Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR Graeme Napier from First National Real Estate Hervey Bay expects the Hervey Bay property market to moderate over the remainder of 2011, on the back of a falling market over the first half of the year due to ongoing lack of buyer confidence. “This will create an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields,” Mr Napier said in the First National Property Market Mid Year Update 2011 released this week. “Restrictive bank lending criteria is holding back the property market as banks adjust their risk profiles for further 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, property values, the economy and the world.” Mr Napier expects house and land prices to flatten out, with any movements between 1 and 5 per cent as a result of reduced buyer sentiment and a lack of sales, while apartment/strata property prices may trend downwards, experiencing marginal decreases of up to 1 per cent due to an over-supply of stocks. According to Mr Napier, the rental market is expected to remain relatively steady with vacancy rates tightening and trending downwards, decreasing by between 1 and 5 per cent as a result of more people opting to rent rather than purchase. “Limited supply is expected to push weekly rent prices upwards, with increases of between 1 and 5 per cent,” Mr Napier said. Mr Napier said affordable buying prices may see investor activity increase by between 1 and 5 per cent, with investors benefitting ultimately from increased second buyer activity, improved rental yields and returns and easing of bank lending criteria. “But, it is Upgraders who are expected to represent the strongest growth in activity in the Hervey Bay region,” Mr Napier 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 Napier said.
“A carbon tax may decrease demand for homes that are not currently adapted for energy efficiency. “Increased council rates, water charges, electricity charges and a carbon tax will all impact on living costs along with ambulance levies on electricity accounts. “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.” Mr Napier thinks Stamp Duty should be abolished altogether, delivering on the promise to remove all indirect taxes such as Stamp Duty, when the GST was introduced as well as stimulating market activity particularly with investors. “But, replacing stamp duty with another form of tax, such as a broad-based land tax or death duties is not supported,” Mr Napier said. “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, and any talk of abolishing negative gearing should cease immediately as it may eventuate in driving investors out of the market altogether, opting to off-load their properties rather than fund other people renting it.” 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 further. According to Mr Napier, the lack of State Government action on new land releases is stifling the market. “The land segment is suffering as a result of high development costs,” Mr Napier said. “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. “Local economic conditions need to improve in order for the property market to properly recover.” - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Graeme Napier, Principal from First National Real Estate Hervey Bay, on 07 4194 2677