Property Remains a Sure Bet
July 23, 2010 1 Comment
As property punters across New South Wales hedge their bets both ways, First National Real Estate Lakeshores’ Principal, Mr Mark Millington is bringing some much needed clarity, predicting property prices’ growth will slow but that the market will remain buoyant despite ongoing uncertainty and increased consumer nervousness.
According to Mr Millington, property prices across all sectors of house, land and apartment/strata in the Lake Macquarie and Central Coast region rose by up to 1 – 5 per cent in the last six months, driven mostly by an increase buyer pool and lower level of available homes for sale, plus lower interest rate and government stimulus.
The rental market has seen vacancy rates decrease marginally by no more than 1 per cent as housing affordability and immigration create more tenants than available homes – a factor which has seen rents increase by as much as 5 per cent in some cases.
For the remainder of 2010, property prices, across all sectors (house, land and apartment/strata) are expected to continue to increase by up to 5 per cent as there is a shortage of new listings and a growing buyer pool to draw from. However, this is dependent on the RBA not increasing rates too high.
“The last two rate rises have already impacted on buyer confidence and also housing affordability and it is hoped they have now done their job and will hold rates where they are for some months, significantly improving buyer confidence,” Mr Millington said.
Vacancy rates are expected to ease even more, decreasing by a marginal 0-1 per cent, while rents are expect to further increase by up to 5 per cent due to the ongoing shortage of available rental accommodation.
Sales should continue to increase as Generation Xers continue to seek, and take advantage of, opportunities to trade up.
The new tax by the NSW government for home owners selling property over $500,000 will have a negative impact on the market, similar to the results of the NSW vendor exit tax for investors.
Housing affordability has come to the forefront in NSW, particularly in Sydney, while other parts of NSW, such as the regional and coastal areas, enjoy lower median prices and are attracting investors and first home buyers. It is expected affordability will remain a major factor in property decision-making throughout 2010.
Property hot spots are considered regional and coastal areas that have the greatest potential for growth as capital cities become more expensive.
A highlight for the second half of 2010 will be an expected 5-10 per cent increase in investor activity in the property market, on the back of an already 1-5 per cent increase in the last six months.
The expected increased activity is due mainly to finance markets becoming more volatile and consumer confidence being affected, investors will return to property for security, with a housing shortage that appears unable to change quickly, ensuring real estate holding values or increasing in value.
Interest rates are expected to continue to increase further by the end of 2010, by between 1-1.5 per cent, further impacting on the Lake Macquarie and Central Coast property market and adding to housing affordability concerns.
The environment is continuing to be a factor for consideration by homebuyers, with the most popular ‘green’ features being water tanks and solar hot water.
According to Mr Millington, the Government needs to take greater control of the supply versus demand issue for the Australian property market.
“They need to consider a holistic approach to the issue and look at a number of factors, such as releasing more land; overhauling the planning process and introducing a national planning authority; and introducing incentives for more medium density developments,” Mr Millington said.
There is a strong trend developing for Gen Xers and Baby Boomers opting to stay in their homes, rather than sell, making it harder for Gen Yers to get into the property market.