Property market outlook patchy, but signs of recovery

Date: 11 March 2011
Denise Pinwill, Principal, First National Real Estate Beerwah expects the Queensland property market to weaken in 2011. “House price decreases of up to five per cent are expected as a result of an excess of properties on the market relative to current rates of sale,” Denise said in the 2011 First National Property Market Outlook released this week. “Some regional areas are doing well, but the majority of the state’s markets are moderating.” Denise expects apartment/strata property prices to trend downwards with marginal decreases of between one and five per cent as the market waits on many project sale properties yet to enter the resale market, coupled with less than desirable market conditions.

Land prices are expected to remain relatively flat with developers rarely building or releasing land due to low rates of return.

Vacancy rates are expected to also remain relatively flat in 2011, as rents quickly adjust to market conditions. “While there is an increase in rental stock, there is also a churn as tenants seek lower rents in response to cost of living increases,” Denise said.

Weekly rentals are expected to trend downwards with decreases of up to five per cent due to the rising supply of vacancies. “Increasing numbers of tenants and properties does not automatically equate to a balanced market,” Denise said. “It gives tenants the opportunity to find cheaper premises and move. At current interest rates, landlords have to take the market.” Forced sales due to mortgage defaults are expected to increase in the early part of 2011, with most small to medium enterprise (SME) loans tied to property, and Queensland experiencing poor business conditions in most sectors. “There are as many sales being brought to market as a result of SMEs as there are from high interest rates themselves,” Denise said.

The resources driven areas of Gladstone, Mackay, Emerald and Rockhampton are considered property hot spots for the coming 12 months.

However, impacts on production and employment as a result of the force majeure flooding events of Christmas and the New Year will likely depress activity for the first few months of 2011. “This would make banks more competitive as buyers would be free to seek out the best deal for their situation,” Denise said. “In addition, the banks should keep their moves on interest rates in line with the RBA rather than move independently. “However, the real point that should be looked at is transferring Mortgage Insurance which is often crippling for many homeowners.” Denise anticipates two additional interest rate increases which will potentially slow the market even further than it was slowed during 2010.

According to Denise, the breaking of the drought’ and widely anticipated electricity price hikes are expected to impact the types of energy efficient features being sought by homebuyers. “Solar electricity is becoming increasingly important as people become less worried about lack of water,” Denise said. The key barrier to energy efficiency features such as solar hot water and power becoming more of a selling’ feature of a home is consumer awareness.” Denise said the government needs to do more to alleviate the lack of supply such as releasing more land, allowing more medium density developments, improving planning and approvals processes and controls, and introducing a national planning authority.

First National Real Estate Beerwah

Article date: 11 March 2011
Back to articles Filed under: Media / QLD News Tags: denise pinwill, first national real estate beerwah, property market outlook
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