The state government’s recently announced boost to the FHBG is just one ingredient in the formula necessary for revival of Tasmania’s property market.
Recent property news from the Apple Isle has been dominated by the state government’s announcement of a significant increase to its first home buyers grant. The FHBG is now a generous $30,000 (up from $15,000).
Premier Lara Giddings says the “turbo-charging” of the incentive, to an amount equivalent to a deposit, is intended to dramatically stimulate activity and job creation in the building industry.
Property market professionals and commentators alike have greeted the move positively, with many expressing hope that it would prompt migration to Tasmania.
However, some have warned of the potential for unwanted side-effects. For example, the incentive might push up prices in the long term and could also lead to a lack of movement in existing properties at the bottom of the market.
According to Rob Zubin, from My Property Hunter, the government is trying to generate some economic activity in the property market, but the incentive might not achieve as much as hoped.
The premier hopes that people from all over Australia will move to Tasmania and buy property but, in order for that to occur, there are other things that need to happen to, he says. “Basically, Tasmania needs more jobs and more economic activity. Because, realistically, if you are wanting to buy property you need an income.”
Despite a slight recent drop in the state’s unemployment rate, it still sits at 8.2%. Meanwhile, the latest APM Housing report has Hobart’s unemployment rate at 6.4%. These figures remain a significant barrier to sustained housing market activity.
Building momentum
Zubin believes that development projects which lead to broader economic activity and create more jobs and, as a result, increase confidence are the way to build momentum in the market.
While there has been a 3-4 year lull where people have been waiting for something to happen, there are now some major projects taking place in Hobart, he says.
For example, the University of Tasmania is building some big (400 room) accommodation sites, the Maritime College is expanding, and a shipbuilding company just got a big European contract which should lead to a few hundred jobs.
Some other proposed projects are a light rail system for the Northern suburbs, a chair lift for Mount Wellington, and redevelopment around the port area.
These developments and proposals are positive signs, Zubin says. “Things are starting to happen. From big projects come smaller projects. And such things in a smaller city like Hobart, which does have a diverse economic base, can make a huge difference.”
He adds that this all bodes well for the Hobart property market – particularly for inner city suburbs and for suburbs in the 5km radius around the CBD. “We are seeing definite interest in these areas from professionals. And that interest has been quite significant for the last 6 months.”
According to the latest APM Housing report, Hobart house prices increased by 5.7% over ending September. It states that early signs of a revival in the market are emerging, although the median house price remains 5.1% below the previous peak.
Conditions = value for money
Unfortunately, while the indicators are looking positive for Hobart and the surrounding areas, the situation in the North of Tasmania is not as hopeful. There has been greater loss of jobs due to the problems of various companies and, as there is less diversity of industry in the North, this has had significant impact.
Zubin points out that, in that sort of scenario, it doesn’t matter how much the boosted FHGB might offset property prices – it is necessary to have jobs for people too.
However, he says that Tasmania has great value for money for investors. In his view, the market offers tremendous opportunities because of the combination of affordable prices, good returns and reasonable rental vacancy rates.
Prestige market expectation gap
Meanwhile, the latest Herron Todd White report notes an interesting trend in Tasmania’s prestige home market. There appears to be an expectation gap between sellers and buyers.
This expectation gap is a reflection of the limited number of participants currently active within the prestige market sector, the report says. It means that some vendors with prestige properties in prime locations are needing extended
selling periods to condition them to the new market reality.
The report concludes that, thanks to the change of federal government, there has been a boost in confidence and sales volumes have increased. This may lead to a gradual decline in expectation gaps across the market.
Suburb to watch: Bellerive
Multiple heritage buildings, along with the historic boardwalk, marina and Quay, help Bellerive retain a quaint village vibe. Originally known as “Kangaroo Point”, the suburb was first settled in the early 19th century, and has long been the eastern shore’s hub of contact with Hobart.
Nigel Heaven, managing director of PMM Real Estate, says Bellerive is in a great location. Close to beaches, foreshore walks and cycling paths, schools, all necessary amenities (including a restaurant strip and the Blundstone Arena for cricket and football), it is only 10 minutes from Hobart’s CBD.
There are fantastic views of the city, the Derwent River and Mount Wellington, and it is possible to watch ships, dolphins and whales in the Derwent, he says. “The Bellerive Boardwalk is host to many functions including jazz festivals, the Seafarers Festival and the local farmers market which aims to showcase local produce and homemade goods.”
Some major development projects are currently underway in the suburb. These include the waterfront development at Kangaroo Bay, the expansion of the Eastlands Shopping Centre, and a new retirement village.
Bellerive has the most heritage properties on Hobart’s eastern shore, but typical properties in Bellerive are 3 bedroom houses on spacious 600-700m2 allotments, Heaven says. “With many large historical homes, beautiful views and renovation options, Bellerive Bluff is the suburb’s most prestigious area. The best street is Bellerive Esplanade.”
All of these features mean the suburb is ever-popular and prices are tipped to remain the best in the eastern shore area, Heaven adds.
