property prices, following their strong performance over recent years. • 83.3 per cent of Chairmen expected apar tment/strata proper ty prices to remain flat (NT, Tasmania, SA, Victoria, NSW) while Queensland apartment property prices could fall. • All State Chairmen expected land prices to remain flat for the rest of 2011.

First National Real Estate 2011 Property Market Outlook 15

National Outlook Rental Market Vacancy rates are expected to tighten even fur ther in SA, Victoria and NSW, ease slightly in NT and Queensland and remain flat in Tasmania. However, all State Chairmen with the exception of NT, expected weekly rents to trend upwards due to ongoing strong demand for rental properties. The NT expected weekly rents to remain steady. All State Chairmen expected an increase in investor activity of between 1 and 5 per cent due mainly to improved rental yields and returns, less competition from first home buyers and easing of lending criteria.

Growth While there was consensus that investors would return to the market, only NSW expected this segment to generate the strongest growth over the next six months. NT, Tasmania, SA and Queensland all expected the strongest growth in activity to come from upgraders, while Victoria said it would be from the first home buyer segment.

Changing Market Conditions According to First National State Chairmen, the Government has a lot to answer for the state of consumer nervousness, given its talk around certain property market policy changes. All agreed that they did not support the governmentâ&#x20AC;&#x2122;s proposed carbon tax and with the exception of Victoria there was general consensus that a carbon tax would increase the number of customers seeking energy efficient features. Tasmania, SA and NSW said they thought stamp duty should be abolished altogether. NT, WA, Queensland and Victoria said it should not, but primarily because they believed it would just be replaced with another tax from somewhere else. The majority of Chairmen believed stamp duty should not be replaced by a broad-based land tax (including the family home) or with death duties.

16 First National Real Estate 2011 Property Market Outlook

National Outlook Chairmen Responses – Should Stamp Duty Be Replaced with a Broad-Based Land Tax or Death Duties? Broad-based Land Tax

Death Duties

Tasmania

South Australia

Yes

New South Wales

Northern Territory

Western Australia

Yes

Queensland

Victoria

Yes

Challenges According to the network’s State Chairmen the key challenges facing the Australian Proper ty Market for the remainder of 2011 were: • Increased investor activity: attracting more investors back into the market • Tax reforms: uncertainty around stamp duty, death duty, land tax, carbon tax • Rising utility and living costs: including the costs of implementing and maintaining the carbon tax, where these costs could outweigh the income from the tax itself.

First National Real Estate 2011 Property Market Outlook 17

New South Wales Outlook The NSW property market is expected to steady fur ther over the remainder of 2011, on the back of an already steadying, and in some cases falling, market over the first half of the year. Housing affordability, the threat of interest rates increasing, and improved lending criteria from major banks will help steady the market in the coming six months. The First National Proper ty Market Outlook Mid-Year Sur vey shows 55 per cent of NSW member respondents said they anticipated the market to steady even further in the coming six months, 28.5 per cent said they thought it would fall and 16.3 per cent said they believed it would rise. Property Prices In the main, property prices across all segments (house, apartment/strata and land) are expected to remain flat, with any movements kept to a minimum of between 1 and 5 per cent. The majority of NSW survey respondents (55 per cent) said house prices would remain flat, 22.4 per cent said they would fall and 22.6 per cent said they would trend upwards. It is a similar picture for apartment/strata and land prices where 26.2 per cent and 20.8 per cent respectively said they would trend upwards, 15.2 per cent and 16.6 per cent respectively said they would trend downwards and 56.5 per cent and 62.5 per cent respectively said they expected them to remain flat.

18 First National Real Estate 2011 Property Market Outlook

New South Wales Outlook Rental Market The rental market is expected to remain strong, with vacancy rates tightening and trending downwards, while weekly rents will trend upwards. The sur vey showed 61.7 per cent of NSW respondents believed vacancy rates would trend downwards, and 83.3 per cent said they expected weekly rentals to trend upwards. A shor tage of available rental accommodation and ongoing demand should see rent increases of between 5 and 10 per cent. The cost of renting compared to buying continues to climb. The Sydney rental market, in particular, remains tight with low vacancy rates and upward pressure on rents. With rising rentals, and the expectation that the current apparent buyersâ&#x20AC;&#x2122; market in Sydney will end soon, investors are likely to become more active in the marketplace.

Growth Investor activity is expected to increase by between 5 and 10 per cent, driven by low interest rates and increasing weekly returns. Investors are expected to represent the strongest growth in activity due to increased second buyer activity, better rental yields and easing of banking lending criteria. According to the survey, 41.6 per cent of NSW respondents thought the strongest growth in activity would come from investors, 29.1 per cent thought it would come from upgraders, 16.6 per cent from first home buyers and 12.5 per cent from retirees. However, investors will closely monitor and be wary of changes to negative gearing and other tax reforms that may affect their intention to become active once again.

First National Real Estate 2011 Property Market Outlook 19

New South Wales Outlook Changing Market Conditions Interest rates are expected to increase before the end of 2011, by between 0.25 and 0.5 per cent. Based on the survey, 61.2 per cent of NSW respondents thought they would increase, 8.1 per cent thought they would decrease and 30.6 per cent thought they would remain unchanged. The Governmentâ&#x20AC;&#x2122;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. Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property. Essentially, this could be an each-way bet, but until the tax is introduced and the impacts felt, it is difficult to predict the impact on property transactions with certainty. Broadly, New South Wales members believe Stamp Duty should be abolished altogether, as it would promote more efficient use of existing housing stocks. This is, of course, provided proposals to replace it with other taxes such as a broad-based land tax, ensnaring the family home, or death duties, are not implemented. Members were also of the opinion that any talk of abolishing negative gearing should cease immediately. Lowering immigration levels would certainly impact on the NSW property market â&#x20AC;&#x201C; but impacts could be both positive and negative. Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices. However, existing infrastructure is sagging under the pressure of the current population.

20 First National Real Estate 2011 Property Market Outlook

New South Wales Outlook Survey responses from NSW members on their thoughts to the policy changes include: Policy

Yes

6.1%

93.8%

Carbon tax will increase percentage of customers seeking energy efficient features when looking to buy

75.5%

24.4%

Should Stamp Duty be abolished

75.0%

25.0%

Should Stamp Duty be replaced with a broad-based land tax

10.6%

89.3%

Should Stamp Duty be replaced with death duties

4.1%

95.8%

Would support disposing of negative gearing

8.5%

91.4%

Support a carbon tax

Undecided

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 reduce red tape. 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.

First National Real Estate 2011 Property Market Outlook 21

Victoria Outlook The Victorian proper ty market is expected to flatten out over the remainder of 2011, on the back of a steadying, and in some cases falling, market during the first half of the year. Financial uncertainty combined with rising living and utility costs are slowing the market down, although conditions are still good for home buyers, particularly investors. 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 uncer tainty about economic, global and market conditions is causing people to feel more vulnerable, so they are saving more and spending less â&#x20AC;&#x201C; all of which is impacting on the proper ty market. The First National Property Market Outlook Mid-Year Update Survey shows 60 per cent of Victorian member respondents said they anticipated the market to steady in the coming six months, 20 per cent said they thought it would fall and 20 per cent said they believed it would rise. Property Prices In the main, property prices for house and apartment/strata segments are expected to flatten out or trend downwards, with any movements kept to a maximum of 5 per cent. Land prices have the potential to trend upwards in certain areas. The largest group of Victorian survey respondents (46.6 per cent) said house prices would remain flat, 33.3 per cent said they would fall and 20 per cent said they would trend upwards.

22 First National Real Estate 2011 Property Market Outlook

Victoria Outlook It is a similar picture for apartment/strata prices where 64.2 per cent said they expected them to remain flat, 14.2 per cent said they thought they would trend downwards and 21.4 per cent believed they would trend upwards. Movements were anticipated in the region of up to 5 per cent, with a few saying they could be as much as between 5 and 10 per cent. Land prices were anticipated to trend upwards by 42.8 per cent of Victorian respondents, by mainly up to 5 per cent, although some said movements could be as much as up to 20 per cent. A downward trend was anticipated by 28.5 of Victorian survey respondents, and 28.5 per cent thought they would remain flat.

Rental Market The rental market is expected to strengthen, with vacancy rates tightening, and weekly rents trending upwards. The survey showed the majority of Victorian respondents believed vacancy rates would trend downwards, 15.3 per cent anticipated they would trend upwards and 23 per cent said they expected weekly rentals to flatten. Movements in vacancy rates were anticipated to be no more than 5 per cent, with any decreases seen as a result of a lack of rental supply due to fewer investors buying, higher interest rates and increases in land and other taxes Based on the survey, all Victorian respondents believed weekly rents would trend upwards, increasing mainly by up to 5 per cent, although there were some expectations they may increase by as much as up to 10 per cent.

Growth Growth was anticipated across all sectors including first home buyers (33.3 per cent), investors (33.3 per cent), upgraders (26.6 per cent) and retirees (6.6 per cent). Growth is expected to result from increased second buyer activity, better rental yields and easing of bank lending criteria. First home buyer growth will be seen from early 2012 as the lower stamp duty begins to take effect.

First National Real Estate 2011 Property Market Outlook 23

Victoria Outlook Changing Market Conditions Interest rates are expected to increase before the end of 2011, by between 0.25 and 0.5 per cent, but respondents were fairly evenly divided with 57.1 per cent of Victorian respondents thinking they will increase and 42.8 per cent that they would decrease. The Governmentâ&#x20AC;&#x2122;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 rising household energy costs and the challenge of maintaining a healthy home budget. Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property. A carbon tax will also potentially decrease demand for homes that are not currently adapted for energy efficiency â&#x20AC;&#x201C; although there are not enough energy efficient homes in the state to make that much difference to the market overall. The majority of Victorian members believe 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. It was considered that any talk of abolishing negative gearing should cease immediately. Lowering immigration levels would certainly impact on the Victorian property market â&#x20AC;&#x201C; however, there could be both positive and negative outcomes. For real estate prices, it was considered that immigration should be increased, but for livability, they should be decreased as the current infrastructure is probably unable to support more people in the state.

24 First National Real Estate 2011 Property Market Outlook

Victoria Outlook Survey responses from Victorian members on their thoughts to the policy changes include: Policy

Yes

7.6%

92.3%

Carbon tax will increase percentage of customers seeking energy efficient features when looking to buy

73.3%

26.6%

Should Stamp Duty be abolished?

73.3%

26.6%

Should Stamp Duty be replaced with a broad-based land tax

14.2%

85.7%

Support a carbon tax?

Should Stamp Duty be replaced with death duties?

100%

Would support disposing of negative gearing?

100%

Undecided

The exclusion of any of these policy changes from the recently announced Victorian state budget may be an indication that the Government has seen the error of its ways and is not intending to take matters any further.

First National Real Estate 2011 Property Market Outlook 25

Queensland Outlook The Queensland property market is expected to flatten out over the remainder of 2011, on the back of a falling market over the first half of the year. Most areas are bottoming but the market is quite fragile at the moment as it struggles to overcome the interest rate hikes at the end of 2010 and the devastating natural disasters earlier this year. The biggest challenge facing Government is to get more of the wealth from the resources boom to the country and wider economy. Restrictive bank lending criteria is holding back the proper ty market as banks adjust their risk profiles for fur ther falls in prices. Even though now is an ideal time to purchase, people are holding onto their money and waiting to see what will happen to the market, proper ty values, the economy and the world. The current laws are affecting trading and profitability, par ticularly in tourist industry areas. The weakness in the US dollar and relative strength of the Australian dollar is not helping tourist numbers. The First National Proper ty Market Outlook Mid-Year Update Sur vey shows 44.4 per cent of Queensland member respondents said they anticipated the market to steady in the coming six months, 38.8 per cent said they thought it would fall and 16.6 per cent said they believed it would rise.

26 First National Real Estate 2011 Property Market Outlook

Queensland Outlook Property Prices In the main, property prices across all segments (house, apartment/strata and land) are expected to remain flat, with any movements kept to a minimum of up to 5 per cent. The majority of Queensland survey respondents (55.5 per cent) said house prices would remain flat, 38.8 per cent said they would fall and 5.5 per cent said they would trend upwards. It is a similar picture for apartment/strata property prices where 11.7 per cent said they would trend upwards, 58.8 per cent said they would trend downwards and 29.4 per cent said they expected them to remain flat. Land prices will follow the same trend, with 5.8 per cent of respondents saying prices would trend upwards, 41.1 per cent said they would trend downwards and 52.9 said they expected them to remain flat. Very high stock levels for apartment/strata properties in most areas and sustained demand from investors will help keep the market moving for this segment. The land segment is suffering as a result of high development costs. The Queensland Government has just put a clamp on head works ($28K per block) but developers say they have not touched the water rates and that adds another $25K on top of that, so effectively it costs around $50K to develop a single block of land, which is discouraging for investors.

Rental Market The rental market is expected to strengthen slightly, although vacancy rates will ease or flatten, while weekly rents will trend upwards. The survey showed 33.3 per cent of Queensland respondents believed vacancy rates would trend downwards, 50 per cent anticipated they would flatten and 16.6 per cent said they expected weekly rentals to trend upwards. Rising rents, affordability issues and people leaving areas where wor k oppor tunities are restricted will see vacancy rates ease, although increasing rents will hold the rental market up to some extent. Based on the survey, 58.8 per cent of Queensland respondents believed rents would trend upwards, increasing mainly by up to 5 per cent, while 35.2 per cent believed they would flatten and 5.8 per cent believed they would fall slightly, by up to 1 per cent.

First National Real Estate 2011 Property Market Outlook 27

Queensland Outlook Growth Upgraders are expected to represent the strongest growth in activity with increased second buyer activity, better rental yields and easing of banking lending criteria will drive any anticipated investor growth. According to the survey, 50 per cent of Queensland respondents thought the strongest growth in activity would come from upgraders, 33.3 per cent thought it would come from investors, 11.1 per cent from retirees and 5.5 per cent from first home buyers.

Changing Market Conditions Interest rates are expected to increase before the end of 2011, by between 0.25 per cent and 0.5 per cent. Based on the survey, 66.6 per cent of Queensland respondents thought they would increase, 5.5 per cent thought they would decrease and 27.7 per cent thought they would remain unchanged. Broadly speaking, the Governmentâ&#x20AC;&#x2122;s move to introduce a carbon tax is not suppor ted 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. Government charges, water and power are up more than 50 per cent in south east Queensland already and predicted to go higher before applying a carbon tax based increase. A carbon tax will also potentially decrease demand for homes that are not currently adapted for energy efficiency â&#x20AC;&#x201C; although there are not enough energy efficient homes in the state to make that much difference to the market overall. The overwhelming majority of Queensland members believe stamp duty should be abolished altogether, however, if it is to stay the Government should look at making it fairer and perhaps apply it to both the seller and the buyer. Replacing stamp duty with another form of tax, such as a broad-based land tax or death duties should be completely quashed. A broad-based land tax including the family home would ultimately become a tax on tenants and it would reduce investor interest in Queensland. Death duties should also be taken off the negotiating table, given the biggest boost to the Queensland property market came when death duties was abolished. Similarly, it was considered that any talk of abolishing negative gearing should cease immediately.

28 First National Real Estate 2011 Property Market Outlook

Queensland Outlook Survey responses from Queensland members on their thoughts to the policy changes include: Policy

Yes

5.5%

94.4%

Carbon tax will increase percentage of customers seeking energy efficient features when looking to buy

69.2%

30.7%

Should Stamp Duty be abolished?

94.4%

5.5%

Support a carbon tax?

Should Stamp Duty be replaced with a broad-based land tax?

100%

Should Stamp Duty be replaced with death duties?

100%

Would support disposing of negative gearing?

100%

Undecided

The exclusion of any of these proposed policy changes from the recently announced Queensland state budget may be an indication that the Government does not intend to take such matters any fur ther. The lack of State Government action on new land releases is stifling the market. Its move to cap Council plan charges in south east Queensland is only a fraction of what they should be considering. Water and sewerage head works should also be reviewed as they are equally important to the cost of new land. There is no expectation of any rise in non-government building approvals in the next six months, and there is even the potential for them to fall.

First National Real Estate 2011 Property Market Outlook 29

South Australia Outlook The South Australian property market is expected to steady over the remainder of 2011, on the back of an already moderating, and in some cases falling, market throughout the first half of the year. Rising stock levels, together with reasonable buyer demand will help to steady the market in the coming six months. The First National Proper ty Market Outlook Mid-Year Update Sur vey shows 62.5 per cent of South Australian member respondents said they anticipated the market to steady in the coming six months, while 37.5 per cent said they believed it could fall still fur ther. Property Prices In the main, property prices across all segments (house, apartment/strata and land) are expected to remain relatively flat, although there is some potential for slight falls, with any movements kept to a minimum of up to 5 per cent. The majority of SA survey respondents (62.5 per cent) said house prices would fall, with 50 per cent expecting them to decrease by up to 1 per cent, and 37.5 per cent anticipating them to be between 1 and 5 per cent. The remaining 37.5 per cent anticipated house prices would remain flat. It is a similar picture for apartment/strata prices where 62.5 per cent said they would trend downwards by up to 5 per cent, 25 per cent said they would remain flat and 12.5 per cent anticipated increases of around 1 per cent. The large supply of land will see land prices flatten, with 50 per cent of SA respondents saying they would flatten out, although 37.5 per cent said they anticipated falls of between 1 per cent and 5 per cent and 12.5 per cent anticipate slight increases of up to 1 per cent

30 First National Real Estate 2011 Property Market Outlook

South Australia Outlook Rental Market The rental market is expected to strengthen, although members are split on what will happen to vacancy rates and rents. Overall, however, strong tenant demand and a general shortage of rental proper ty will increase competition and underpin the South Australian rental market. The survey showed 12.5 per cent of SA respondents believed vacancy rates would trend downwards, 50 per cent said they would trend upwards and 37.5 per cent said they would be flat. Weekly rentals are expected to trend upwards, with 62.5 per cent of SA survey respondents anticipating them to increase, 25 per cent expecting them to be flat and 12.5 per cent believing they will drop. Movements in vacancy rates and weekly rentals are anticipated to be in the vicinity of 5 per cent.

Growth Investor activity is expected to increase by between 1 and 5 per cent, driven by improved rent returns and some excellent investment opportunities in a fairly stagnant market. Investors and upgraders are expected to represent the strongest growth in activity due to increased second buyer activity, better rental yields and easing of bank lending criteria. Respondents were split by where the activity would come from with 37.5 per cent of SA respondents thinking the strongest growth in activity would come from investors, 37.5 per cent thinking it would come from upgraders and 25 per cent from retirees.

First National Real Estate 2011 Property Market Outlook 31

South Australia Outlook Changing Market Conditions South Australian members are divided on the expected changes in interest rates for the remainder of 2011, with half of all SA respondents thinking they would increase slightly and half thinking they would remain unchanged. The Governmentâ&#x20AC;&#x2122;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. A carbon tax will also potentially decrease demand for homes that are not currently adapted for energy efficiency. It was considered that Stamp Duty should be abolished altogether, as it only serves to stifle the proper ty market. Should the Government feel the need to replace the duty with another type of tax, Land Tax was seen as a fairer system which does not penalise home buyers and investors. It was felt that any talk of abolishing negative gearing should cease immediately.

32 First National Real Estate 2011 Property Market Outlook

South Australia Outlook Survey responses from SA members on their thoughts to the policy changes include: Policy

Yes

Support a carbon tax?

Undecided

100%

Carbon tax will increase percentage of customers seeking energy efficient features when looking to buy

87.5%

12.5%

Should Stamp Duty be abolished?

62.5%

37.5%

Should Stamp Duty be replaced with a broad-based land tax

12.5%

87.5%

Should Stamp Duty be replaced with death duties? Support disposing of negative gearing?

100% 12.5%

87.5%

The exclusion of any of these proposed policy changes from the recently announced South Australian state budget may be an indication that the Government does not intend to take such matters any further. A key change for the property market in South Australia 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.

First National Real Estate 2011 Property Market Outlook 33

Western Australia Outlook The Western Australia property market is expected to steady and begin to strengthen over the remainder of 2011, on the back of a falling market throughout the first half of the year. The market is currently very slow and has just about stalled. Banks are cautious in their lending and infrastructure is slow at keeping pace with developments. Port Hedland and Karatha are maintaining momentum, due to limited stock, and there is a nine month supply of housing stock in Per th â&#x20AC;&#x201C; 4 months is considered a normal market. The vacancy rate in Geraldton is in excess of 5 per cent as a result of a lag between the mining boom and the Governmentâ&#x20AC;&#x2122;s response to infrastructure needs. Investors have jumped in, but the infrastructure is yet to follow. The burgeoning resources boom and forecast population growth figures are expected to see the market rebound strongly in the coming years. The First National Property Market Outlook Mid-Year Update Survey shows 72.7 per cent of Western Australia member respondents said they anticipated the market would steady in the coming six months and 27.2 per cent said they believed it would rise.

34 First National Real Estate 2011 Property Market Outlook

Western Australia Outlook Property Prices In the main, house and land property prices are expected to flatten, with any movements kept to a minimum of up to 5 per cent. The majority of Western Australia survey respondents (63.6 per cent) said house and land prices would remain flat, 18.1 per cent said house prices would fall, and 18.1 per cent said house prices would trend upwards. Around 27.2 per cent said land prices would fall, while 9 per cent said land prices would rise. Prices for apartment/strata properties are anticipated to trend downwards by 54.5 per cent of Western Australia respondents, while 36.3 per cent thought they would flatten and 9 per cent believed they would rise. Movements for this segment were anticipated to be in the region of mostly below 1 per cent.

Rental Market The rental market is expected to strengthen, with vacancy rates tightening and weekly rentals increasing. Perth posted the third highest growth in the residential property rental market nationally with 4.4 per cent. The survey showed 81.8 per cent of WA respondents believed vacancy rates would trend downwards, 9 per cent anticipated they would flatten and 9 per cent said they expected weekly rentals to trend upwards. Movements were anticipated to be no more than 5 per cent. Based on the survey, 90.9 per cent of WA respondents believed rents would trend upwards, increasing mainly by up to 5 per cent, while the remaining 9 per cent believed they would flatten.

Growth Investors are expected to represent the strongest growth in activity driven by increased second buyer activity, better rental yields and easing of bank lending criteria. According to the survey, 72 per cent of WA respondents thought the strongest growth in activity would come from investors, 18.1 per cent thought it would come from upgraders and 9 per cent thought from retirees.

First National Real Estate 2011 Property Market Outlook 35

Western Australia Outlook Changing Market Conditions Interest rates are expected to remain unchanged, although some allowance is made for some increases before the end of 2011, of between 0.25 and 0.5 per cent. Based on the sur vey, 54.5 per cent of WA respondents thought they would remain unchanged, and 45.4 per cent thought they could increase. The Governmentâ&#x20AC;&#x2122;s move to introduce a carbon tax is not, in the main, supported by First National WA members. 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. Western Australia members are divided on whether they believe stamp duty should be abolished altogether â&#x20AC;&#x201C; although if it stays it should be reduced to a more equitable rate and the shor tfall could be covered by a small property tax that all property owners pay. But this amount would have to be minimal compared to the current Stamp Duty. However, replacing Stamp Duty with another form of tax, such as a broad-based land tax or death duties should be completely quashed. Similarly, it was considered that any talk of abolishing negative gearing should cease immediately.

36 First National Real Estate 2011 Property Market Outlook

Western Australia Outlook Survey responses from Western Australian members on their thoughts to the policy changes include: Policy

Yes

Support a carbon tax?

54.5%

45.4%

Carbon tax will increase percentage of customers seeking energy efficient features when looking to buy

100%

Should Stamp Duty be abolished?

63.6%

36.3%

Should Stamp Duty be replaced with a broad-based land tax?

100%

Should Stamp Duty be replaced with death duties?

100%

Would support disposing of negative gearing?

20%

Undecided

80%

The exclusion of any of these policy changes from the recently announced WA state budget may be an indication that the Government does not intend to take such matters any further. There are still concerns about the Mining Tax, which has the potential to impact on the WA proper ty market in the coming 6 to 12 months. Western Australia is a major exporter of raw product and this tax could place some of the smaller operations in danger of becoming unviable, which would impact on employment and therefore demand for properties.

First National Real Estate 2011 Property Market Outlook 37

Tasmania Outlook The Tasmanian property market is expected to fall over the remainder of 2011, on the back of a steadying, and in some cases already falling, market during the first half of the year. Tasmania still has plenty to offer home buyers in a market where there is an increase in the number of proper ties coming onto the market, even though the number of sales has decreased. It is still seen as the most affordable state in Australia and recently recorded the nationâ&#x20AC;&#x2122;s largest rise in dwelling approvals in February 2011. The Australian Bureau of Statistics data shows Tasmania enjoyed a 44.5 per cent rise in approvals for new buildings and recent reports showed the annual median price for the State had increased slightly. The First National Proper ty Market Outlook Mid-Year Update Sur vey shows 100 per cent of Tasmanian member respondents said they anticipated the market to fall fur ther in the coming six months. Property Prices 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 between 5 and 10 per cent. All Tasmanian survey respondents said house prices would likely fall, while 75 per cent said apar tment/strata prices would fall (25 per cent thought they would flatten out) and 75 per cent said land prices would flatten out. 25 per cent expect them to fall â&#x20AC;&#x201C; 50 per cent thought falls would be up to 1 per cent, 25 per cent thought they would be between 1 and 5 per cent and 25 per cent thought they might drop by as much as 10 per cent.

38 First National Real Estate 2011 Property Market Outlook

Tasmania Outlook Rental Market The rental market is expected to weaken, with vacancy rates tightening and trending downwards, while weekly rents will trend upwards or flatten. This is despite Hobart recently posting the second highest residential property rental market growth at 4.5 per cent. The survey showed 75 per cent of Tasmanian respondents believed vacancy rates would trend downwards, mostly by up to 1 per cent (25 per cent said they would flatten out), and respondents were evenly split between expecting weekly rentals to trend upwards by up to 5 per cent and expecting weekly rentals would flatten out. Movements in vacancy rates are subject to interest rates. 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.

Growth Investor activity is expected to increase by mainly between 1 and 5 per cent, although some areas predict increases of between 5 and 10 per cent, driven by stable interest rates, low vacancy rates and growing consumer confidence. Investors and upgraders are expected to represent the strongest growth in activity due mainly to increased second buyer activity, better rental yields and easing of bank lending criteria. Growth in the upgrader market is a result of people upsizing and getting out of their first home. 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. According to the survey, 50 per cent of Tasmanian respondents thought the strongest growth in activity would come from investors, 25 per cent thought it would come from upgraders and 25 per cent from retirees.

First National Real Estate 2011 Property Market Outlook 39

Tasmania Outlook Changing Market Conditions Interest rates are expected to increase before the end of 2011, by between 0.25 and 0.5 per cent. Based on the sur vey, 75 per cent of Tasmanian respondents thought they would increase and 25 per cent thought they would remain unchanged. 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 rising household energy costs and the challenge of maintaining a healthy home budget. Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property. It was considered that 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. 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. Government should also not consider replacing 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 Tasmanian households. Members believe that any talk of abolishing negative gearing should cease immediately. Lower immigration levels would certainly impact on the Tasmanian 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’. 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.

40 First National Real Estate 2011 Property Market Outlook

Tasmania Outlook Survey responses from Tasmanian members on their thoughts to the policy changes include: Policy

Yes

Support a carbon tax?

25%

75%

Carbon tax will increase percentage of customers seeking energy efficient features when looking to buy

75%

25%

Should Stamp Duty be abolished?

75%

25%

Should Stamp Duty be replaced with a broad-based land tax?

100%

Should Stamp Duty be replaced with death duties?

100%

Would support disposing of negative gearing?

100%

Undecided

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. Developers in Tasmania are still up in arms about the Head works charges imposed on them by the three state Water/Sewerage authorities. Ultimately, this will be passed onto the consumer which may impact on the Tasmanian property market in the next six to 12 months. Increasing electricity prices, water/sewerage charges (reportedly an increase of up to 20 per cent), extraordinary head works charges and the introduction of the Carbon Tax will all have a negative impact on the housing industry in the next 6-12 months, especially if there are further interest rate rises during the next year. The upcoming Tasmanian budget announcement in June will negatively impact on the state with major spending cuts on the cards â&#x20AC;&#x153;in order to return the State Budget to a sustainable positionâ&#x20AC;?. The absence of property issues from the recent Federal Budget has done nothing to rescue the real estate market in Tasmania, completely ignoring first home buyers and the lack of incentives would only add to the already worsening housing shortage in the state.

First National Real Estate 2011 Property Market Outlook 41

Northern Territory Outlook The Alice Springs and Darwin proper ty markets are expected to remain steady over the remainder of 2011, on the back of an already moderating market over the first half of the year. This is due to demand remaining quite reasonable and more listings coming onto the market. Property Prices In the main, property prices across house and apartment/strata segments are expected to remain flat, with any movements kept to a minimum of between 1 and 5 per cent. The market is just managing to keep abreast of any downward trend, with interest rates holding buyers back. It is very difficult to predict what land prices will do, as there is so little land released in The Territory.

Rental Market The rental market is expected to remain relatively balanced as demand has dropped off. There are fewer major projects and weekly rents have flattened out. Vacancy rates could ease by between 1 and 5 per cent, with a balanced market lessening the chances of movement in weekly rent prices, although there is the potential they could potentially increase by between 1 per cent and 5 percent.

Growth Investor activity is expected to increase by between 5 and 10 per cent, driven by low interest rates, and increasing weekly returns. Upgraders are expected to represent the strongest growth in activity as there is little reason for investors or first home buyers to re-enter the market at the moment.

42 First National Real Estate 2011 Property Market Outlook

Northern Territory Outlook Changing Market Conditions Interest rates are expected to decrease slightly before the end of 2011. The Government’s move to introduce a carbon tax is not considered a good one, although it is not expected to impact on the Northern Territory property market to any great extent. People will continue to buy houses they like and can afford and it will only be those buyers that can afford the cost of a ‘green house’ that will seek them out. First National NT members considered that Stamp Duty should not be abolished altogether because it would just be traded for another tax. In the past, the Government has traded the lack of a land tax for the level of Stamp Duty – and this would probably be what would happen again. If not with land tax, then something else such as death duties, which would be counter-productive and do little to promote self-funding retirement. It is expected that the new suburb of Killgarif, where the Government is spending infrastructure money, will provide extra land for residential property – which is a much needed commodity for Alice Springs and the Territory overall.

First National Real Estate 2011 Property Market Outlook 43

Sources National Outlook

victoria

Newspapers National, metropolitan and local suburban press

Matusik Residential Property Insights

PRD Nationwide reports

Websites Domain.com.au Hotspotting.com Realestate.com.au RPdata.com

First National Real Estate members across the country

Queensland

South Australia

Newspapers National, metropolitan and local suburban press

Matusik Residential Property Insights

PRD Nationwide reports

Websites Domain.com.au Hotspotting.com Realestate.com.au RPdata.com

First National Real Estate members across the country

44 First National Real Estate 2011 Property Market Outlook

Sources Western Australia

Northern Territory

Newspapers National, metropolitan and local suburban press

Matusik Residential Property Insights

PRD Nationwide reports

Websites Domain.com.au Hotspotting.com Realestate.com.au RPdata.com

First National Real Estate members across the country

Tasmania Newspapers National, metropolitan and local suburban press Matusik Residential Property Insights PRD Nationwide reports Websites Domain.com.au Hotspotting.com Realestate.com.au RPdata.com First National Real Estate members across the country

First National Real Estate 2011 Property Market Outlook 45

Notes _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________

46 First National Real Estate 2011 Property Market Outlook

First National Real Estate 2011 Property Market Outlook 47

48 First National Real Estate 2011 Property Market Outlook