Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR Tim Aldridge from First National Real Estate Collie & Tierney expects the Mildura property market to steady further over the remainder of 2011, on the back of a moderating market during the first half of the year. “This trend should continue, with the region recovering from the drought, as long as the promised infrastructure is completed and delivered, creating prime conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Aldridge 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 Aldridge said in the main, house and apartment/strata property prices are expected to remain relatively flat, with the potential for some increases in apartment/strata property prices as a result of affordable rental homes being available for sale. “Land prices are expected to trend upwards and experience increases of between 1 and 5 per cent,” Mr Aldridge said. “Land prices have dropped over the last 12 months, but there have been slight increases in recent times.” Mr Aldridge 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 rental properties and an influx of out of town tenants. “Mildura’s current vacancy rate is 0 per cent, so there is not much room for movement, unless it is upwards,” Mr Aldridge said. Weekly rents are trending upwards, increasing by between 5 and 10 per cent due to demand exceeding supply and creating a rise in prices. Mr Aldridge expects investors 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.
“Investor activity in the region is expected to increase by between 5 and 10 per cent,” Mr Aldridge said. “Growth is expected to result from low vacancy rates producing high yields, which are currently 7 per cent for the Mildura region.” 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 Aldridge said. “Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property.” Mr Aldridge 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. “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 Aldridge said. “The notion of taxing someone on their death is also unfair and uncompassionate.” He says any talk of abolishing negative gearing should cease immediately. Lowering immigration levels would certainly impact on the property market – however, there could be both positive and negative outcomes, according to Mr Aldridge. “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 Aldridge 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. Major projects earmarked for the Mildura area should see significant capital growth for the region and increased buyer activity coupled with further improved rental yields. “Although, should there be similar restrictions on the subdivision of farming zone land on Mildura’s urban fringes, as there have been in the past, this may curtail any potential land price increases,” Mr Aldridge cautioned. “The biggest challenges faced by the region include water security, farming viability, local tourism and the high Australian dollar, all of which could have a detrimental impact on the Mildura property market.” - copy ends – Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Tim Aldridge from First National Real Estate Collie & Tierney on 03 5021 2200