Hobart - Australia's silent achiever
Hobart's tightly squeezed housing supply is boosting prices but hitting sales. Robert Carry reports.
The Tasmanian Real Estate market has become something of a silent achiever among its fellow states and territories of late. A decade of almost continued growth has seen real estate in Tasmania almost treble in value. "Astute investors who sought our shores during this period achieved substantial capital gains and some of Australia's best rental yields over the course of time," says PRDnationwide Hobart director Tony Collidge.
Alongside the surge in growth enjoyed in the state of late, Tasmania has been improving in other departments - comparative affordability being one of them. "The state or territory that showed the greatest improvement in housing affordability was Tasmania, with the proportion of income required to meet loan repayments decreasing 0.6 percentage points," said a Real Estate Institute of Tasmania (REIT) statement in its latest quarterly report.
Today, the Tasmanian market is still the cheapest in Australia but Collidge believes the pace of growth is set to pick up. He adds, "The market is balanced - it's neither favoring buyer nor seller."
Home prices in Tasmania are supported by a shortage of stock for sale - much as they were for the early to mid months of 2009, according to Collidge. His view is supported by the fact that the number of properties for sale is down on previous years - as are sales transactions, although he feels there are other factors at play.
"Future buyers and sellers are waiting for signs of stability in the economy before committing, especially with interest rates and employment," he adds.
However much of the decline in sales is understood to be attributable to stock shortages. According to the National Home Supply Council, Tasmania's undersupply of homes problem will be hitting 6,000 by 2013. Collidge believes that the marketing of Tasmania as a destination for retiring baby-boomers will add to the already positive population growth that the state has been experiencing for the past decade.
The decrease in first homebuyers and increase in interest rates has already seen a drop off in the number of sales at the bottom end of the market and this could have a bearing on where the market heads. However, Collidge believes the increasingly dire shortage of properties for sale will ensure prices continue to hold, as those that can afford to buy fight over what is available to choose from. "Most real estate offices in Tasmania are experiencing a severe shortage of places to sell," he adds.
The housing shortages may stifle sales but did little to suppress home price increases seen over recent months. The median price of a house in Tasmania leapt by 6.05% in the three months to October 2009 to take one-year average increase to 7.29%. Hobart followed a similar trend to the state in general over the same period to take the capital's median house price to $372,500 against the state-wide median of $274,500 according to the latest figures from Residex.
Shortages have triggered rises in rents for Tasmanians with the state being ranked as the least affordable state or territory in Australia in which to rent, with 30.4% of family income required to meet rent repayments.
In fact, Tasmania is facing other challenges. As elsewhere, financial institutions are getting more stringent with their lending criteria and valuers are being cautious.
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