Box Hill, Lindella VIC

Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR

Dennis Dellas from First National Real Estate Lindellas expects the Box Hill property market to steady further over the remainder of 2011, on the back of a moderating market during the first half of the year as a result of interest rates appearing to be on hold.

“This creates prime conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Dellas 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,” Mr Dellas said.

“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.”

In the main, Mr Dellas expects property prices across the board (houses, apartment/strata and land) to remain relatively flat, although they may trend downwards by between 1 and 5 per cent.

“The value of the Australian dollar is impacting on overseas buyers, which is putting downward pressure on prices,” Mr Dellas said. “Land price drops are resulting from the high costs of financing developments.”

Mr Dellas believes the rental market is expected to strengthen, with vacancy rates tightening, decreasing by up to 1 per cent with more people renting than buying.

“Weekly rents are trending upwards, increasing by between 1 and 5 per cent due to demand exceeding supply and creating a rise in prices,” Mr Dellas said.

Mr Dellas said investor activity in the region is expected to increase by between 1 and 5 per cent.

“Growth is expected to result from more confidence in the market place following increased second buyer activity and easing of bank lending criteria,” Mr Dellas said.

Investors are expected to generate the strongest growth in activity for the remainder of 2011, although, Mr Dellas pointed out, 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 Dellas said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.”

Mr Dellas considers Stamp Duty should be abolished altogether, but not if it is replaced by some other form of tax such as a broad-based land tax or death duties.

“Stamp Duty unfairly penalises those who choose to invest in property rather than securities and replacing it with a broad-based land tax makes home ownership even harder to achieve for those entering the market on limited incomes, placing greater demand on state funded housing,” Mr Dellas said.

“The notion of taxing someone on their death is also unfair and uncompassionate and any talk of abolishing negative gearing should cease immediately, as it unnecessarily creates consumer nervousness.”

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

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, Dennis Dellas from First National Real Estate Lindellas on 03 9838 1388