Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Andrew Thomas from Cremorne First National expects the Cremorne property market to soften further for the remainder of 2011, on the back of a falling market over the first half of the year as a result of over-inflated house prices. “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. “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. “The general economy is expected to see property prices across all segments of houses, apartment/strata and land, remain flat, with the potential for apartment/strata property prices to trend upwards and increase by between 1 and 5 per cent as a result of strong first home buyer interest. “Limited land stocks available in the Cremorne area and high building costs will keep land prices flat.” Mr Thomas believes the rental market is expected to strengthen, with vacancy rates tightening and trending downwards, decreasing by between 1 and 5 per cent, while weekly rents are expected to trend upwards, increasing by similar percentages. “The shortage of available rental properties and strong demand will underpin the rental market for the rest of the year,” Mr Thomas said. According to Mr Thomas investors are expected to represent the strongest growth in activity for the region, and will be driven by increased second buyer activity and better rental yields. “Investor activity is expected to increase by between 1 and 5 per cent as a result of an unstable share market,” Mr Thomas said.
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,” 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 stimulate market activity and promote more efficient use of existing housing stocks. “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 investors would exit the market rapidly.” 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, Andrew Thomas, from Cremorne First National, on 02 9904 1234