Overcoming adversity in The Apple Isle
Areas of Tasmania might be doing it tough in the property market at the moment, but if you look beyond the negative headlines there’s still a lot of potential to make money there
When somebody says the word “mining”, images of BHP Billiton, the Pilbara region and Gina Rinehart might come to mind but probably not Australia’s smallest state, whose resources sector in the spotlight for reasons some Tassie investors would prefer not hear.
For one, the Mount Lyell copper mine in Queenstown
on Tasmania’s west coast region has closed, spelling the end of 200 jobs. In addition to being Australia’s longest continuing operating mine, it is also Queenstown’s biggest employer.
Secondly, the Henty gold mine (located about 30 kilometres north of Queenstown) has been put on care and maintenance for the second half of 2015, resulting in the loss of 150 jobs between December and next June.
The decision is a blow for workers, their families and the wider community, says Tasmania’s Minister for Resources Paul Harriss. “However, it is important to note that the identified date is still more than a year away, and the company’s decision to put the mine on care and maintenance while continuing to invest in mineral exploration gives reason for cautious optimism,” he says.
Furthermore, Queenstown is not solely reliant on resources, unlike a lot of the mining towns in northern Australia. Queenstown is also a popular tourism spot, home to a growing arts community, and the terminus of the West Coast Wilderness Railway.
More reasons for optimism
Overall, Tasmania’s economy actually looks to be on the up, according to the Deloitte Access Economics Business Outlook report. There are three key reasons why this is the case:
- Despite what’s happening in its resources sector, job growth in Tasmania has shot up above the national average and the state’s high unemployment rate is falling. Additionally, recent ABS statistics show there was a 2.2% increase in the number of Tasmanians employed over the 12 months to June 2014.
- Tasmania currently has the strongest annual growth rate on retail spending of the eight states and territories.
- While Australia’s population growth is easing back, Tasmania’s annual growth is the strongest in two years.
Move over, the good economic news looks to be translating into strong house sales. In fact, the June Quarter Property Report revealed the highest number of house sales a quarter in Tasmania since the June 2010 quarter, according to figures released by the Real Estate Institute of Tasmania (REIT).
This included a 5.7% state-wide increase in house sale for the June quarter, which was up 10.1% for the year.
“Breaking these figures into regions, we see Hobart experienced a 23% increase, Launceston a 14.4% increase, while the North West Centres eased back for the quarter – 4.8% on the previous quarter, but up 4.4% on the same time last year,” says REIT President Adrian Kelly.
Additionally, Tasmania’s median house price went up by 2% to $311,000 for the June quarter.
“While first home buyers remained steady at 17% of all house sales across Tasmania for the quarter, we expect to see this drop back slightly in the next quarter, following the removal of the First Home Owner’s Grant on July 1.”
Business confidence in the state's economic outlook has also been improving, according to the Tasmanian Chamber of Commerce and Industry. In a recent report, the TCCI noted that the business community’s confidence in the outlook for the next 12 months was the highest it has been for three years.
Suburb to watch
Rokeby: From crime-riddled area to investment hotspot
Once known for its high crime and unemployment rates, Rokeby is well into the process of changing its reputation. This is largely due to increases in private home ownership and infrastructure such as the Rokeby skate park (which has hosted national and international skateboarders) and a variety of sporting opportunities (both in Rokeby and neighbouring Howrah
) that’s providing hope and motivation for the youth.
The state government is currently funding Stage Two of the $15 million Rokeby Main Road upgrade. This involves creating an efficient and safe four-lane corridor between Rokeby and the beachside suburb of Howrah. Moreover, the Hobart CDB is just 9km away from Rokeby and it’s also relatively close to Rosny Park, which is home to Eastlands Shopping Centre (the biggest in Tasmania).
Houses in Rokeby spend just 63 days on the market, which is very good for this state. It could be because houses here are much cheaper and have strong rental yields, compared to most other suburbs in the City of Clarence.
It’s vital to pick the right streets in Rokeby because some streets are much better than others. Houses in the popular Oakdowns Estate on Cavenor Drive have gross yields upwards of 6% and are minutes from beaches, Oakdowns Park and schools, making them ideal for families. Modern brick veneer homes in these quiet surrounds may be more expensive than most others in Rokeby, but it’s worth the extra cash. Overall, this suburb has come a long way and is capable of going much further.
Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker