Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Ross Neilson from First National Real Estate Frank Facey expects the Narre Warren property market to weaken further over the remainder of 2011, on the back of a falling market during the first half of the year. “This will create ideal conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Neilson said in the First National Property Market Mid Year Update 2011 released this week. “Financial uncertainty combined with rising living and utility costs are slowing the market down, although conditions are still good for homebuyers, particularly investors. “The State Budget decision to lower stamp duty prices for first home buyers should help stimulate this segment of the market. “Consumer confidence, as a result of uncertainty about economic, global and market conditions is causing people to feel more vulnerable, so they are saving more and spending less, all of which is impacting on the property market.” In the main, property prices are expected to remain flat and trend downwards, as a result of an oversupply of houses or a market correction in the case of land. “House prices are expected to decrease by between 5 and 10 per cent, while drops in land prices could be between 10 and 20 per cent following exponential growth in the last calendar year,” Mr Neilson said. According to Mr Neilson, the rental market is expected to strengthen, with weekly rents trending upwards, increasing by between 5 and 10 per cent due to demand exceeding. Vacancy rates are expected to be flat with the continued lack of supply resulting in consistent low vacancy rates. Investor activity in the region was expected to increase by between 5 and 10 per cent. “Growth is expected to result from strong demand and uncertainty in financial markets, making bricks and mortar look a much more attractive option. Investors will also be looking to benefit from increased second buyer activity, better rental yields and returns and easing of bank lending criteria,” Mr Neilson said.
“However, it is first home buyers who are expected to generate the strongest growth in activity for the remainder of 2011, gaining momentum from early 2012 as the lower stamp duty begins to take effect” 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 Neilson said. Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.” Mr Neilson considers Stamp Duty should be reduced, if not abolished altogether, but not if it is replaced by some other form of tax such as a broad-based land tax or death duties. “The family home is sacrosanct in Australia and death duties are a far worse wealth tax and sometimes forces people to sell family assets they would rather keep,” Mr Neilson said. “And any talk of abolishing negative gearing should cease immediately as it only creates nervousness in the marketplace.” Lowering immigration levels would certainly impact on the Narre Warren property market – however, there could be both positive and negative outcomes, according to Mr Neilson. For real estate prices, he thought immigration should be increased, but for liveability, they should be decreased as the current infrastructure is probably unable to support more people in the state. The exclusion of any of these policy changes from the recently announced Victorian state budget may be an indication that the Government is not intending to take the matters any further. - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Ross Neilson from First National Real Estate Frank Facey on 03 9705 4888