First National Supports Rates Decision

February 9, 2012 1 Comment

First National Real Estate says RBA’s decision to keep interest rates on hold is the right one because the market needs stability to counter ongoing consumer nervousness and tension.

The network’s members have reported drops in listing volumes for the second month in a row, which, in part, reflects home owners waiting for selling conditions to improve before they put their properties on the market but also reflects seasonal factors.

While the market remains slow in much of Australia, decreases in housing availability will begin to place upward pressure on prices as it increases competition, ultimately reducing the number of days it takes to sell a home.

Home buying opportunities, even with the rates remaining steady, were still considered plentiful as interest rates are still relatively low and home prices are at their most affordable for quite a number of years – which all bodes well for a property market looking for signs of stability and recovery.

Any rate decreases could have further added to consumer nervousness, which is still suffering from uncertainty around global economies and impacts of rising living costs, especially with the advent of the carbon tax.

At the same time, an increase now could result in reduced affordability, something first home buyers in particular can ill-afford at a time when some of the government assistance schemes are being cut back or dropped altogether.

Home buyers are encouraged to negotiate better rates with mortgage lenders including the Big 4 banks who are all on record as saying they are willing to discuss rates with home buyers in order to retain their share of the market, giving buyers a real position of power.

A calm approach is exactly what is needed right now to allow the property market to catch its breath and stabilise activity, so it can prepare for the next wave of influencing factors. This falls right into the hands of home buyers who should be able to secure the best deals they have for many years.

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Burnie Property Outlook 2012

January 15, 2012 1 Comment

The Burnie property market will be bolstered by renewed interest in 2012, as home buyers stop marking time, after waiting through 2011 for prime buying conditions to arrive.

In the last six months, the market has been falling due to a lack of confidence in the economy and with state government policies, but this is expected to steady in 2012.

With current economic uncertainty, state budget cuts and rising unemployment dampening confidence, house sales and new housing construction will remain slow, with prices generally remaining flat.

It is expected that extended selling periods will be seen and that values will remain under pressure until the region’s economic prospects improve.

The key challenges facing the region’s property market in 2012 will be ongoing low consumer confidence due to State Government budget cuts to health, education and police.  Stamp duty concessions for first homebuyers ceased in the middle of 2011 and this will continue to impact on first homebuyers entering the market, as they will need to save a larger deposit.

The government also announced in the budget, that spikes in property land taxes will be smoothed out with a reduction in the valuation cycle from 6 years to 3 years.  Cost of living increases, such as rising water/sewerage charges and electricity prices, will continue to negate any gains made from high affordability levels.

Market Conditions

Buyer confidence will improve in 2012 on the back of decreasing sentiment in the last half of 2011.  Confidence has been at the mercy of local market conditions and into 2012, interest rates will be more of a key influencing factor.

Residential Market

Property Prices

Property prices in Burnie are expected to remain relatively flat across all sectors although there is potential for some upward movement of below 1 per cent, depending on what happens with interest rates.

A large choice of available properties for purchase in the local Burnie area will continue to ease pressure on prices.

Land prices may be sensitive to any decline in building approvals and an oversupply of land in some areas.

Rental Market

2012 could see an easing in rental vacancies, of up to 1 per cent, and moderating rental growth.

Rental markets in areas where job losses are being experienced may experience further easing of rental prices and some price drops in weekly rents will be due to people leaving areas in search of employment. This could lead to an oversupply of rental properties.

So, weekly rental prices will remain relatively flat in those regions, with the potential of some decreases of up to 1 per cent. 

Growth

Any increases in investor activity are expected to be up to 5 per cent in the main, as economic uncertainty continues to play a role in investment behaviour and purchase decisions.  Any potential increases will only be if investors are able to purchase positively geared properties.

The upgrader segment is expected to produce the strongest growth in 2012, as buyers seize the opportunity to capitalise on greater affordability and the possibility of lower interest rates, which are expected to further decrease by between 0.5 and 0.75 per cent.

While interest rate cuts may increase activity slightly in Burnie, the real benefit will be any relief it provides to home owners who are facing large increases in their day-to-day living expenses.

Changing Market Conditions

The introduction of the carbon tax is expected to further reduce confidence in the state economy and the government that runs it.

Commercial Property Market

Tasmania is currently outperforming all other major office markets and it will continue to set the pace until at least the first half of 2012.

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Top End Challenging

December 21, 2011 Leave a Comment

Buyers are cautious & certainly price-sensitive

Times are good for buyers at the top end.

This is where prices have fallen further and faster than the wider market. However, owners with high price expectations are reducing their expectations significantly in order to make a sale and move on.

Instead of traditional high exposure marketing campaigns, a trend towards properties being listed quietly has recently emerged in capital city markets.

Owners fearing that a ‘no sale’ campaign might injure their chances of achieving the dream price have been reluctant to promote widely. However, despite weak auction clearance rates, properties in the upper ranges are still selling strongly post-auction, their marketing ultimately having generated the necessary enquiry.

While buyers are cautious and certainly price-sensitive, it’s tough selling a secret and statistics show that properties marketed by auction continue to achieve a sale in fewer days on the market.

With interest rates falling and the outlook positive, activity levels are anticipated to improve in 2012, although the very high prices of the past are unlikely to return quickly.

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Confidence At Six Month High

December 7, 2011 Leave a Comment

Merry Christmas & have a safe holiday

As the property market moves toward its summer hiatus, First National would like to wish you a happy and safe holiday as well as a Merry Christmas.

With the housing market correction having slowed in September and interest rates fallen, Australian confidence has risen to a six-month high.

Capital city dwelling values have fallen just 0.2%, the smallest decline since February, and economists are tipping rates could fall further yet.

So what’s next for 2012?

We’re working on our 2012 Property Market Outlook right now, so ask us for a copy in January and we’ll give you the views of over 450 agents Australia-wide.

Swim between the flags!

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Renting Versus Buying – The Housing Dilemma

December 6, 2011 Leave a Comment

Is now the right time to rent or buy?
Is now the right time to rent or buy?

Current market conditions coupled with increasing housing affordability, has many renters questioning if now is the time to stretch their budgets and commit to buying their own home.

But serious consideration needs to be given to the person’s individual and financial situation to ensure they make the right decision.

The advantages of each housing option should be weighed against the drawbacks to find the one that best suits specific needs and individual situations.

Renting offers great flexibility with the option to relocate from home to home and area to area, as the need arises, is often a cheaper alternative to buying, with monthly rental payments usually less than a mortgage repayment for a comparable property and without the other incidental costs which can be incurred as a home owner.

One of the greatest financial and stress-free advantages of renting is that property maintenance costs, repairs, rates and insurance bills are the responsibility of the owner, and not the renter.

Despite these many advantages of renting a property, there are some disadvantages which will make buying preferable, particularly in light of escalating monthly rentals.  The most obvious one being the difficulty renters face placing their own personal stamp on a rental property.

There is also the fact landlords can inspect their property whenever they wish, with sufficient notice, potentially disturbing the renter’s privacy.

But the biggest disadvantage of renting is that the property can never be paid off by the tenant, making the money lost for good, without any chance of recovering it in a sale of the property.

This is where First National can really help.  We offer advice and assistance based on the necessary knowledge, experience and skills to understand the market, its trends and its weaknesses and opportunities to ensure home buyers and renters make the most of their finances over the long term by considering the impact on personal net wealth and cash flow over a lifetime.

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Lend A Hand For Renters

November 28, 2011 Leave a Comment

Is NRAS is losing its edge as affordability improves?

While the network supports NRAS in principle, it is no longer effectively impacting on rising rents, leaving those most in need of assistance flailing in their efforts to make ends meet.

First National is calling on the government to look at changing NRAS so it has more relevance and achieves what it set out to do, or consider other forms of assistance such as bringing back some of the grants and other incentives that were obviously phased out too soon.

First National says while it is good news for the property market to get first home buyer activity increasing as a result of the market conditions, it is not good when it is done at the expense of those renters who can least afford it.

Struggling renters need access to assistance schemes that meet their circumstances and offer real assistance, which NRAS initially did, but has since failed to recognise the growing demand of assistance required, making it obsolete.

We don’t see property market conditions altering too dramatically in the near future, and certainly not to the extent that they will improve the situation soon enough.

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Agents Should Rate In Energy Scheme

October 20, 2011 Leave a Comment

First National Real Estate believes real estate agents have a role to play in any national mandatory disclosure energy efficient rating scheme, so long as it is the right role.

The proper policy and regulations need to be in place, and the appropriate people prescribed the role they are best suited to play.

A national and consistent approach is crucial to any future success of a scheme of this nature.  Current state-based schemes already produce inconsistent ratings and results due to software flaws or subjective interpretation of results often compounded by a lack of correlation between actual energy performance of houses and their star ratings.

The real solution to the mandatory disclosure issue lays with government and industry working together.

Government needs to get the scheme right and put it in place with appropriate support strategies, both in terms of financial resources and implementation, which means getting the regulations and policies passed, educating the general public on the benefits of energy efficiency ratings and funding ongoing research and development.

It then falls to real estate agents to promote the ratings through the marketing of the properties they have on their books to buyers and lessors.

The real question is how assessors are selected and trained and accredited.  It is important that they are independent of the real estate profession so no potential conflict of interest is perceived by consumers.

The First National Real Estate network is committed to environmentally efficient principles and prides itself on its green initiatives – it fully supports a national mandatory disclosure of energy efficient ratings scheme, as long as all players act in the interest of the environment.

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Negative Gearing Here To Stay

May 6, 2011 Leave a Comment

First National Real Estate says the government is ‘bluffing’ when it says it is considering cutting negative gearing as it does not make economic or political sense.

Talk of cutting negative gearing only adds to a worsening situation where property investors are already opting to stay out of the market.

Ongoing investment in property is crucial to Australia’s economy.  It also maintains a healthy rental market and any changes to the current policies could have a detrimental effect on this country’s economic stability, as well as the future supply of rental properties in an already tight rental market.

At the end of the day, it will be struggling renters who will bear the brunt of this burden and they may be forced into relying more heavily on government welfare agencies and government funded housing for their very survival.

This just won’t happen.  It is pure scare mongering on behalf of the government to even suggest that they are seriously considering cutting negative gearing.

The property market is also doing it tough with increasing rents which are set to rise by 7 per cent in capital cities as a result of low vacancy rates and a shortage of supply of suitable available accommodation.

Consumer nervousness is increasing at an exponential rate due to ongoing tight vacancy rates, low first home buyer and investor activity and the market suffering seven interest rate rises since October 2009.  Plus new supply coming on-line is quite constrained all amid a host of natural disasters and the ongoing unstable European and Japanese economies.

Negative gearing ensures a significant supply of rental housing, which serves to hold down rents.  Any dislocation in investment housing would affect those who can least afford it – people who pay rent.

Investors should be gearing up to take advantage of a market which is cooling and prices are coming off, good loans are available, good fixed rates are on offer, the banks are in real competition and there are less first-home buyers competing with investors.

In addition, rents have been increasing and vacancy rates in many areas are well below 2 per cent – all positive signs for the investor.

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First National Bucks Industry Stance

April 21, 2011 Leave a Comment

First National Real Estate CEO, Ray Ellis, disagrees that stamp duties should be replaced with a broadening land tax or any other tax – saying it should just be abolished. 

It has long been recognised that stamp duty as a tax is inefficient and a complete rort, so, while it is obvious it needs to go, it should not be replaced with some other tax. 

When the GST was introduced, it was meant to phase out a number of various state and territory government taxes, duties and levies such as banking taxes and stamp duty. 

More than a decade on, we are still being burdened with stamp duty and it seems the industry is now being portrayed in the media as willing to settle for replacing the duty, instead of having it abolished altogether. 

The upcoming 2011 Federal Tax Summit presents the ideal opportunity to get blanket approval from state and federal governments to abolish this duty and there should be no further talk of ‘replacement’, but to deliver what was promised in the first place. 

A recent article said the OECD supported the rationalisation of state and government taxes, particularly stamp duty on house sales. Ex-Treasurer Peter Costello said it should have been eliminated when the GST was introduced and even the Henry Review recognises the need for it to go. 

The GST was meant to provide sufficient funding for state needs, and if they are not able to raise enough revenue through the GST they need to look at reform, rather than rorting hard-working Australians and replacing one tax for another.  Get rid of stamp duty altogether.

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First National Says Stamp Duty Too Taxing

February 24, 2011 Leave a Comment

A reform of state taxes is being called for by First National, particularly inefficient ones like stamp duty which is proving too taxing for working families to pay.

Stamp duty is nothing more than governments gouging money from those who can least afford to pay – working Australian families.

We are already proven to be one of the most expensive property markets in the world and excessive property taxes, like stamp duty, is making it incredibly difficult for new entrants to gain access to the market or for existing home owners to upgrade.

The situation with the Australian property market is becoming untenable and needs to be addressed at a national level.

At a time when rents are soaring, vacancy rates are tight and there is a shortage of supply, there is a real potential that more Australian families will be forced onto the streets – increasing homeless rates and welfare payments and further adding economic stress to the Australian economy.

Serious consideration needs to be given to addressing the problems with the Australian property market if there is going to be hope for future Australians to realise home ownership dreams.

Plus, as the Henry Review points out, transaction taxes such as stamp duties reduce economic efficiency, either by discouraging turnover or being embedded in the cost of production, which just increases the problem.

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