Market Report Tasmania (July 2009)

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Unit prices surge as buyers hunt affordable offering

Strong buying activity in the unit sector pushed median unit values by a stunning 6.02% to $264,000 in the June quarter, easily outperforming all other capital cities in Australia. Over the 12 months to June, median unit values grew by 6.13%. House managed a modest 0.25% growth in median value to $352,000.

"The Tasmania market is really robust, it's been very active," says Tony Collidge, sales manager with PRDnationwide. "The markets across the state have just been going gangbusters throughout the March quarter. The biggest problem we have is the lack of stock. It's getting to the stage where it is very severe."

Collidge says his company used to carry 200 properties, but now down to 110. "We've been making 50 odd sales a month during the last 2 months. We're on target to do it again this month. But the lack of stock is the real issue," he says.

While first home buyers are still active in the market, in areas like Launceston, there is strong buyer activity in the medium price ranges, as people get ready to move to better homes according to David Harris, franchise manager for Victoria and Tasmania with
LJ Hooker Operations.

"Investors have been returning in significant numbers, driven by low interest rates and the good rental returns available in most Tasmanian cities or towns and the very reasonable pricing of entry level properties," he says.

Sound fundamentals
One of the factors that continue to support prices in Tasmania is the steady growth in population resulting in housing undersupply.

"We don't have the trades people do build the houses that we need so there's always going to be a lag. We only have 1600 net growth to the population per annum, so that's 400 extra homes we need, but because we don't have enough people to put up 400 homes over six months, supply will be unable to keep pace with demand," says Collidge.

Another key factor for the property market remaining strong is Tasmania's unemployment rate - at 4.8% in July, slightly down on June, it is the lowest of all states and more than 1% below the national rate. "In fact, the Tasmanian Chamber of Commerce says the unemployment rate for skilled labour for example, is almost zero," notes Harris.

Collidge adds that Tasmania's healthy job market is mainly due to the fact that the major employer is the government which employs 20% of the state's working population. "We don't have the large industries here. You don't have the large mining companies that are putting people off. Having the government as the main employer creates a lot of stability," he says.

The improved 'connectivity' to other cities across Australia is also helping the island tremendously.

"We have good airports in the cities of Wynyard, Launceston, Devonport and Hobart which enable professionals to own a stunning acreage home in a delightful village but still be a short flight away from Melbourne or Sydney. Air fares are very competitive and on a recent flight to Tasmania, it is easy to see how many people from writers, artists to business people make the commute easily," says Harris.

Harris also points to the construction of the Tasmanian leg of the national broadband network, a $780 million project, now slated to begin in October, according to federal Communications Minister Stephen Conroy. "This will connect 90% of the population to the internet at speeds of 100 megabits per second," says Harris.

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