The data indicates mixed results for the Tasmanian property market in April, but one thing is clear: it’s a buyer’s market in the ‘Apple Isle’.
Recent data suggests Tasmania’s median dwelling value has grown in excess of 10% this year, while others report a decline in values across the state.
Tasmanian state manager for WBP Property Group Daryll Timms says these conflicting figures are due largely to a significant drop in sales volumes, which have resulted in an equally significant jump in stock levels. But in reality, while trends show a notable decline in purchase activity, prices in most markets have remained relatively stable.
According to Residex, the median house price in Hobart is $373,500 – a whopping $100,000 more than for country Tasmania, where the median house price is $273,000. Capital growth in the 12 months to April was 6.25%, a significant drop from the average annual growth over the past decade, at 12.07%. Residex reports that house values rose by 2.9% in the three months to April.
Year-on-year growth for units painted a far better picture, with Residex recording a 13.5% rise. A median unit price of $283,000 was the result of a 3.76% rise in the quarter, but a fall of 0.12% during the month of April.
Timms suggests that median value increases are the result of strong sales in the top-end and prestige property markets, which have lifted the state’s median. Conversely, he argues that the lower end of the market, largely driven by first homebuyers, “has all but ceased”.
“It’s a buyer’s market,” says Timms. “Buyers are holding out on their purchases until they find a bargain.”
Investors are also in a good position to reap higher rental returns as rental stock dries up. “Stock is in severe undersupply,” says Martin Harris, CEO of the Real Estate Institute of Tasmania (REIT). “There continues to be a chronic shortage of rental stock all over the state, Hobart in particular, with welfare, refugee and new immigrant support agencies constantly trying to find affordable, well-priced housing,” he explains.
Investors are currently racking up returns of 4.75% for houses, with weekly rent sitting at $340 – an extra $20 compared to a year ago. Returns for units are comparable at 4.80%, while weekly rent is around $260.
The best and worst
Timms explains that the outer suburbs are likely to continue to suffer hardship and limited demand from buyers, while the affordable, inner-city suburbs with good access to the CBD will lead as the city’s top property performers.
Harris points to Sandy Bay and Battery Point, both just a short walk from the Hobart CBD, as the city’s premier residential locations, adding that they’re in high demand by local, interstate and overseas investors.
Herron Todd White (HTW) notes in its Month in Review for May that Battery Point is advantageous for its proximity to the CBD, Salamanca Place and heritage architecture, and lists its lack of off-street parking as one of its drawbacks.
The valuation group notes that properties in the suburb range from the mid-$200,000s for a basic 1960s-style unit to $3m-plus for historic homes on large lots with Derwent River views. The REIT records a median house price for Battery Point of $920,000 and for Sandy Bay of $690,000 in the March quarter.
HTW says both suburbs offer opportunities for investors; although initial returns may not be huge, there is still significant potential for capital growth.
For those on a tighter budget, Harris points to North Hobart ($455,000), South Hobart ($454,000) and West Hobart ($471,000) as more cost-effective alternatives which are still on the capital’s doorstep.
He adds that the most affordable homes within 10km of the Hobart CBD can be found in the suburbs of Bridgewater, Rokeby, Gagebrook and Clarendon Vale. But this comes with a warning: “They may appear at face value to be an excellent buy; however, investors are well advised to carefully consider the ongoing maintenance issues that often apply to some older homes.”
REIT figures for March show median asking prices for homes of $185,000 in Bridgewater, $225,000 in Rokeby, $150,000 in Gagebrook and $174,000 in Clarendon Vale.