Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR Gavin Gilmore from First National Kalgoorlie expects the local property market to moderate for the remainder of 2011, on the back of a falling market over the first half of the year due to increased mining activity in the region. “This creates prime conditions, especially for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Gilmore said in the First National Property Market Mid Year Update 2011 released this week. In the main, property prices across the board (house, apartment/strata and land) are expected to flatten out with movements kept to below 1 per cent. “While there is strong mining activity in the region, there is also an oversupply of housing for sale and it will take some time for the supply and demand equation to balance out,” Mr Gilmore said. “Once this occurs, the market will once again be driven upwards.” According to Mr Gilmore, the majority of apartment/strata properties in the locality are investment properties and rental returns are currently increasing for investors, with low vacancies pushing up rental rates. “However, this is being offset by the lack of demand by investors who are reluctant to enter the market at present because of the external issues confronting the world today, serving to keep the market stable for the next six months,” Mr Gilmore said. “Demand for land is low and the cost of building in the Kalgoorlie Boulder is greater than purchasing established housing. Until this situation changes, demand for land will continue to be low.” Mr Gilmore believes the rental market is expected to strengthen, with vacancy rates tightening by between 5 and 10 per cent, pushing weekly rentals up by 5 to 10 per cent. “There has been strong demand for residential rentals with a steady increase of people to the region due to the strong mining economy,” Mr Gilmore said. “Vacancy rates are now at below 1 per cent, which means increasing pressure on rent prices to continue their upwards trend.” Mr Gilmore said the proposed amendments to the Residential Tenancies Act represents some challenges for the Kalgoorlie property market in the future. “These changes cold impact negatively on owners of residential properties as it will shift the bar further towards Tenants and make it more difficult to adequately protect the interests of the Landlords,” Mr Gilmore said.
Mr Gilmore warned a challenge for the Kalgoorlie property market is acquiring skilled staff for region’s needs. “While we are in a strong growth phase with high prices for Gold and base metals, we are still faced with the prospect of having to find suitably qualified people to work in the region so it will continue to prosper,” he said. “The demands of the Iron Ore industry, where wages are higher, have impacted on the ability of employers, especially small to medium sized business, to compete against the bigger players in the workforce.” Investor activity is expected to increase marginally, by up to 1 per cent due to a general cautiousness of investors in the residential property market, despite strong returns on their investment dollars. “However, it is Upgraders who are expected to represent the strongest growth in activity for the Kalgoorlie region,” Mr Gilmore said. The Government’s move to introduce a carbon tax is not, in the main, supported by First National members. “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 Gilmore said. Mr Gilmore considers Stamp Duty should be abolished altogether, to stimulate market activity, making purchasing more affordable, and deliver on the promise of eliminating indirect taxes such as Stamp Duty when the GST was introduced. “But, replacing Stamp Duty with another form of tax, such as a broad-based land tax or death duties should be completely quashed,” Mr Gilmore said. “And any talk of abolishing negative gearing should cease immediately.” The exclusion of any of these policy changes from the recently announced WA state budget may be an indication that the Government does not intend to take such matters any further. - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Gavin Gilmore from First National Kalgoorlie on 08 9021 2488