More good results for Tasmania’s market builds further hopes about the prospect of a genuine recovery, but will the overall economy hold improvements at bay?
Increasing flickers of light continue to pierce the clouds still hanging around the Apple Isle’s property market. Recently, these flickers have been contained in news of some more surprisingly good markets results.
In the RP Data-Rismark January Home Value Index, Hobart was the best performing capital city over the December quarter, with a rise in home values of 5.8%. This result was comfortably above the national average of 2.7%.
RP Data’s Tim Lawless says that, while the result was positive, it was yet to be seen whether it indicated a turnaround in the market. He believes more data is necessary before the result could be described as a trend.
However, the latest APM Housing Market Report was the harbinger of further good news for Tasmania.
The report shows that, after a long period of subdued buyer activity, Hobart house prices increased solidly over the year by up to 6%, with a noticeable rise in buyer activity over the second half of 2013. This brought the median house price close to its previous price peak in late 2010.
APM’s Andrew Wilson says the continuing price growth indicated Hobart’s housing market is heading in the right direction at last – and was likely to be continuing trend over the coming year.
“There is no doubt that improvements in affordability* and lower interest rates have activated buyers. The perception that it is time to move and buy is there now, especially for buyers who have been postponing making a decision.”
Buyer activity had picked up pace over the second half of 2013, Wilson says. “We should see a similar type of moderate growth going into the middle of this year, driven by expanded confidence and momentum.”
Unfortunately for Tasmania, its soft short term economic outlook and unemployment rate are likely to continue to be a drag on the market for some time yet.
On a brighter note, Wilson says that Tasmania’s market is showing resilience in the face of an underperforming economy which was not working against buyer activity.
“The economic situation seems to be counter-balanced by the improved affordability and low interest rate factor. Gathering momentum from those factors, and the perception that now is the time to buy, is helping the market to pick up, as a consequence.”
Broader, national economic issues - like potential government spending constraints in the budget and the lower Australian dollar, which will lead to higher prices for imported goods - could also act to moderate the Tasmanian market later this year.
However, Wilson says the Tasmania market should see its best first half year since 2010.
Further, APM’s report found that signs are emerging of a slow regeneration of economic activity. If that regeneration continues, the report predicts Hobart house prices should rise by 3 to 5% over 2014.
[* Hobart remains the most affordable capital city with a median dwelling price of $340,000.]
More good news further down the track
Meanwhile, the latest Deloitte Access Economics Business Outlook, notes that, while recent data from Tasmania has been better, the state continues to be the biggest victim of Australia’s “two speed split”.
The state has been suffering from the strength in interest rates and exchange rates, which have weighed on exports, retail and housing construction. This has had significant impact on population growth, employment rates and the overall economy.
Although Tasmania’s economy will continue to struggle for awhile, things are beginning to improve, according to the report. It says the lower the $A falls, the less drastic the pressures on Tasmania’s economy – with tourism and manufacturing set to benefit.
Further, it notes that housing construction and housing finance approvals have both picked up, residential vacancy rates are improving, and business investment spending is no longer falling.
Suburb to watch: Dynnyrne
Known as one of Hobart’s more affluent suburbs, Dynnyrne is picturesque – with lovely views of the Derwent River in parts - but also boosts close proximity to the CBD.
Colin Fulton, from Edwards Windsor Hobart, says the suburb’s proximity to services and amenities, coupled with good public transport, is a real selling point. “The university [of Tasmania] is only a short drive, and there are many schools and shops within walking distance. So it doesn’t matter whether you’re a university student or you have a family, everything you need is close by.”
Neighboured by the growth suburbs of Sandy Bay and South Hobart, Dynnyrne also benefits from its proximity to those much sought-after areas – as well as the amenities they have to offer.
Fulton says there is a good range of property types available in the suburb. “Whether you are after a big house, a heritage property, a unit or a modern house, you will be able to find it in Dynnyrne.”
While the predominantly residential suburb is well-developed, there are also pockets of new land available with splendid views, he adds.
Thanks to its proximity to the university which feeds the tenant pool, Dynnyrne has a strong rental market. There are low vacancy rates and rental yields sit at a healthy 4%.
The current median house price in Dynnyrne is a relatively affordable $487,500. However, Fulton says recent data shows the Hobart market has started to experience some growth, so prices in the suburb could soon start to rise.
