Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
David Hamilton from First National Palm Beach expects the Palm Beach property market to weaken over the remainder of 2011, on the back of a falling market over the first half of the year with no marked changed in business conditions visible. “This will create ideal conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Hamilton said in the First National Property Market Outlook Mid Year Update released this week. “Restrictive bank lending criteria is holding back the property market as banks adjust their risk profiles for further falls in prices. Even though now is an ideal time to purchase, people are holding onto their money and waiting to see what will happen to the market, property values, the economy and the world.” In the main, Mr Hamilton expects house and apartment/strata prices to trend downwards, with decreases of between 1 and 5 per cent but there is the potential for land prices to flatten out. “Across the market, there is about a 10 month supply of houses at the current sale rate, and a 12 months supply of apartment/strata properties,” Mr Hamilton said. “There is very little land to sell, which is putting a floor under land prices.” Mr Hamilton believes the rental market is expected to flatten out, with little movement, up to 1 per cent, in vacancy rates or weekly rents. “Rents could decrease by up to 5 per cent with some tenants being forced out of the area due to high rents, resulting from affordability pressures and availability,” Mr Hamilton said. First home buyers are expected to represent the strongest growth in activity in the Palm Beach region, while investor activity will maintain a low profile even though prices are low, due to low yields in the flat market. “The October tax summit and potential for interest rate rises will result in a wait and see attitude by investors,” Mr Hamilton 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 Hamilton said. “A carbon tax may decrease demand for homes that are not currently adapted for energy efficiency. “Government charges, water and power are up more than 50 per cent in south east Queensland already and predicted to go higher before applying a carbon tax based increase.” Mr Hamilton thinks Stamp Duty should be abolished altogether, delivering on the promise to remove all indirect taxes such as Stamp Duty, when the GST was introduced as well as stimulating market activity. “But, replacing stamp duty with another form of tax, such as a broad-based land tax or death duties is not supported,” Mr Hamilton said. “A broad-based land tax including the family home would ultimately become a tax on tenants and it would reduce investor interest in Queensland. “Death duties should also be taken off the negotiating table, and any talk of abolishing negative gearing should cease immediately.” The exclusion of any of these proposed policy changes from the recently announced Queensland state budget may be an indication that the Government does not intend to take such matters any further. According to Mr Hamilton, the lack of State Government action on new land releases is stifling the market – taking up to 18 months to get approvals for a pair of duplexes from the Council. “The land segment is suffering as a result of high development costs,” Mr Hamilton said. “The Queensland Government has just put a clamp on head works ($28K per block) but developers say they have not touched the water rates and that adds another $25K on top of that, so effectively it costs around $50K to develop a single block of land which is discouraging for investors.” - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, David Hamilton, from First National Palm Beach, on 07 5559 9630