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Bryan Cain from JA Cain First National expects the Glen Iris property market to weaken further over the remainder of 2011, on the back of a falling market during the first half of the year. “This will create ideal conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Cain 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 Cain 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.” Mr Cain said in the main, property prices are expected to remain flat or trend downwards, as a result of uncertainty of what interest rates will do and rising utility costs including the possible introduction of a carbon tax. “House prices are expected to decrease by between 5 and 10 per cent, although Melbourne property prices are probably high enough,” Mr Cain said. “Any movements in apartment/strata property and land prices will be minimal, up to 1 per cent at the most.” Mr Cain believes the rental market is expected to strengthen, with a lack of supply of rentals due to less investors buying as a result of higher interest rates, increases in land taxes and other costs. Weekly rents are expected to trend upwards, increasing by between 1 and 5 per cent while vacancy rates will trend downwards, decreasing by between 1 and 5 per cent.

According to Mr Cain, investor activity in the region is expected to increase by between 1 and 5 per cent. Growth is expected to result from better rental yields and returns. “However, it is first home buyers who are expected to generate the strongest growth in activity for the remainder of 2011, gaining momentum from early 2012 as the lower stamp duty begins to take effect,” Mr Cain 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 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 Cain said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.” Mr Cain considers Stamp Duty should be reduced, if not abolished altogether, 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 will only cause unnecessary concern in the marketplace,” Mr Cain said. Lowering immigration levels would certainly impact on the Glen Iris property market – however, there could be both positive and negative outcomes, according to Mr Cain. “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 Cain 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, Bryan Cain from J.A. Cain First National on 03 9805 2900

Glen Iris, JA Cain VIC  

Glen Iris, JA Cain VIC - Media Release

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