Media Release – [date] 2011

PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR

Mark Gunther from Mark Gunther First National expects the Healesville property market to steady over the remainder of 2011, on the back of a weakening market during the first half of the year.

“This is evidence that the market has found its level for the region and so will create prime conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Gunther 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 Gunther said.

In the main, property prices (house, apartment/strata and land) are expected to remain relatively flat, with the potential for some increases in house prices of between 1 and 5 per cent.

Mr Gunther believes the rental market is expected to strengthen, with vacancy rates tightening, decreasing by up to 1 per cent as a result of a lack of strong supply. Weekly rents are trending upwards, increasing by between 1 and 5 per cent due to demand exceeding supply and creating a rise in prices.

He expects investor activity in the region is expected to increase by between 1 and 5 per cent.

“Growth is expected to result from better returns and increased second buyer activity,” Mr Gunther said.

“But, Upgraders are expected to generate the strongest growth in activity for the remainder of 2011, although the first home buyer segment is expected to gain 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 Gunther said.

“Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.”

Mr Gunther 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 market nervousness,” Mr Gunther said.

Lowering immigration levels would certainly impact on the property market – however, there could be both positive and negative outcomes, according to Mr Gunther.

“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 Gunther 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.

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Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Mark Gunther from Mark Gunther First National on 03 5962 3030