Demographic weakness
The declining population outlook is having a significant impact on the economic woes of the Apple Isle
Tasmania’s outlook is the weakest of all the states, according to the latest Deloitte Access Economics Business Outlook. This economic weakness is partly dollardriven, partly a reflection of global woes and state fiscal fortunes, and partly due to a lack of demographic demand.
It is no surprise that Tasmania’s businesses aren’t happy and aren’t investing, Deloitte partner Chris Richardson says. “An unwillingness to expand production capacity helps to explain the current weakness in the economy. It also points to further weakness down the track – businesses just don’t expect the future Tasmanian economy to be strong enough to justify much by way of outlays on new capacity.”
Unfortunately, while lower interest rates are positive, there are some important negatives to note: the state’s population growth is “slower than a wet week”, job growth is stagnant, unemployment is sitting above 7%, and the measures of job vacancies are continuing to sound the retreat, he continues.
Exchange rates aren’t the state’s key challenge for the longer term; rather, demographic destiny is, Richardson says. “The workforce is ageing fast, and less than half of all adult men in Tasmania are employed full-time, with that share having dropped notably since the GFC … The Apple Isle will be continuing to shed some its share of national population and output in coming years.”
This ever-weakening population outlook means that, even with new construction moving at a slow pace, state vacancy rates are well above the national average and house prices are edging lower, he adds. “Further, despite its infrastructure program, the state government is keeping a close eye on its recurrent spending, meaning that the public sector isn’t doing much to offset the hole in private sector activity.”
Although there are some major projects in the pipeline, “there’s not really anything to get excited about over the next couple of years”, ANZ head of property research Paul Braddick says. “As a result, the broader prospects for the state are that we’re likely to see the employment market continue to struggle. That’s not good news for the housing market because there will be fewer potential renters and first home buyers.”
Currently, Tasmanian projects are led by the $395m wind farm being constructed in Little Musselroe Bay and a $2bn wind farm proposed for King Island. Plans for a $900m iron ore pellet and concentrate plant have been shelved, but planning is underway for a $200m tin and tungsten mine at Mount Lindsay. A $78m open-cut nickel and cobalt mine at Barnes Hill has also been proposed.
The $565m redevelopment of the Royal Hobart hospital is the most significant public sector project on the cards, although plans for a $100m redevelopment of the Hobart Showground are pending approvals.
New funding for regional development
Meanwhile, state politicians have high hopes that opportunities and economic development will flow from a new Jobs and Growth Plan, which is supported under the $100m regional diversifi cation fund recently announced by Kevin Rudd.
State premier Lara Giddings says her number one priority is jobs, and the funding represents a huge injection into job creation in regional areas. “Importantly, the package contains an emphasis on creating jobs for people displaced by changes in forestry, and supporting projects that will help further diversify the forest industry for the future.”
The funds are set to go to targeted forestry projects, the tourism industry, and an extension of the Tasmanian Government Innovation and Investment Fund, but the package will also support the continued growth of important industries like agriculture, aquaculture and advanced manufacturing, the premier says.
Suburb to watch
New Town
Just 4km north of Hobart’s CBD, New Town is one of the city’s oldest suburbs. Federation-style cottages line many of its leafy streets, and its historic buildings include Australia’s second oldest farmhouse, Pitt Farm, and the New Town Post Office.
Rod Ham, from Raine & Horne Hobart, says New Town’s position on the fringe of the inner-city suburbs makes it attractive. “It is close enough to still be walking distance to the city for most people, but with more elbow room and larger blocks of land which make it more child friendly in that respect.”
He says that he himself moved to New Town with a five-year project in mind, and that was 29 years ago. “I have no intention of leaving the area. It is so convenient for work and was an excellent place to raise children.”
While there are some upmarket units and apartments in New Town, properties are dominated by three-bedroom houses that are on larger blocks than those in other central areas. The houses were largely built between about 1900 and 1950 and range from modest cottages to mansions, Ham says.
New Town has several large shopping complexes, as well as boutique stores, doctors and a hospital. A highly sought after private school, The Friends Quaker School, is located in the suburb, and there is a selection of public and Catholic education facilities.
Served by a good public transport system, New Town also boasts a major sports centre, Aurora Stadium, and is bisected by “the” bicycle track, which takes you right into the city of Hobart or out through the northern suburbs.
Ham says historically New Town has been a good capital growth area, and he expects this to continue into the future. “I believe it may become even more sought after than it is now, so I would strongly recommend to buy there.”
