Is the Tasmanian property market holding up, or is it at risk of going downhill fast?
The Tasmanian property market has always been a notoriously difficult one to measure. Even small changes in the type of property selling at any point can lead to volatile swings in measures like median house price, distorting the picture for anyone on the outside looking in.
Even so, there’s a consensus among local industry figures and national property analysts: the Tasmanian market is flat. RP Data figures show seasonally adjusted growth for Hobart in the year leading up to October 2010 at 1%. Units saw much stronger price increases over the 12 months – seeing growth of 5.1% – however, the small size of the unit market in the state means that this has barely made a dent in the prevailing flat conditions.
Tim Lawless, research director at RP Data, reckons that the market will remain flat for the foreseeable future.
“Tasmania has historically benefitted from sea-changer and tree-changer migration,” he says. “That’s dropped back significantly, as that market has reduced significantly. Volumes have been marching back to 2008 levels, too. We will see some price falls, but they’ll probably be short-lived. Realistically, we’re looking at small movements – a flat market.”
The Real Estate Institute of Tasmania tried to put a bright face on the news – pointing out that while sales had returned to 2008 levels, that was still better than the slower market that the island had seen over the winter. However, even it conceded that Hobart’s median house price had eased by 0.9% to sit at $370,000 at the end of October.
Indeed, it seems like the city’s saving grace might be a lingering undersupply – even with slowing population growth – and its affordability.
“It’s the most affordable market in Australia,” adds Lawless, “but affordability alone won’t rescue a market. There also needs to be employment and economic growth – and that’s not looking so convincing right now.”
One development which could bring some relief to the gloom is the beginning of the redevelopment of the Royal Hobart Hospital. The $565m project kicked-off in December with the first stage of construction of the new integrated Women and Children’s Hospital. The project is being touted as the biggest-ever infrastructure development in the south of the island, and is expected to provide employment to a “few thousand” people over the next five years. Andrew Peck, director of Herron Todd White’s Launceston office, reckons that it could provide “a kick” to Hobart. Even so, he acknowledges that the market isn’t about to go gangbusters all of a sudden.
“Sure, the metro centres are holding up, but housing stress is creeping in. We may have the most affordable capital in the country, but the average wage is 15% below the national average too. That keeps prices low, but doesn’t necessarily make them any more affordable.”
He reckons stress is beginning to show at the bottom end of the market.
“We’re definitely seeing price falls at the lower end of the market – the lower-quality housing that’s not in the blue-chip locations,” adds Peck. “One of the major lenders has also been very active in disposing of its arrears properties recently – with resales coming in well below the expected price. That’s also had an impact.
Even so, Peck reckons there are opportunities.
“It could be a good time for investors, now that prices have fallen back. After all, employment is holding up in the cities, plus we’re seeing rents rise. It could suit an investor interested in buying for yield and quality, but certainly not anyone after short-term capital gains.”
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