2014 saw continued prices increase in PNG real estate, causing concern among Papua New Guineans who feel that affordability is at an all-time low.
Moving into 2015, there are range of government initiatives aimed at delivering affordable housing to Papua New Guineans combined with a number of public and private sector projects which will continue to bolster PNG’s economic growth. What result will these factors have on the property market? Will 2015 be the year of the affordable home for the average Papua New Guinean?
To answer these questions, Hausples.com.pg interviewed several major PNG real estate agents to garner their views on the market forecast for 2015. Read on to find out more.
Hypothesis One: Drop in Prices
According to Century 21 Siule Real Estate’s Christian Arek, this year will see a drop in the real estate market.
“I would say the real estate market would be dropping this year… [It] will continue to drop a bit initially and then eventually level off” predicted Arek.
This is great news for the bulk of Papua New Guineans who are renting as this means a wider range of rentals that will fall within their budgets. From recent trends and surveys, it appears that high quality houses will still be able to be leased at a reasonably steady rental price while ordinary properties will be the most affected by price fluctuation.
“[The market drop] presents a lot of options for tenants in the rental market because they have more to choose from in terms of budgets. Moreover, landlords are more willing to negotiate renting costs.” added Arek.
As for those who are planning to sell their property this year, Arek stated that it’s uncertain as to what sellers should anticipate. Definitely buyers will be more motivated to purchase a house relying on the First Home Ownership Loan Scheme which increases the possibilities of making a big and important investment. Moreover, it seems that the Government is making steps toward a new project to give away Free Land Titles to ordinary PNG citizens which will give them a security to take a loan. However, ultimately sellers make the decision about whether to sell at a particular price so the market will once again be largely in their hands.
DAC Real Estate’s property manager, James Beangke also anticipates that the real estate market will decline in 2015.
“Generally speaking, the Government has settled [real estate] regulations and taxes but considering the ongoing PNG LNG Project, there will be a lot of people who will be able to spend in the market. Hopefully, this drop will pick up after March,” stated Beangke.
In particular new affordable housing projects such as Duran Farm and Edai Town will slowly release large amounts of quality affordable housing onto the market at reasonable prices. This increased supply should mean price declines and relative bargains for purchasers.
Hypothesis Two: Increase in Prices
On the other hand, LJ Hooker’s Gemma Mavo forecasted that real estate market prices will increase this year. Mavo, however, stated that this will only happen if there’s increased competition.
“My view is that real estate prices will at best remain flat over 2015. However, I believe that it’s more likely that due to the various government initiatives and continued strength of the economy, competition will increase and this will have a tendency to increase both rental and sale prices”
Mavo points out increased prices may particularly apply to properties for sale as strong rental demand will mean better returns for investors and therefore higher rental yields and prices.
With more real estate companies springing up, as well as the introduction of the First Home Ownership Loan Scheme and Free PNG Land Title Giveaway Trial, 2015 will certainly be an interesting for Papua New Guineans and might represent the best opportunity yet for ordinary citizens to secure a home.