Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Julia Fanos from First National Real Estate Newtown expects the Newtown to strengthen for the remainder of 2011, on the back of a steadying market over the first half of the year. “This is mainly as a result of ongoing limited supply with reasonable demand and a more competitive marketplace creates an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields,” Ms Fanos said in the network’s Property Outlook 2011 Mid Year Update released this week. “However, housing affordability, the threat of interest rates increasing, reducing consumer confidence and tight lending criteria from major banks will serve to moderate the market to some extent in the coming six months.” “House and apartment/strata property prices are expected to trend upwards, increasing by between 1 and 5 per cent. However, land prices are expected to be flat, with the potential for movements kept to a maximum of up to 1 per cent.” Ms Fanos said she believed the rental market to strengthen, with vacancy rates tightening, decreasing by between 1 and 5 per cent and weekly rents trending upwards, increasing by between 5 and 10 per cent. “Strong demand and inflationary pressures will underpin any rent increases for the second half of 2011,” Ms Fanos said. According to Ms Fanos, Investors are expected to represent the strongest growth in activity for the region as they take advantage of the improved rental yields and weekly returns. “Investor activity is expected to increase by between 1 and 5 per cent, driven by the popular Newtown rental market,” Ms Fanos said. “However, investors will monitor closely and be wary of changes to negative gearing and other tax reforms – which may impact on their levels of interest.”
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,” Ms Fanos 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.” Ms Fanos considers Stamp Duty should be abolished altogether, as it would stimulate the market and 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,” Ms Fanos said. “And any talk of abolishing negative gearing should cease immediately, as any changes to negative gearing may prove detrimental to the real estate industry.” Lower immigration levels would certainly impact on the property market – but impacts could be both positive and negative according to Ms Fanos. “Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices,” Ms Fanos 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,” Ms Fanos 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, Julia Fanos, Principal from First National Real Estate Newtown, on 02 9557 5893