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Media Release – [date] 2011 PROPERTY MARKET UPDATE – THE YEAR OF THE INVESTOR Anthony McTaggart from First National Edward Higgens Parkinson expects the Upper Hunter property market to moderate for the remainder of 2011, on the back of a rising market over the first half of the year. “This steadying market is a result of expansions in the Coal Export industry putting pressure on accommodation,” Mr McTaggart said in the network’s Property Outlook 2011 Mid Year Update released this week. “This will create an ideal market for investors, who could capitalise on lower house prices, increasing rents and improved yields. “However, housing affordability, the threat of interest rates increasing, reducing consumer confidence and tight lending criteria from major banks will add pressure to the market to some extent in the coming six months.” Property prices across the board (house, apartment/strata and land) are expected to trend upwards, with increases of between 1 and 5 per cent for all sectors. “A shortage of rental accommodation in the area, along with increased job opportunities will underpin house price rises, and increased number of shift workers will see a growing demand for Duplex and Unit accommodation,” Mr McTaggart said. “The influx expected with more job opportunities in the mining sector has kept demand for land and New House & Land packages high.” Mr McTaggart expects the rental market to tighten further, with vacancy rates trending downwards and decreasing by between 5 and 10per cent. “Vacancy rates are already low with high demand for rental accommodation in the region,” Mr McTaggart said. “This trend will continue and the shortage of supply will put pressure on available stocks, which will put further upward pressure on weekly rental rates. “Weekly rents are expected to trend upwards, increasing by similar percentages as a result of a growing demand due to the expansions in the mining sector.” According to Mr McTaggart investor activity is expected to increase by between 1 and 5 per cent, driven by the shortage of supply and an influx of mining communities resulting in better rental yields and returns. Increased second buyer activity is also driving investor growth.


However, Mr McTaggart cautions investors will monitor closely and be wary of changes to negative gearing and other tax reforms – which may impact on their levels of interest. Investors are expected to represent the strongest growth in activity for the Upper Hunter 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 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. Homeowners will also be more likely to take action to begin correcting the least energy efficient aspects of their property. Although, this could be an each-way bet, but until the tax is introduced and the impacts felt, it is difficult to predict the outcome on property transactions. Mr McTaggart considers Stamp Duty should be abolished altogether, as it would stimulate the market and promote more efficient use of existing housing stocks. “This should only happen as long as the mooted plans for replacing it with other taxes such as a broad-based land tax, including the family home, or death duties are not carried through,” Mr McTaggart said. “And any talk of abolishing negative gearing should cease immediately.” The exclusion of any of these proposed policy changes from the recently announced NSW state budget may be an indication that the Government does not intend to take such matters any further. “It is hoped that the change in NSW government will see some changes in planning policy to enable developers to release more land at a more affordable development cost and with reduced red tape,” Mr McTaggart said. “The road link that will bring the Pacific Highway link to Branxton will see travelling times to Sydney cut dramatically, which will lure people out of the city in search of less crowded accommodation. “There is, however, a budget loss to be recovered and this may impact on the ability of the new government to effectively move forward with their plans.” - copy ends Issued by: First National Real Estate For further information or to receive a copy of the 2011 Property Outlook, Anthony McTaggart, Principal from First National Edwards Higgens Parkinson, on 02 6543 2788


Upper Hunter, Edwards Higgens, Parkinson, NSW