Hobart’s property market drops further but locals are optimistic that summer will bring back the buyers
The winter may not have been kind to Tasmania’s property markets, but there’s every hope that the warmer months will see an improvement in the state’s fortunes.
Indeed, the latest RP Data figures show Hobart recording the weakest performance of all capital cities over the past 12 months with median dwelling values dropping by 9.1%. Over the past quarter, values fell by 6.4%.
It looks bad on the surface, but local buyer’s agent Rob Zubin argues that the figures are somewhat deceptive.
“Traditional ‘bread and butter’ property up to the $400,000 mark is actually progressing well,” he says. “There are a lot of transactions in that range, and we haven’t really seen drops in value in that market segment in the major population centres.”
So what is causing the fall in overall median prices? Zubin argues that it’s weakness at the top end of town.
“It’s a real challenge in the $800,000- plus market: there’s been a fair moderation in vendor expectations and a 10–15% adjustment in price,” he says.
That’s not to say that it’s all guns blazing at the affordable end of town, though. While prices might be holding up, activity has been down and buyers have been extra cautious.
“Buyers are carrying out three or four inspections of properties: we have vendors wanting to know if they should start charging prospective buyers rent, they’re coming back so often,” says Zubin. “Also, where property previously might have been on the market for two months, now it’s closer to four months. Even so, there hasn’t been a dramatic adjustment in price – although it is clear that buyers are more astute, and are recognising when a property is overpriced.”
Damien Taplin, director of TPC Valuers, agrees. “Conditions in Hobart remain challenging for the local property market, with evidence demonstrating a clear decline in activity from buyers and, unsurprisingly, a notable fall in the number of sales across the state’s capital,” he comments – adding that this caution is spreading to sellers with a 25% fall in the number of sales listings.
Even so, Zubin believes that the warmer months are bringing some zip back into the market.
“The last two months have seen a noticeable pickup,” he comments. “That’s partly down to the season – as we head into the summer, more activity naturally occurs. However, I also believe that when there’s been a time of less activity, there’s pent up demand that ends up being released – both in terms of properties on the market and buyers wanting to buy.”
Taplin is a little more reserved. “Market activity appears to have stabilised but economic uncertainty and interest rate sensitivity will continue to subdue activity for the remainder of the year,” he says. “Buyer and seller confidence is likely to return only with improved local conditions.”
One interesting trend he’s noticed, however, is greater interest in units in central Hobart – a market segment that’s not historically strong in Tasmania due to the affordability of detached housing.
“Amid the uncertainty there appears to be increasing interest in newly developed inner city apartment buildings – particularly in Hobart’s largest apartment complex at Bathurst Street,” adds Taplin. “Currently under construction, the complex is advertising off-the-plan apartments from $360,000 which is viewed by many as overpriced.”
This spike in interest is one that is also borne out by RP Data’s median unit price for Hobart in July, which had increased by 1.7% over the previous year. As Taplin wonders, could this spike in interest signal the “beginning of a trend for this lowrise housing-dominated city”?
Stormy seas
It’s the aforementioned local conditions that are proving problematic. With little exposure to the resources boom that’s beginning to reenergise the Western Australia and Queensland markets, one of the lowest rates of population growth in the country, and shaky public finances meaning a pullback on government spending, there’s little to drive demand for property.
The biggest project on the island, the long-awaited $2.3bn Gunns pulp mill at Bells Bay, is inching towards approval; this is likely to assist the ailing north-east of the island if and when it finally gets underway. Zubin suggests that it would have a “visual economic benefit” across the whole of the north of Tasmania from Launceston to Georgetown, and the influx of workers could even put pressure on rental housing.
While the Bells Bay project is undoubtedly a key one for Tasmania, it’s not the only project in the works: Zubin highlights two sizeable golf course developments. The problem with these and similar private sector projects, however, is twofold. “Some of it is down to lack of confidence and an inability to secure funds,” he says. “However, there’s also been a lot of private sector interest that’s been roadblocked by bureaucratic red tape and vocal minority interests.”
Zubin argues that these barriers need to be broken down if the state is to get back on its economic feet.
“The state government is challenged economically. While it’s doing what it can, it’s challenging – there’s nothing that would dispute that anywhere,” he adds. “If there can be an agreement that development can occur hand in hand with preserving lifestyle and assets, that will help the state progress. That’s the only way the state will be able to grow and preserve harmony between all stakeholders.”
Even so, Zubin maintains that activity in the property market will continue to improve. “The world doesn’t stop,” he says. “People relocate for jobs. We’ve still got very affordable property, and the majority of property in Tasmania fits in a range that is both good for Tasmanians [even while they are] potential buying opportunities for mainland investors. At the moment the majority of property is affordable, attainable and rentable.
“My personal view is that you have to take action for something to occur,” he continues. “You can wait and watch as long as you want, but nothing will happen. If you buy well, in well-located areas, then you’ll see benefits in the medium to long term. There are always ups and downs That’s what property is, after all – a long-term investment.”
