Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR Gordon Williams from Chambers & Frewin First National expects the Hornsby property market to further steady for the remainder of 2011, on the back of a moderating market over the first half of the year due low stock levels and economic uncertainty. “This will create an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields,” Mr Williams said in the network’s Property Outlook 2011 Mid Year Update released this week. “However, housing affordability, the threat of interest rates increasing, reducing consumer confidence and tight lending criteria from major banks will continue to impact 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 marginal increases of around 1 per cent. “Positive house price movements are still being experienced in Hornsby Shire as being the outer ring of the northern suburbs, houses are still affordable and attracting buyers from the north Shore,” Mr Williams said. “Units in the Waitara area in particular continue to be in high demand with limited stocks available. “However, ongoing restrictions on building in bush-fire zones are making new and renovated properties a costly exercise, which is resulting in downwards trend for land prices, which are expected to decrease slightly by up to1 per cent.” Mr Williams believes the rental market is expected to remain strong, with vacancy rates tightening and trending downwards, decreasing by up to 1 per cent, while weekly rents will trend upwards by a similar percentage. “A shortage of available rental accommodation and ongoing demand will underpin any rent increases,” Mr Williams said. Mr Williams expects investors to represent the strongest growth in activity for the region with returns on investment currently at 5 per cent and increasing. “Investor activity is expected to increase by between 5 and 10 per cent, driven by low interest rates, and improved rental yields,” Mr Williams 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 Williams 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 Williams considers Stamp Duty should be abolished altogether, as it would deliver on the promise of eliminating indirect taxes such as these when the GST was introduced. “The mooted plans for replacing it with other taxes such as a broad-based land tax, including the family home, or death duties should not be carried through and any talk of abolishing negative gearing should cease immediately,” Mr Williams said. Lower immigration levels would certainly impact on the local Hornsby property market – but impacts could be both positive and negative, according to Mr Williams. “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,” Mr Williams said. 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 Williams 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, Gordon Williams, Chambers & Frewin First National on 02 9476 6000