Market Report Tasmania (September 2009)

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Under supply supports the market

First home buyers and under supply continue to push Tasmania"s market forward.

At the beginning of the global financial crisis, many industry professionals predicted Australia"s property market would mimic New Zealand"s: there would be a contraction of listings and stock would sell quickly. According to Julian Adkins, Sales and Marketing Consultant with LJ Hooker Hobart, Tasmania is experiencing just that.

"There"s been a severe reduction in stock levels but if you can get them, you can sell them," says Adkins. "People aren"t upgrading; they are holding on to their money and it is those types of people who underpin the market. The undersupply is going to push up prices - it"s moving towards sellers market."

Adkins says the central suburbs of Hobart - such as North Hobart, South Hobart, West Hobart, Mount Stuart and Lenah Valley - are performing particularly well. "The central suburbs in Hobart are always a good investment, particular the Sandy Bay area," says Adkins. "Its proximity to the university keeps vacancy rates lower and three-bedroom houses make ideal properties."

Like Sydney, Tasmania is experiencing a lull in high end stock. "The First Home Owner Grant has certainly underpinned the market from the end of last year and driven it there on in," says Adkins. "There was a snow ball effect to the $450,000 market but the premium end is still stiff. I think it will start to pick up at some point but it is difficult to say when."

Martin Harris of the REIT says the fundamental problem with Hobart"s market is the chronic vacancy rates and lack of suitable rental properties. "The vacancy rate in Hobart is 2.1% which is down 0.3% on the year but the real figure is probably more chronic," he says. "You have a particular market out there that is desperate for a certain house, in a particular area and price but they don"t match the 2.1% that are available. Those vacancies are more than likely in the middle to upper range - people looking for $200,000-$300,000 houses can"t afford the $600,000-$800,000 prices that are on the market."

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