Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Gerard Smith from First National Real Estate Gerard Smith expects the Picton property market to further steady for the remainder of 2011, on the back of an already steadying market over the first half of the year due to ongoing nervousness and global uncertainty. “This will create an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields,” Mr Smith said in the network’s Property Outlook 2011 Mid Year Update released this week. “However, housing affordability, the threat of increasing interest rates, reducing consumer confidence and tight lending criteria from major banks will continue to impact the market in the coming six months. “While house prices could trend upwards, increasing by between 5 and 10 per cent, apartment/strata and land prices are expected to remain relatively flat with movements kept to less than 5 per cent.” Mr Smith believes the rental market is expected to remain strong, with vacancy rates tightening and trending downwards, decreasing marginally by up to 1 per cent, while weekly rents will trend upwards, increasing by between 5 and 10 per cent. “A shortage of available rental accommodation and ongoing strong demand will underpin any rent increases,” Mr Smith said. Investor activity is expected to increase by between 1 and 5 per cent, driven by low better rental yields and increasing returns. “However, investors will monitor closely and be wary of changes to negative gearing and other tax reforms – which may impact on their intention to become active again,” Mr Smith said. Upgraders are expected to represent the strongest growth in activity for the 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 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 Smith 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 Smith considers Stamp Duty should be abolished altogether, as it would promote more efficient use of existing housing stocks and possibly attract more investors back to the market. “The mooted plans for replacing it with other taxes such as a broad-based land tax, including the family home, or death duties should not be carried through and any talk of abolishing negative gearing should cease immediately,” Mr Smith said. Lower immigration levels should be considered as impacts could be both positive and negative, according to Mr Smith. “Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices,” Mr Smith 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,” Mr Smith 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. “For the Picton property market to pick up, the Government needs to act on land tax and stamp duty.” - copy ends –
Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Gerard Smith, First National Real Estate Gerard Smith, on 02 4677 1488