Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR David Servi from First National Spencer & Servi expects the Surry Hills property market to further steady for the remainder of 2011, on the back of a moderating market over the first half of the year due to a gradual increase in stock levels. “This will create an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields,” Mr Servi said in the network’s Property Market Outlook 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 continue to impact the market in the coming six months.” In the main, property prices across all segments (house, apartment/strata and land) are expected to remain relatively flat, with the potential for maximum upwards movements of between 1 and 5 per cent. “Continuing improvement in the area and its convenience to the CBD ensure its ongoing appeal to property buyers,” Mr Servi said. “The lack of new construction in the Surry Hills area and lack of available land stocks maintain pressure on properties available for purchase, especially apartment/strata properties.” Mr Servi believes the rental market is expected to remain strong, with vacancy rates tightening and trending downwards, decreasing by between 5 and 10 per cent, while weekly rents will trend upwards by similar percentages. “A shortage of available rental accommodation and ongoing strong demand will underpin any rent increases,” Mr Servi said. Mr Service expects investors to represent the strongest growth in activity for the region as self-managed super funds and investors are once again lured back into the market by better rental yields and easing of bank lending criteria. “Investor activity is expected to increase by between 5 and 10 per cent, driven by increased second buyer activity, low interest rates, and increasing weekly returns,” Mr Servi 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 Servi 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 Servi considers Stamp Duty should be abolished altogether, as it would deliver on the promise of eliminating indirect taxes such as these when the GST was introduced. “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 Servi said. Lower immigration levels would certainly impact on the local Surry Hills property market – but impacts could be both positive and negative, according to Mr Servi. “Immigration has been a benefit to keeping housing strong during and post GFC, and the housing shortage continues to underpin market prices,” Mr Servi 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 Servi 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, David Servi, First National Spencer & Servi on 02 9690 1377