Market Report Tasmania - (January 2009)


17th April 2009

Prices have come down a bit, but demand for Tasmanian properties has returned to levels even above last year. 

While values have fallen slightly in Tasmania and its capital, the underlying current is that the sales volume is well up. And there's no doubt confidence is back, with the local media recently even declaring a "revival" has begun.

In the northwest coast of the island, sales volume increased 51.4% from December to January, and 1.9% on the year, according to the Real Estate Institute of Tasmania (REIT). On a statewide basis, volume was up 20.7% on the month, and 3% on an annual basis. And in Launceston, sales volume was up 30.5% on the month and 11% on the year earlier.

The buying effort, spearheaded by first home buyers, led Hobart-based The Mercury newspaper to declare a "Tasmania property revival" in late February.

REIT President Peter Bushby cautions against expecting too much out of the Tasmania market in terms of growth, however.

"It's certainly not a boom," says Bushby. "However, I would say that in Tasmania, the property market is holding quite firmly, which is comforting considering the economic news that's out there."

About 35.5% of sales were by first home buyers in Tasmania during January, whereas the figure is usually closer to 18%. That's not to say all buyers are back in force. Investor purchases have slipped for now, for example, says Bushby.

"I think we're going to see some growth (in investor purchases) as the year goes on," he says.

Counting on stability

One of the key factors to Tasmania's market is that while there haven't been huge gains to draw headlines as other states had in previous years, there haven't been the falls either.

"It's fair to say in the last five years, it's just been a stable, steady growth without any huge increase," says Rob Zubin, principal buyer's agent at My Property Hunter.

That growth should continue on in coming years as well, he says.

"The information that we've been provided by the state government and other economists is that we here in Tasmania are faring quite well compared to the rest of the country," Zubin says. "That's because there haven't been such large increases in property prices in the last five years, and it's unlikely it's going to experience any sharp declines."

Without heavily relying on mining or manufacturing as other parts of the country, Tasmania's economy is also better suited to continue on strongly during the global economic downturn, says Bushby.

"In Tasmania, we haven't got the major manufacturing companies, so we're not so reliant on that for our employment figures," he says.

There's also the price factor, as Hobart is the most affordable capital city in Australia, well under Adelaide. Finding a home for sale at $150,000 in Tasmania is a simple task, for example.

"We still have low vacancy rates, high demand for rental prices, the buying price is low, so all the parameters of why you might want o invest do exist in Tasmania," says Zubin.

While there are even greater bargains in remote areas, Zubin recommends sticking around the cities of Hobart and Launceston. The lesser known areas can carry more risk.

"Those areas 15 to 20 minutes from Hobart and Launceston are the strongest because they are in areas with highest demand, and that helps them maintain low vacancy rates," he says.

In Hobart itself, it is properties below $400,000 that are selling best right now, says LJ Hooker property and marketing consultant Stuart Fitze.

"Anything below that mark is moving fairly quickly in Hobart," he says.

Zubin says some property owners still have some unrealistic asking prices on their property and are hesitant to sell any lower, but that's starting to change.

"A lot of them are a have some unrealistic expectations, but they understand that they have to sell at the right price or it's just going to sit there," he says.

A word of caution for interstate buyers, says Zubin, is that in Tasmania there's no protection for buyers of a cooling off period.

"It's very important that buyers do their homework before finalizing a contract," he says. "Once it's done, there's no opportunity to change one's mind."

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