Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR
Thomas Som from First National Waverley City expects the local property market to moderate over the remainder of 2011, on the back of a weakening market during the first half of the year, as a result of increased buyer numbers coming into the market. “This will create prime conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Som said in the First National Property Market Mid Year Update 2011 released this week. “Financial uncertainty combined with rising living and utility costs are slowing the market down, although conditions are still good for homebuyers, particularly investors.” The State Budget decision to lower stamp duty prices for first home buyers should help stimulate this segment of the market. “Consumer confidence, as a result of uncertainty about economic, global and market conditions is causing people to feel more vulnerable, so they are saving more and spending less, all of which is impacting on the property market,” Mr Som said. Mr Som expects house prices to remain relatively flat with the potential for movements of up to 1 per cent as a result of the high Australian dollar exchange rate. “However, apartment/strata property prices in the Waverley City area are expected to trend downwards, decreasing by between 1 and 5 per cent,” Mr Som said. “Land prices are expected to trend upwards as a result of an ongoing short supply.” Mr Som believes the rental market is expected to strengthen with weekly rents trending upwards, increasing by between 1 and 5 per cent although vacancy rates are expected to ease and trend upwards. Investor activity growth in the region is expected to increase by between 5 and 10 per cent.
“Growth is expected to result from increased second buyer activity,” Mr Som said. “But, first home buyers are the market expected to generate the strongest growth in activity for the remainder of 2011, although they should gain further momentum from early 2012 as the lower stamp duty begins to take effect.” 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 may 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 Som said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.” Mr Som considers Stamp Duty should be abolished altogether, as promised when the GST was introduced, but not if it is replaced by some other form of tax such as a broad-based land tax or death duties. “And any talk of abolishing negative gearing should cease immediately, as it unnecessarily creates consumer nervousness in the market place,” Mr Som said. Lowering immigration levels would certainly impact on the property market – however, there could be both positive and negative outcomes, according to Mr Som. “For real estate prices, it was considered that immigration should be increased, but for liveability, they should be decreased as the current infrastructure is probably unable to support more people in the state,” Mr Som said. The exclusion of any of these policy changes from the recently announced Victorian state budget may be an indication that the Government is not intending to take the matters any further. - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Thomas Som from First National Waverley City on 03 9560 3988