Selena Carabot from Mareeba First National Real Estate, expects the Far North Queensland property market to weaken in 2011, however, impacts of the force majeure flooding events of Christmas and the New Year, will likely depress activity for the first few months of 2011
“Rising interest rates are creating consumer nervousness and it is expected house and units prices will trend downwards as a result, decreasing by between 10 and 20 per cent,” Mrs. Carabot said in the 2011 First National Property Market Outlook released this week.
“An over-supply of land, only due to the GFC, coupled with high prices, are expected to see land prices trend downwards, where decreases are expected to be in the range of 5 and 10 per cent, creating a buyers’ market.”
According to the Outlook, a steady demand and short supply of rentals should see vacancy rates remain relatively flat, with potential increases of up to 1 per cent, or decreases of up to 5 per cent.
“As capacity to pay decreases with every interest rate rise, it is expected weekly rentals will trend downwards, decreasing by up to 5 per cent,” Mrs. Carabot said.
Mrs. Carabot anticipates two additional interest rate rises for 2011 which may dampen activity further.
“The main area of concern in the market is the enormous uncertainty that has been generated by the RBA and the banks on future rises,” Mrs. Carabot said.
“Another factor is the uncertainty over possible carbon taxes and electricity prices. There is also ongoing anxiety by investors on the potential of a ‘housing bubble’.”
Mrs. Carabot believes banks should be doing more to help keep the property market healthy and robust in 2011 and should consider abolishing mortgage exit fees, perhaps restoring some confidence in an otherwise stressed and apprehensive market.
“They should lessen stringent lending criteria and look at means of facilitating loans instead of insisting on minimum deposits, etc,” Mrs. Carabot said.
“Councils also should do more – perhaps consider less regulations and a more relaxed regime, to start.”
Mrs. Carabot said the government needs to do more to alleviate the supply versus demand issue such as an overhaul to the planning process and introduce a national planning authority.
“Currently, the process from planning to sub-division is far too long and the government needs to look at speeding up the approval process and land title issue and streamline the process so that there are clear and complete guidelines,” Mrs. Carabot said.