TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH FIRST NATIONAL REAL ESTATE CEO, RAY ELLIS
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me to discuss the outlook for property in 2011 is First National Real Estate, CEO, Ray Ellis.
Ray welcome back, each year you survey your network of offices around the country, what did this year’s survey reveal?
Ray Ellis: Thanks Clive, it is great to be back to outline to your viewers where we think the property market’s going in 2011. As discussed, every year we release our national property outlook to advise the general public where we think the property market is going. 2010 was a good year, average growth around 4.7 nationally, varied from State to State, but that is a good growth in what the conditions were in 2010 coming off the Global Financial Crisis.
We see 2011 as being optimistic without over optimistic. It is a market that is going to improve, but of course the events that have had an effect on the Australian psyche in the early part of the year being in Queensland, northern Victoria and New South Wales - only time will tell how much that affects the market. But for investors and people looking to change homes or get into their first home, we see 2011 as being cautiously optimistic.
Clive Tompkins: And Ray what about sales of apartments and townhouses, what’s the expectation for 2011?
Ray Ellis: In all the major capital cities we’re very optimistic about apartments and townhouses, for two reasons. Firstly, there was a major supply came into the market place in 2007/8/9 and even 10 because demand was seen to be there - that is now dwindled down because sales have been strong last year. But more importantly, in the last couple of years the opportunity to obtain finance as a direct result of the Global Financial Crisis became difficult. So in 2011 there’s probably not the same number of new projects coming online in the market as there was in previous years.So there’s dwindling of stock, lack of new ones coming on should mean that the prices for apartments and townhouses will remain strong throughout 2011.
Clive Tompkins: Okay Ray looking at each of the capital cities in turn, what’s the outlook for each, starting with Sydney?
Ray Ellis: Metropolitan Sydney should return to its dominance in the Australian market in 2011. There’re a number of factors for this. The first is March 26th is a State election, that will get that off the agenda and confidence will return to the market that that’s done and dusted.
Secondly, there’s been a lack of supply in recent years, that’s now coming into good conditions in the market. Rental returns have been above 5%, growth in prices has been around about 4% or 5% coming into 2011, confidence is returning. So Sydney should be very good for 2011 – not the boom times we saw perhaps six or seven years ago, but certainly nothing like the poor conditions in recent years.
Clive Tompkins: And Melbourne?
Ray Ellis: Well Melbourne has been the star performer in 2010 and that looks set to continue throughout 2011. What has caused Melbourne’s growth is the high population intake into that city, then also the completion of infrastructure projects such as the western ring road, which has seen a dramatic growth in the western northern corridor.In 2012 the Frankston bypass and the south-eastern suburbs is coming online and then again that’ll see growth in those outlying eastern suburbs there. So Melbourne should be a good solid performer in virtually all suburbs in 2011.
Clive Tompkins: Brisbane?
Ray Ellis: Brisbane and the greater south eastern Queensland corridor was set for a slight increase in growth in 2011, but of course we’ve seen the floods in January and now the cyclones in February. What effect that has on the psyche of the buying and selling public - very hard to guess at the moment. But what we should see is a return to normal conditions as opposed to the very poor conditions in recent years.
The effect on property values in Brisbane as in relation to the floods is going to be the key question, because after 1974, property values halved and it took about four or five years to even improve to pre ’74 levels. Hopefully we won’t see the same conditions again, but then on the upside rental accommodation is going to be very popular in Brisbane as people renovate their homes, so strong rental growth will occur. So investors it may be a perfect opportunity to get into the Brisbane market.
Clive Tompkins: Tell us about Adelaide.
Ray Ellis: Adelaide is always a consistent performer in the Australian property market. It doesn’t have the highs and lows of the major cities in the eastern States, but the impact of the mining boom in the north of the State is yet to be felt. Good planning, good infrastructure and you’re seeing this in the Mount Barker area where over 7000 new dwellings or people expected to move there in the next number of years, again will drive growth.
The outer suburbs of Adelaide continue to grow, not the high performance of say Melbourne or even Sydney in 2011, but good solid growth throughout most of Adelaide in 2011 is what is expected.
Clive Tompkins: What about Perth?
Ray Ellis: Perth or Western Australia, we should replay exactly what I said last year. The mining boom continues Port Hedland, Broome, Karratha – we can’t build new houses quick enough. This is in contrast to Perth where activity in recent years has slowed down dramatically in comparison to the heydays of ’06 and ’07.
Slightly better returns in 2011, certainly better returns for investors in the rental property market but not the highs. Certainly we’ll never see the highs again in recent times of ’06 and ’07s, but certainly an improved outlook for 2011 in comparison to last year for the Perth metropolitan area.
Clive Tompkins: And now to Darwin.
Ray Ellis: Darwin - great performer in 2010, no reason to change the outlook in 2011. Prices should grow up to 5% for houses and even up to 10% for apartments and units. Great territory at the moment, good economy, people moving there, great vibe about what’s happening there. Darwin - good investment opportunity for anyone in Australia in 2011.
Clive Tompkins: Canberra?
Ray Ellis: Canberra is always a good solid market. It is a Government town, work continues, the economy continues. Growth between 1 and 5% should be expected, always a good investment return in Canberra, good solid supply, good solid demand, never a standout performer. If you’re looking for safety in returns, Canberra is always a good bet.
Clive Tompkins: And Hobart?
Ray Ellis: Hobart is the country’s most affordable capital city. Good growth in Hobart, 2010 was solid, 2011 will be solid and that goes for all of Tasmania. Launceston, Devonport, Burnie, all those northern cities will have good growth in 2011. Again, because it’s a good solid economy, good solid growth will occur in 2011.
Clive Tompkins: Okay Ray now to regional Australia, what’s the outlook for 2011?
Ray Ellis: What we’re starting to see in regional Australia and I’m talking about cities like Townsville, Dubbo, Orange, Bendigo, Whyalla, Bunbury - anywhere that’s outside of the capital cities, we’re seeing the impact of Government programmes encouraging new migrants and Australians from the capital cities to move to these regional centres. And there’s been strong growth in property prices where a recent survey indicated that Coffs Harbour, Bendigo and even Devonport in Tasmania were considered to be among the least affordable places Australia. Whilst that’s certainly a shock to the people that live there, it reflects the growth in those areas.
So there’s still good opportunities to go and live there with lifestyle and property growth, but it seems Australians are finally deserting the growth to the major cities and going to regional centres for a better lifestyle. So all those major regional centres will continue to grow very well in 2011 and beyond.
Clive Tompkins: Ray Ellis thanks for the comprehensive roundup.
Ray Ellis: Pleasure Clive, always a great opportunity to speak to your viewers and provide an outlook for the Australian market.
ENDS
