Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR Dominic Tallon from First National Real Estate Tallon expects the Hastings 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 Tallon 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.” 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 Tallon said. In the main, Mr Tallon expects house prices to trend downwards, with decreases of up to 1, due to lower consumer confidence resulting in buyers not willing to spend and vendors not willing to sell. “Apartment/strata property prices are expected to remain flat, although there is still a strong demand for this type of property which may see some price movements of up to 1 per cent,” Mr Tallon said. “Land prices are expected to trend downwards, with decreases of between 1 and 5 per cent. Purchases are tending to buy pre-existing or off the plan homes rather than vacant land. But demand for vacant land is still existent due to its scarcity.” Mr Tallong believes the rental market is expected to strengthen further, with vacancy rates tightening and decreasing by between 1 and 5 per cent. “The rental market in Hastings is booming, with many buyers being put off purchasing a home in the short term and opting to rent,” Mr Tallon said. “Weekly rents trending upwards, increasing by between 1 and 5 per cent due to demand exceeding supply and creating a rise in prices.” Mr Tallon said investors are expected to generate the strongest growth in activity for the remainder of 2011, although first home buyer activity will strengthen from early 2012 as the lower stamp duty begins to take effect.
“Investor activity in the region was expected to increase by between 1 and 5 per cent, resulting from increased second buyer activity, better rental yields and weekly returns and easing of bank lending criteria,” Mr Tallon said. “Hastings has always been a strong investment area, and the announcement of the redevelopment of the Hastings Port is a driving force for increased investor activity.” 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 Tallon said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property,” Mr Tallon said. Mr Tallon 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, and any talk of abolishing negative gearing should cease immediately as it unnecessarily creates market nervousness. Lowering immigration levels would certainly impact on the property market – however, there could be both positive and negative outcomes, according to Mr Tallon. “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 Tallon 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. - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Dominic Tallon from First National Real Estate Tallon on 03 5979 3000