Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Chris McGregor from First National Real Estate McGregor expects the Moonah property market to weaken over the remainder of 2011, on the back of a falling market during the first half of the year due to affordability pressures, the threat of interest rates increasing, increasing living and utility costs and tight lending criteria from major banks. “This creates prime conditions, especially for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr McGregor said in the First National Property Market Mid Year Update 2011 released this week. “The lack of first home buyers, due to worsening affordability, is having a significant impact on the market, driving the downward trend currently being experienced.” According to the Update, in the main, property prices across all segments (house, apartment/strata and land) are expected to drop, with movements around 5 per cent. “An abundance of stock and self-corrections will impact on house and apartment/strata property prices, while extremely tight restrictions, red tape and less building approvals will put downward pressure on land prices,” Mr McGregor said. Mr McGregor believes the rental market is expected to remain steady, with any vacancy rate or weekly rent movements kept to between 1 and 5 per cent. “Ongoing high demand, which is underpinning the rental market tight, is a result of affordability issues purchasing properties and the value and quality of property people can rent is a lot cheaper than if they were to purchase the property themselves,” Mr McGregor said. “Rent increases will be suppressed compared to the free market demand, as a result of changes to government regulations, specifically in relation to the taxes, negative gearing and planning processes.” Investor activity is expected to increase by between 1 and 5 per cent in some cases, and as much as between 10 and 20 per cent in others.
“Investors are expected to represent the strongest growth in activity as a result of cheaper home prices and higher rental yields and returns,” Mr McGregor 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 McGregor said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.” Mr McGregor considers Stamp Duty should be abolished altogether, as it is an inefficient tax and should have been eliminated when the GST was introduced, as promised. “Government should also not consider replacing the stamp duty with another form of tax, like an across-the-board land tax or death duties,” Mr McGregor said. “The introduction of a new tax coupled with the rising costs of electricity, water/sewerage charges and the possibility of further interest rate rises will put a strain on households. “And any talk of abolishing negative gearing should cease immediately as it would act as another disincentive for investors.” The exclusion of any of these proposed policy changes from the recently announced 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, Chris McGregor from First National Real Estate McGregor on 03 6278 2666