Experts say the current outlook for the Tas property market is encouraging, but internal factors may come back to bite
Since markets peaked in 2012, a lack of employment opportunities has ravaged the Tasmanian housing market. However, recent developments in Australia’s island state indicate that the market may not be as bad as once perceived. While property is far from booming, there are some increasingly positive signs. Statistically speaking, Tasmania is plodding along at a stable rate.
CoreLogic RP Data reports that Hobart is still the most affordable capital city by far, with a median dwelling price of $336,500. Houses were down 0.9% in February; however, prices are still 0.7% higher than this time last year. And a healthy rental yield of 5.3% places Hobart as the second best performing city in the country for annual returns.
Low interest rates are helping prices, and the population outflow is starting to turn around. BIS Shrapnel senior manager Angie Zigomanis says the population side of the equation is encouraging.
“Tasmania, in the 2011/12 financial year, recorded a net loss of 2,600 persons to the other states, and in the 2013/14 financial year that was down to about 1,150. There’s fewer people leaving, and I expect that trend will continue to strengthen,” he says.
Fewer Tasmanians are leaving for the mainland as the national economy continues to feel the effects of the downturn in the mining sector. Looking for work locally is proving a safer option.
“There are probably some positives in Tasmania in terms of agriculture, from the employment perspective,” says Zigomanis. “The dollar has fallen, and that should hopefully help a few export
industries. You might find some recovery in the towns that benefit from the agricultural industry.”
REIT president Tony Collidge says Tasmania’s tourism industry is also seeing growth. “Tourism down here has really taken off,” he says.
“There was a recent survey showing that Tasmania is 33% above the level that it was at last year for tourism. It’s become a really really big thing, and it’s generating a lot of activity. It’s getting more people into the state, spending more money and creating more jobs, so it’s a real positive.”
Tasmania’s employment prospects could look positive; however, if any significant economic movement is to take place, further developments in infrastructure and migration will be key.
Looming oversupply?
High levels of construction throughout 2014 saw the best growth in eight years. The January CommSec State of the States report showed construction was up 15.4% on 2013 in the September 2014 quarter.
Much of this was largely driven by the Tasmanian government’s First Home Builders Boost, in which first home buyers were given $30,000 towards the construction of new homes. While beneficial in the short term, Zigomanis says this incentive may come back to bite.
“From a short- to medium-term perspective the market will increasingly be oversupplied,” he says. “We saw a lot of first home buyers take it up, and most of them probably moved out of rental dwellings to do it. That’s left behind a bit of an overhang of rental stock, and vacancy rates there are a little high.
“That’s the problem with most incentives, because once you do them there’s a bit of an after-effect, because you’re distorting the natural progression of how the market is operating. Whether or not it’s biting right this second, it will come back to bite them at some point.”
Unless migration continues to improve, fallout from oversupply is looming.
Mainlanders eye up the island
Collidge says Tasmania has hit rock bottom and now the only way to go is up.
“I don’t think any sectors of our market will go backwards over the next 12 months. It has bottomed out and now it’s on the way up. It’s onward and upward,” he says.
One of the effects of hitting rock bottom is affordable properties. Collidge and Zigomanis agree that this has made Tas attractive to mainlanders.
“Last year we had approximately 1,000 people moving from the mainland into Tasmania to live, just for a change of lifestyle,” says Collidge. “With our median price at just around the $300,000 mark, it’s the cheapest place in Australia to buy housing, so you get a good bang for your buck.”
SUBURB TO WATCH
Bellerive: Seaside living in demand
While Bellerive is best known for its international cricket grounds, there is much more to this seaside suburb. Stunning views, beautiful beaches and a community village atmosphere are just a few of the alluring advantages of residing in Bellerive. Only 4km from Hobart’s CBD, this suburb looks to be on the up.
Bellerive is becoming ever more popular with families and established couples. Stock fell by 31.2% over 2014 and its vacancy rate is just 1.09%. There are two schools and a range of sporting facilities and parks. At the main commercial centre on Cambridge Road, there are banks, supermarkets, restaurants, and community centres. Buses service the area and the Tasman Highway connects directly to the CBD. A ferry service operates daily. Sought-after areas include Victoria Esplanade and Dillon Street due to their panoramic views of Hobart and the harbour.
