New South Wales Outlook The New South Wales property market is expected to strengthen in 2011, led by investors, upgraders and prices trending upwards as a result of an undersupply of properties to purchase or rent across the state to meet pent up demand. House and apartment/strata property prices are expected to increase by between 1 and 5 per cent, while land prices are likely to remain flat. Vacancy rates are trending downwards and weekly rentals upwards as a shortage of available accommodation and worsening housing affordability, making it more difficult for first homebuyers to enter the market. Movements in weekly rentals will be up to 5 per cent in the main, and vacancy rates, already tight, will tighten even further by up to 1 per cent. While the government’s Zero Stamp Duty Initiative, which cuts stamp duty for new homes, will drive supply and lend a hand to home buyers, the banks should be doing more to help keep the property market healthy and robust in 2011 and should consider: • Abolishing mortgage exit fees. This would increase competition in the mortgage industry, give consumers the chance to change lenders for a better deal, as well as help anyone who has to sell for financial reasons to not have to get above market value to cover exit costs. • Keeping their moves on interest rates in line with the RBA rather than independently. Two additional interest rate increases are anticipated which will have a negative impact on affordability as buyers’ borrowing capacity is reduced. Widely anticipated electricity price hikes are expected to increase the number of buyers looking for energy efficient features as well as change the types of features they look for. Solar hot water and power will become the features that make a home more saleable, and there needs to be more done to educate consumers on the benefits of energy efficient features. The state election scheduled for 2011 may impact on the market as a result of the typical uncertainty caused during the lead up.
12 First National Real Estate 2011 Property Market Outlook