State in transition
Change needs to happen in Tasmania in order to kick-start both the economy and the property market. Is this the year to make it happen?
Mine closures, job losses, dwindling prices and environmental issues are just some of the problems that have plagued Tasmania’s mining industry throughout 2014. And the Apple Isle’s other traditional performer – the forestry industry – hasn’t fared much better either.
None of this has helped the Tasmanian property market, which has been very flat in recent times.
“Locals are leaving Tasmania to come to the mainland for jobs. Something needs to change in Tasmania for demand to increase,” says Elaine Chase of Positive Real Estate.
Angie Zigomanis of BIS Shrapnel agrees, and believes that even though middle-aged people are moving there, it’s primarily the youth who are leaving. This is backed up by the fact that Tasmania’s median age is 40, according to the latest ABS figures – three years more than the Australian average.
“Typically, young people leave and the people who move there – they are not necessarily retirees, but they might be close to it, in their ’50s,” says Zigomanis.
“They trade out of their home, release the equity, and buy something cheaper in Hobart and take a more casual job and support themselves like that. They are atypical migrants, in some ways a lifestyle migrant, but not a pure retirement market or a real economic migrant.”
At present there is a transition happening, with mining and forestry making way for sectors such as tourism, education and agriculture.
“Some parts of northern Tasmania are a bit of a food bowl, and if the dollar falls there might be some scope for exports to be ramped up, and that might impact on employment,” says Zigomanis.
First Home Builder Boost extended
The good news for Tasmania’s building and construction sector is that the First Home Builder Boost is not in danger of being scrapped any time soon. Instead the Boost will be extended for the first six months of 2015 at a rate of $20,000 per home, and will then be kept going at $10,000 per home after that. The Boost was originally set at $30,000 per home.
The purpose of the extension was to stimulate the economy and also help address the state’s relatively high unemployment levels. Tasmania’s building and construction sector is worth $2bn a year and employs 17,500 Tasmanians.
“With most first home buyer’s attention being diverted to newly constructed homes this year, established property in the first home buyer price bracket has been ripe for investors,” says the latest Herron Todd White Report.
“Good gross rental yields have been maintained as the rental market remains steady and interest rates remain historically low.”
A new world-class destination?
Is it any wonder Tasmania is finally getting the attention it deserves? World-class accommodation, wine and spirits, gastronomic and cultural experiences, and stunning natural features are just some of the things this tiny state boasts.
“With international attention focused on Tasmania (particularly with the Chinese Presidential visit) and its burgeoning agricultural, food and tourism industries, Tassie’s future has exciting potential,” says the latest Herron Todd White report.
At the moment China is Tasmania’s biggest international tourist market and also the state’s chief trading partner, as merchandise and exports add up to about $610m annually.
In fact, the Tasmanian government recently signed three memorandums of understanding – including one with the state-owned China Development Bank Corporation and two with Chinese provincial governments –aimed at facilitating new investment opportunities across industries such as tourism and agriculture.
Further good news is that Tasmania’s fine wine could well be in strong demand soon, as it was recently found that many areas of Tasmania have climates and soils suitable to support new and increased planting of vineyards.
Richard Smart of Smart Viticulture says Australian wine companies have predominantly failed to invest in genuine cool climate regions like Tasmania, and continue to lose domestic and export market share to New Zealand.
“Hopefully this report will give investors confidence to develop new vineyards and processing facilities in Tasmania, and so help to reverse these trends,” he says.
“Tasmania is one of a few parts of Australia with a suitable climate for ultra-premium wine production, and by national and international standards the land is very affordable.”
SUBURB TO WATCH
Waverley: Beast becoming beauty
Waverley is one suburb that’s really got its act together in recent years. Once known for its Housing Commission roots, it has benefited from an abundance of private ownership and renovation that is transforming its image.
It is just 4km from Launceston, but there are some excellent amenities and employment opportunities in Waverley itself. Apart from the standard shops, schools and eateries, Waverley boasts its own vineyard and winery, a fishing lake and stunning mountain views.
The excellent 7% gross rental yield for houses means investors don’t have to rely on just capital growth to make money. Further, the fact that house prices have dropped by 7% over five years gives investors the chance to buy towards the bottom of the market. With a median house price of just $157,000, Waverley is one of the most affordable suburbs in the Launceston LGA.
Houses on Anson Street are especially sought after. They may cost a bit more than the median (up towards $200,000) but are within minutes of Newstead shopping, and walking distance from shops and schools. Many also have brilliant views over the city. Other popular streets include Craig Street, Waverley Road and Brookes Court.
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