TAS Excerpt from the 2013 July Market report



Tasmania’s tourism turnaround

Even though it is forecast that many of Tasmania’s leading industries will hang back over the foreseeable future, the one industry that could offer a light at the end of the tunnelis tourism.

Anyone who has not been living in a remote, internet-less bomb shelter over the last few years will know that Tasmania’s economy has seen better days.

The state business sector has been in the doldrums for years, and major engineering and construction projects remain few and far between. Young people are leaving the state, and unemployment is rising. Beyond that, the Apple Isle’s property market is Australia’s least healthy: vacancy rates are high, value growth has been stagnant at best, and while rental yields are attractive this is only because property prices have been falling faster than rents.

Of course, that’s hardly news. Investors who are frequent readers of Your Investment Property magazine will certainly have noticed the alarming regularity with which the Tasmanian property market has been receiving negative coverage. What the more opportunistic among them will be wondering is how long can the bad news keep coming.

The reality is that no situation lasts forever. That applies to Australia’s booming mining sector but equally to Tasmania’s underperforming economy. An economy can fall back or remain stagnant for a very long time, but not permanently. If history shows us anything, it is that even the most dire economies can get second wind and return to life.

Investors who doubt this assertion need only consider the Tasmanian tourism industry. That the state has massive tourism potential is undeniable, but the industry has been facing steep challenges over the last few years. One of these is a historically high Australian dollar, which, as Deloitte Access Economics reveals in its latest Business Outlook report, hurts the industry not just in Tasmania but across the country.

“The lift in the value of the $A makes international travel relatively more affordable for Australian tourists while at the same time making Australia a more expensive destination for international holiday makers,” the report says.

The report points to a fall in tourist flows that can be directly attributed to the high value of the dollar. The number of Australians who chose to holiday abroad increased by 5.7% in 2012 and by 41% since 2008, but the number of international visitors to Australia has not seen the same robust growth, increasing just 10.5% since 2008.

That there has even been growth is something of a surprise, given that the tourist flows to Australia are increasingly being driven by select tourist markets.

Deloitte Access Economics reports that the growth in international visitors that has occurred can be attributed to the strong economic performance of key emerging tourist markets such as China, Singapore, Malaysia and Hong Kong. Deloitte further reveals that these markets offer Tasmania’s tourism industry the best hope for the future.

“The rising middle class in Asia represent an excellent opportunity for the Australian tourism market, and one which has provided much needed support over recent years. We are also starting to see investment in cultural and recreational facilities respond to the changing demand of international tourists, shifting from the traditional resort style investment to a focus on expanding hotel and gaming facilities in capital cities. At present, all the major States’ casino facilities, except Victoria, are planned to be extended,” says the Business Outlook report.


As the tourism industry transitions into Tasmania’s new great white hope, the big-project pipeline for the state remains remarkable – if only for the fact that there is none.

“When we look at the list of major projects, there’s not really anything to get excited about over the next couple of years,” says ANZ head of property research Paul Braddick. “As a result, the broader prospects for the state are that we’re likely to see the employment market continue to struggle. That’s not good news for the housing market because there will be fewer potential renters and first home buyers.”

As it stands, Tasmanian projects are led by the $395m, 56-turbine wind farm being constructed in Little Musselroe Bay, but plans for a $900m iron ore pellet and concentrate plant have been shelved. Public sector projects are led by the $565m redevelopment of the Royal Hobart hospital.


Three kilometres from the Launceston CBD, Summerhill is dominated by families. Twenty-seven per cent of properties are rented, while the remainder of houses are filled by owner-occupiers.

Despite this, the suburb is not held by a significant portion of first home buyers, at least compared to the Tasmania average, which shows that the market is less swayed by the new mortgagee market.

Being a primarily residential suburb, Summerhill is close to two shopping centres, primary and secondary schools, medical facilities, parks, and public transport. It remains highly affordable, with the current median house price of $245,000 belying the fact that there are plenty of buying opportunities well below this benchmark. This is also a good $130,000 cheaper than nearby Blackstone Heights.

Considering the affordable price point, rental yields are attractive for investors. The suburb’s $280 a week median rent has pushed the median gross rental yield to 5.9%, which is significantly higher than the Australian average.

The only drawback for investment is the vacancy rate, which currently remains high at 3.68%, according to DSRscore.com.au. However, investors should consider this within the wider context of residential property in Tasmania, which tends to attract higher vacancy rates than the Australian mainland.

Can you afford to buy in this suburb? Find out how much you can borrow

Top Suburbs : leumeah , newcastle , coorparoo , the basin , westbrook

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