Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR Gordon Jenkinson from First National Real Estate Kosciusko expects the Kosciusko property market to steady for the remainder of 2011, on the back of a falling market over the first half of the year. “This will create an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields,” Mr Jenkinson said in the network’s Property Outlook 2011 Mid Year Update released this week . “Housing affordability, the threat of interest rates increasing, reducing consumer confidence and tight lending criteria from major banks will help to moderate 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 around 5 per cent. “Limited qualified buyers is the main reason for the steadying market,” Mr Jenkinson said. “Seasonality is a major issue for the Kosciusko property market which relies too heavily on the tourism industry. “There is a growing need to attract public sector jobs to the area, which could be done through the new state government’s Decade of Decentralisation. This policy may see encourage even more 40 to 50 year olds stay in the area for their retirement as more essential services are brought back here.” Mr Jenkinson believes the rental market is expected to strengthen, in line with seasonal factors. “Limited vacancies for permanent properties over winter and stand alone houses are in short supply,” Mr Jenkinson said. “However, there is plenty of strata units available outside the peak winter months.” Mr Jenkinson expects investor activity to increase marginally by up to 1 per cent, driven by increased second buyer activity, improved rental yields and easing of bank lending criteria. 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.
“The increased cost of electricity for heating in this colder part of the country could have a huge impact on affordability as will the continuing cost of petrol especially if the Australian dollar falls to more normal levels,” Mr Jenkinson said. “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. “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 Jenkinson considers Stamp Duty should be abolished altogether, as it would deliver on the promise to eliminate indirect taxes when the GST was introduced. “This should only happen as long as the mooted plans for replacing it with other taxes such as a broad-based land tax, including the family home, or death duties are not carried through,” Mr Jenkinson said. “Home ownership should be encouraged, and people should have an incentive to work and build wealth. “Any talk of abolishing negative gearing should cease immediately as it only serves to reduce investor demand and line the coffers of government pockets.” Lower immigration levels would certainly impact on the local Kosciusko property market – but impacts could be both positive and negative, according to Mr Jenkinson. “Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices,” Mr Jenkinson 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 Jenkinson 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 Jenkinson, First National Real Estate Kosciusko on 02 6457 2000