Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Ali Yagmur from First National Real Estate Domain expects the Illawarra 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 to ongoing nervousness and global uncertainty. “This will create an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields,” Mr Yagmur said in the network’s Property Outlook 2011 Mid Year Update released this week. “However, housing affordability, the threat of increasing interest rates, 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 any movements kept to a maximum of up to 1 per cent.” Mr Yagmur believes the rental market is expected to remain strong, with weekly rents trending upwards, increasing by between 1 and 5 per cent and vacancy rates remaining flat. “A shortage of available rental accommodation and ongoing strong demand will underpin any rent increases,” Mr Yagmur said. According to Mr Yagmur, the lack of government incentives will keep investors at bay and the New Tenancy Act which further favours tenants, will also serve as a disincentive for investors. “Although, astute investors could be lured back to the market by better rental yields and returns,” Mr Yagmur said. “First home buyers are expected to represent the strongest growth in activity for the region.” 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 Yagmur 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 Yagmur considers Stamp Duty should be abolished altogether, as it would promote more efficient use of existing housing stocks and possibly attract more investors back to the market. “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 Yagmur said. Lower immigration levels would certainly impact on the local Illawarra property market – but impacts could be both positive and negative, according to Mr Yagmur. “Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices,” Mr Yagmur said. “However, existing infrastructure is sagging under the pressure of the current population.” 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 Yagmur 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, Ali Yagmur, First National Real Estate Domain, on 02 4271 7444