Property Market Outlook Mid Year Update – The Year Of The Investor

Media Release – 1 July 2011

First National Real Estate has surveyed its 450+ offices throughout Australia and New Zealand to find that 2011 is set to become the year of the investor, with prime conditions for this segment to make their return to the market.

According to First National CEO, Ray Ellis, this is the picture building at the moment, based on expectations of interest rates, movements and local area member knowledge, underpinned by strong economic fundamentals as detailed in First National Real Estate’s  Property Market Outlook Mid Year Update released this week.

“The market is continuing to slow which is producing excellent opportunities for investors who should be taking advantage of low vacancy rates, strong returns, increased upgrader activity and easing bank lending criteria conditions”, Mr Ellis said.

“The biggest challenge facing us as an industry will be uncertainty.

“There is a lot of consumer nervousness which is basically due to uncertainty.  They are unsure of what is going to happen on a lot of fronts including what is happening to Australia’s economy and other global economies like Japan and Greece, will interest rates rise, will house prices fall, what’s happening on the job front and what changes will the government introduce in terms of policy, planning and taxes.

“As long as there is so much uncertainty and talk of policy changes, consumers will hold off making any major financial decisions.

“There is already evidence that they are holding onto their savings and either putting it back into their mortgages or other safe holdings until their confidence returns.”

First National Real Estate members across the country were overwhelmingly in agreement that house prices had steadied or fallen.

“Around 32 per cent of our members surveyed said house prices would trend downwards, while 50.9 said they would be flat,” Mr Ellis said.

“Across the board, any movements in house prices are expected to be within 10 per cent, but the majority of survey respondents anticipate them to be less than 5 per cent.”

Apartment/strata property prices in the coming six months are a mixed bag, with some states and areas expected them to trend upwards, some downwards and some for them to remain flat.

“Nationally, 45.5 per cent of our members surveyed expected this segment to remain relatively flat, but in New South Wales and Victoria the greater majority were expecting this,” Mr Ellis said.

“Whereas for Queensland, Tasmania and Western Australia, most of the members responding believed apartment/strata property prices would trend downwards.

Price movements for Apartment/strata property prices are expected, in the main, to be below 5 per cent.

According to the survey, most of First National’s members expect land prices to remain flat, with some predictions for prices to head upwards, and some downwards.   Victoria is the only state where the majority of members say land prices will trend upwards.

Any movements in land prices are expected to be mainly less than 5 per cent with some saying they may be as much as 10 per cent and a small minority predicting movements of between 10 per cent and 20 per cent.

For the rental market, members’ surveyed overwhelmingly expect weekly rents to increase while vacancy rates will lower or remain flat.

Members surveyed believe the strongest growth in their region will come from primarily investors, followed by upgraders, then first home buyers and lastly from retirees.

“Investor activity is expected to increase across the board, with all member survey respondents saying they anticipated growth in this segment,” Mr Ellis said.

“Investor growth is expected to be driven by mainly better rental yields and returns, increased second buyer activity and easing of bank lending criteria.

“As upgraders become more active, members expect opportunities will be created for first home buyers to dip their toes back into the market, as well.  However, any movement by investors and upgraders may be diminished if government continues to talk up some of their proposed policy changes they have recently raised.”

Mr Ellis said it was hoped the lack of inclusion of any of these proposals from the recently released budget is a sign that they have seen the error of their ways and dropped them.

Issued by: First National Real Estate. For further information or to receive a copy of the 2011 Property Market Outlook Mid Year Update, contact Stewart Bunn, National Communications Manager, First National Real Estate, on 02 9320 2535