Diversified economy the key for Tassie
A push for new infrastructure investment has given the island state a boost.
The president of the Real Estate Institute of Tasmania, Peter Bushby, is very upbeat about the future of the Tasmanian property market. He holds the state economy up as an example to be followed by the rest of Australia, even the world.
"The reason Tassie is so strong at the moment is because we've got such a diversified economy," Bushby says. "We're not relying on any one particular component of the economy for our survival. We've got tourism, education, fishing, forestry, mining, horticulture. You name it." Bushby compares this to the economies of WA and Queensland, which he says largely rely on tourism and resources and are hence more volatile.
Tasmanians are certainly innovative when it comes to finding new ways to boost their economy. The best example is the northwest coastal town of Burnie. Ten years ago, realising that the local woodchip mill was not going to be able to provide for the whole town, the council decided to start inviting international cruise liners to dock in Burnie's deepwater port. Millions of dollars have since poured into the community and Burnie has become a must-see destination for many travellers.
John Lindeman, chief property analyst at Residex, is not convinced that the real estate market simply responds to fluctuations in the economy. "It's more to do with people," he says. "Without more people coming in, you don't need a lot more housing. [The Tasmanian market] is in balance. There's not a great shortage."
The population of Tasmania is, in fact, growing. "That's good because it reverses a trend," says Bushby. "Up to about 10 years ago we were having a negative population growth."
However, Lindeman notes that the rate of population growth is the lowest in Australia.
Most of the new arrivals to the state are retirees rather than families or operators of businesses. Bushby counters by pointing out that a lot of the retirees moving to Tasmania bring considerable resources with them, enhancing the state's economy.
Whichever way you look at it, high affordability in all the major centres makes investing in Tasmania less stressful. Bushby points to the low vacancy rate as evidence of strength in the market: "Right around the state, the vacancy rate for residential is still only 2.1%. In Launceston it's even lower than that." Also, demand for boutique units in the inner-Hobart area is very strong, Lindeman concedes.
Increased investor activity
The influx of new investors, many from interstate, has coincided with the reduction in first homebuyer activity across all Tasmanian markets.
"Last month just over 20% of sales were to investors statewide," says Bushby. "The investors are coming through, and why wouldn't you at the moment? You're going to get lousy returns from the banks. People are still very wary of superannuation and share market volatility, so bricks and mortar with a strong rental demand, low vacancy rates and low servicing costs, it's a good opportunity to get into property."
A number of state and federally funded infrastructure projects as well as private ventures are expected to further boost demand for property throughout Tasmania. In April, work commenced on the $243m Brighton Bypass and transport hub, which is expected to improve access to residential and industrial areas in the south. The project is due to be completed by mid-2012.
In the north, the controversial Gunns pulp mill looks almost certain to receive a green light. "We're waiting for the final push, and that's going to have a positive impact on the northern economy in particular, but the state economy as a whole," says Bushby. "There'll be opportunities for leasing and investments. It's not going to be an overnight apparition. It's going to be sustained over a period of time."
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