Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Carlo Palamara from Holgate First National Real Estate expects the Lane Cove property market to soften further 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 Palamara 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. “The general economy is expected to see property prices across all segments of houses, apartment/strata and land, remain flat, with the potential for house prices to trend downwards by between 1 and 5 per cent.” Mr Palamara believes the rental market is expected to weaken slightly, with vacancy rates trending upwards, increasing by between 1 and 5 per cent as a result of less investors being in the market. “Weekly rents are expected to trend upwards, increasing by between 1 and 5 per cent,” Mr Palamara said. According to Mr Palamara, any increase in investor activity is expected to be as a result of increased second buyer activity, better rental yields and returns and easing of bank lending criteria. “But, unless interest rates fall, investors will remain absent from the property market,” Mr Palamara said. “As a result, it is First Home Buyers who are expected to represent the strongest growth in activity for the Lane Cove 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 may 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 Palamara 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 Palamara considers Stamp Duty should be abolished altogether, as it would promote more efficient use of existing housing stocks. “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 Palamara said. “And any talk of abolishing negative gearing should cease immediately.” Lower immigration levels would certainly impact on the local Lane Cove property market, says Mr Palamara, as less accommodation would be required and effectively decreasing demand. “Australia is a large country and should be able to accommodate a higher population,” Mr Palamara 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 Palamara 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. “Any attempts by the government to change taxes or raise interest rates may result in a major drop off in consumer confidence and property prices will suffer.” - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Carlo Palamara, from Holgate First National Real Estate, on 02 9427 4355