Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Trevor Pick from First National Runcorn expects the Runcorn property market to weaken over the remainder of 2011, on the back of a falling market over the first half of the year due to ongoing economic uncertainty. “This will create ideal conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Pick said in the First National Property Market Mid Year Update 2011 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.” Mr Pick said in the main, house and land prices are expected to trend downwards, with decreases of between 1 and 5 per cent. “There is the potential for land prices to flatten out, even though there is a strong demand for it, as it is too expensive to build due to land being overpriced at the moment,” Mr Pick said. Mr Pick believes the rental market is expected to flatten out, with little movement, up to 1 per cent, in vacancy rates or weekly rents due to increasing living costs. He expects Upgraders to represent the strongest growth in activity in the Runcorn region, however said declining house prices would drive increases of between 1 and 5 per cent in investor activity. “Investors are set to benefit from increased second buyer activity, better rental yields and returns and easing of bank lending criteria,” Mr Pick 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 Pick said.
“A carbon tax may decrease demand for homes that are not currently adapted for energy efficiency.” Mr Pick considers Stamp Duty should be abolished altogether, delivering on the promise to remove all indirect taxes such as Stamp Duty, when the GST was introduced. “But, replacing stamp duty with another form of tax, such as a broad-based land tax or death duties is not supported,” Mr Pick 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. Mr Pick feels the lack of State Government action on new land releases is stifling the market. “The land segment is suffering as a result of high development costs,” Mr Pick 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, Trevor Pick, from First National Runcorn, on 07 3344 3060