A change of fortunes is expected for Tasmania with affordability tipped to drive buyer activity. What isn’t immediately clear is when…
For a long time, would-be Tasmania investors have been urged to be patient – a resurgence will come. It’s a call that’s been bandied about since the GFC struck and investors could be forgiven for starting to lose faith.
Adding to their doubts is the fact that a lot has happened since the height of the GFC in 2009. The first homebuyer’s grant has been reduced significantly, taking many buyers out of the market. Meanwhile, the Tasmanian economy has shown signs of underperforming in most spheres. Economic growth has been consistently flat and confidence in the property market remains low at best.
With quiet buyer activity and declining prices becoming almost a regular feature in the state’s property news, My Property Hunter principal Rob Zubin says that the irony is that now may be exactly the time when patience is not necessary.
“Property always has its ups and downs. At the moment we are down on the bottom side. What this actually means is that there’s a sensational opportunity to buy property at really good prices,” he says.
He also points out that the government is currently 600–800 houses behind what it projected to provide for public housing. This, he says, hints at a supply situation that could be a platform for some growth to return to the market. “For investors that understand buy and hold … rest assured, growth will occur.”
Phil Brumby of Real Estate Tasmania believes the state has some surprises up its sleeve. He says that with dire forecasts increasingly becoming the order of the day, investors may be in danger of missing some of the opportunities on offer. While the market as a whole may hint of stagnation, some areas are bucking the trend.
He points to Hobart and Launceston inner suburbs, which he believes haven’t been affected by the malaise that has crept into the Tasmanian market as a whole.
“Property in those areas tends to be more established, being characterised by older houses and units that tend to better weather turbulent economic climates,” he says.
Zubin agrees. “Because Hobart and Launceston are the major population centres of Tasmania, their economic fabric is more diverse. There’s more stress and strain in smaller communities, which often lack the diversity needed to weather many of the current economic issues facing Australia as a whole.”
Lifelines from the mainland
These exceptions aside, the fact that Residex data indicates that even in Hobart there have been large-scale house price falls is perhaps a sign that Tasmania’s current situation may indeed be as bad as many people think.
Head of research at Australian Property Monitors Andrew Wilson explains that Tasmania doesn’t have the same exposure to the resource sector as most mainland states. The effect of a higher dollar on tourism and a lull in the manufacturing sector have combined to put renewed pressure on general consumer confidence.
“For this situation to change there needs to be an improvement in the economic climate across the state,” he says.
“Job creation, income growth – these are major aspects in the economy, which itself is the primary driver of what happens in housing markets over short and longer terms.”
Wilson adds that although there are no significant signs of improvement in the state’s economy, the wider Australian economy is expected to see a reasonable level of activity this year.
“This activity tends to lift all states in a lagging effect,” he says. “Tasmania will eventually be a beneficiary of increased economic activity from the mainland. This, together with low median house prices, can be expected to increase buyer activity.”
Wilson says the catch is that it will take at least a couple of quarters until this happens. What it means for investors is a familiar thought – be patient.
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