Tasmania’s property markets may be arriving late to the growth party, but indicators show that they are finally getting there – despite the state’s ongoing economic struggles
Some are fashionably late, some terminally late to parties. In the case of Australia’s property market growth party, the Apple Isle’s lack of punctuality fits into the latter category. But the good news is that Tasmania’s property markets are finally eligible for entry to the party.
According to the latest RP Data- Rismark Hedonic Home Value Index results, Hobart recorded a growth of 4.7% in dwelling values over the quarter ending March. While it is still the most affordable capital city, it leaves Hobart’s market with a median dwelling price of $338,000.
Andrew Wilson, of Australian Property Monitors, says without a doubt property markets across Tasmania are more active, in common with housing markets around Australia. “It is not surprising Tasmania is a little late to the party, though: economically, Tasmania and Hobart are underperformers.”
Ongoing economic issues will continue to be challenging for the state’s property markets. Tasmania’s economy has suffered a decline over a long period of time and, as a result, it has a very subdued economy now, Wilson says.
“Tasmania doesn’t have a lot of factors to drive it and the problems are structural, including its high unemployment level, which needs to be reduced. But the lower dollar is good for Tasmania’s economy, particularly in terms of export markets and tourism.”
Despite the state’s broader economic performance issues, its property markets are poised to improve – thanks to the impact of historically low interest rates finally flowing through, affordability and, at least in the short term, the change of government.
Wilson says that while there are still some confidence issues that need to be overcome in order for the state’s markets to really move forward, there is continued and growing energy in those markets.
“Inevitably, the affordability of the market is a key driver in market growth and, in turn, improving confidence,” says Wilson. “When prices reach a certain low point, they activate the market. It’s all about perceptions that property is undervalued.”
Contrary to some other commentators, Wilson believes that the performance of the North Tasmania economy and property market is generally better than that of Hobart’s.
However, all of the state’s markets – particularly Hobart and Launceston – are improving and will continue to do so. The market overall has moved from being about 8% below its peak to about 3% below now. This means that even Hobart and Launceston are about to reach their previous price peaks.
For the Hobart market, the quarter ending December 2013 encouragingly showed the most growth since 2010, Wilson says.
“There are now a lot more opportunities and, crucially, confidence in the market. And the new growth in the last year reflects that. Hobart is the last capital city to make it to the party, but the coming year will be significantly better for its market.”
Impact of FHBB initiative
The latest Herron Todd White report notes that, while Tasmanians might like to boast about the First Home Builders Boost initiative, it is actually too soon to tell what its impact might be.
The FHBB initiative is scheduled to end at the end of this year, but Wilson believes there is room for more. This is because new builds tend to drive both the surrounding industry and market demand – and seem to go down well in the Apple Isle.
“Hobart and Launceston don’t seem to have the same sort of spread of new build development that Sydney, Melbourne and Brisbane have. This means that FHBs are happier to buy new because there isn’t that same dislocation on the fringes that you see elsewhere.”
Election outcomes
Meanwhile, the Liberal Party’s election victory will bring a stable government to Tasmania, which will benefit property market participants, according to Real Estate Institute of Tasmania president Adrian Kelly. He expects confidence in Tasmania’s real estate to strengthen with the election outcome. The fact that the new government is a majority one should provide greater consistency.
The ongoing issue of Tasmania’s many different planning schemes, and the resulting inconsistencies, will also be addressed by the new government, Kelly says. This is because pre-election all parties acknowledged that the complicated planning system was a problem that needed to be dealt with.
Property Council of Tasmania executive director Mary Massina welcomes the new government’s commitment to cutting red and green tape and taking a more ambitious approach to job creation.
SUBURB TO WATCH
West Moonah
Blessed with stunning views of either the River Derwent or the mountains, West Moonah is an up-and-coming suburb. Prices in the primarily residential suburb are still aff ordable, which adds to its appeal.
Situated on the fringe of the Hobart municipality, it is about 15 minutes’ drive from the CBD. There is a major shopping precinct in the wider Moonah area, but the popular suburbs of New Town and Lenah Valley – and all the amenities they have to off er – are also nearby.
West Moonah itself has several schools, a good range of sport and recreational facilities, and an active community centre. This makes it particularly attractive to young families, says Natalie Downton from LJ Hooker Hobart.
“Also, just down the road a couple of million dollars is being spent on building a new arts centre, and there are plans to make the main drag into an eating destination, much like the North Hobart strip.”
The typical West Moonah property is an older four-bedroom, two-bathroom family home, either brick or timber, on a decent-sized block. However, there are some modern properties in the area’s newer subdivisions.
Downton says prices are set to go up in the future. “I think it will be the next Hobart suburb to boom,” she says. “ It hasn’t yet and it is poised to do so.”
The growing popularity of West Moonah means the rental market off ers good returns, she adds. “There are bargains to be had. For example, you could buy a place in the mid-$200k price range and then rent it for about $300 plus per week.”
