Media Release – 30/07/2010
PROPERTY REMAINS A SURE BET
As property punters across Australia hedge their bets both ways, Selena Carabot, Principal of Mareeba First National Real Estate 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.
Selena remains optimistic saying there remains plenty of opportunities for buyers and sellers, but cautions that banks need to adopt a responsible approach to future interest rates.
“On average, I expect property prices to continue slowly rising for the remainder of 2010 as ongoing supply shortages keep the pressure on, driving prices upwards, as outlined in the First National Real Estate’s 2010 Mid Year Update released this week,” Selena said.
“The market has become very erratic given the current market conditions and volatile European economies, but the increasing supply versus demand issue will continue to dog the industry.
“As long as demand outstrips supply, the market will remain competitive and thereby force prices up.
“While interest rates may impact on affordability if they continue to rise, and nervousness about the European economies may adversely impact upon consumer confidence, the reality is there are more buyers out there than available stock and that produces a competitive market.”
According to Selena, mortgage stress was of real concern for many homeowners and represents one of the most significant risks for the industry for 2010 in general.
“Interest rates and the increased costs of living have overstretched some mortgage holders, and if property prices do drop significantly, may force them into negative equity where the size of their loan exceeds the value of the property,” Selena said.
“This would create an even greater dilemma for the real estate sector, at a time when it needs ongoing stabilization to ride the next wave of the property cycle.”
Selena Carabot says house prices represent the most polarizing debate for the property market for the remainder of 2010.
Some commentators are predicting a property bubble and are waiting for it to burst, while others say that periods of rising interest rates often result in accelerated or steady house price inflation.
“Regardless of which way house prices go, there is opportunity for buyers and investors alike, depending on their individual circumstances,” Selena said.
“The one thing I am sure of is that property will continue to represent great value in the coming six months.”
House prices are predicted to continue increasing by up to 10 per cent by the end of the year according to 70 per cent of First National members surveyed recently, along with strata property prices and land prices.
It is predicted rental vacancy rates may reduce slightly over the second half, and so ease pent up demand, while rental rates are predicted to increase, making it potentially just as difficult for renters to get into appropriate accommodation.
“Our survey showed 65 per cent of our agents saw vacancy rates decrease mostly by up to 5 per cent, and this trend is predicted to continue into the back end of the year, with 70 per cent of our members predicting further declines,” Selena said.
“Rents are predicted to continue escalating by up to another 5 per cent in the majority of areas, with 20 per cent of respondents predicting rent increases of up to 10 per cent.
“Investor activity is expected to increase by up to 5 per cent by 43 per cent of our survey respondents, by between 10 and 20 per cent by 45 per cent of our survey respondents and by more than 20 per cent by around 11 per cent of our survey respondents.”
An increasingly tight rental market will continue to yield strong returns, proving lucrative for new investors. While there is some easing of rental vacancies in some areas of Australia, First National agents, in the main, predict rental increases in the vicinity of 5 per cent up to 10 per cent, further acting as a draw-card for investors.
Selena Carabot said First National members continue to report strong desirability by homebuyers for energy efficient features, when looking to buy a new home. A recent report showed 59 per cent of homebuyers would pay more for an environmentally friendly property.
“Almost 80 per cent of members responding to our survey said their customers seek energy efficient features, the top of the list being water tanks (82 per cent) and solar hot water and power (82 per cent),” Selena said.
“This is followed by native, drought tolerant gardens (26 per cent) and approved garden watering systems (25 per cent).”
Just over 67 per cent of our members responding to the survey agreed with recent reports that there is a trend that more Gen Xers and Baby Boomers are opting to stay in their homes, making it even harder for Gen Yers to get into the property market.
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Issued by: Mareeba First National Real Estate.
For further information , contact Selena Carabot, Principal, Mareeba First National Real Estate on 07 40 922 111
A Copy of Property Outlook 2010 can be viewed on our web site: www.mareebafirstnational.com under the “Buying” tab.