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Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR Richard Waldron from First National Paradise Point expects the North Gold Coast property market to moderate over the remainder of 2011, on the back of a falling market over the first half of the year. “This has resulted in sellers accepting new pricing levels, which will serve to steady the market, creating ideal conditions for investors to capitalise on lower house prices, increasing rents and improved yields,” Mr Waldron said in the First National Property Market Mid Year Update 2011 released this week. “Restrictive bank lending criteria is holding back the property market as banks adjust their risk profiles for further falls in prices. Even though now is an ideal time to purchase, people are holding onto their money and waiting to see what will happen to the market, property values, the economy and the world.” Mr Waldron expects property prices across the board (house, apartment/strata and land) are expected to trend downwards. “House prices may see falls of up to 5 per cent, while apartment/strata property prices may drop by between 10 and 20 per cent as a result of more investors moving out of the market,” Mr Waldron said. “The entry level unit market is currently defying the general market trend, which has seen no fall in prices during the past six months and it is expected this activity will increase in the second half of 2011. This will be driven by the down-sizing local market. “Land, which has seen a major fall in price already, may experience further price falls of between 5 and 10 per cent. “Currently, buyers are calculating land values by subtracting building costs from comparable resales. With the general market steadying, the last six months of pressure on land prices will ease.” Mr Waldron believes the rental market is expected to remain relatively steady with vacancy rates tightening and trending downwards, decreasing marginally by up to 1 per cent as a result of more people watching the market and waiting to purchase, creating increased demand for rental accommodation. “This wait and see approach is expected to push weekly rent prices upwards, with increases of between 5 and 10 per cent,” Mr Waldron said.

According to Mr Waldron, Upgraders are expected to represent the strongest growth in activity in the region, although retirees are also expected to be quite strong. “Lower prices and population growth from interstate migrants may see investor activity increase by between 1 and 5 per cent, with investors benefitting ultimately from increased second buyer activity, improved rental yields and returns and easing of bank lending criteria,” Mr Waldron 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 will 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. “A carbon tax may decrease demand for homes that are not currently adapted for energy efficiency,” Mr Waldron said. “Government charges, water and power are up more than 50 per cent in south east Queensland already and predicted to go higher before applying a carbon tax based increase.” Mr Waldron thinks Stamp Duty should be abolished altogether, delivering on the promise to remove all indirect taxes such as Stamp Duty, when the GST was introduced as well as stimulating market activity particularly with investors. “But, replacing stamp duty with another form of tax, such as a broad-based land tax or death duties is not supported,” Mr Waldron said. “A broad-based land tax including the family home would ultimately become a tax on tenants and it would reduce investor interest in Queensland. “Death duties should also be taken off the negotiating table, and any talk of abolishing negative gearing should cease immediately as it may eventuate in driving investors out of the market altogether, opting to off-load their properties rather than fund other people renting it.” The exclusion of any of these proposed policy changes from the recently announced Queensland state budget may be an indication that the Government does not intend to take such matters any further. Mr Waldson feels the lack of State Government action on new land releases is stifling the market. “The land segment is suffering as a result of high development costs,” Mr Waldron said. “The Queensland Government has just put a clamp on head works ($28K per block) but developers say they have not touched the water rates and that adds another $25K on top of that, so effectively it costs around $50K to develop a single block of land which is discouraging for investors.” - copy ends –

Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Outlook, Richard Waldron, from First National Paradise Point, on 07 5529 5700

Paradise Point, North Gold Coast QLD  

Paradise Point, North Gold Coast QLD - Media Release

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