Property values ease but experts expect steady market ahead.
It’s no coincidence that the volume of sales in Tasmania eased at the same time the government’s first homebuyer grant boost ended in December 2009. According to the latest data from the Real Estate Institute of Tasmania (REIT), the volume of house sales fell 14.8% in January with drops recorded in most centres across the state bar Launceston and Devonport.
This drop in buying activity led to a lower median house price in Hobart according to REIT. In January, the median house price fell 2.58% to $359,500. Launceston lost 3.4% to $280,000, with Burnie falling by 5.5% to $210,250.
The latest Residex data supports this trend, showing median house values in Hobart falling by 2.58% to $363,000 in the three months ending January. Units performed much better, gaining 1.71% to $272,500 over the same period.
“Unlike areas in other states such as Melbourne and South East Queensland, Tasmania does not benefit from a booming population but rather represents a more stable marketplace,” says Daryll Timms, state manager for WBP Tasmania. “While real estate prices weren’t subject to the dramatic falls sustained by most other capital cities in 2008, there has been a significant change in investment and purchasing habits. As investors around the country pour back into the residential property markets, investment in the local market remains cautious. Buyers have become increasingly selective, and exercise caution with regards to their borrowing capacity.”
In the buyer-skewed market, demand for property in middle class suburbs has diminished, says Timms. “While the market is quite lean, buyers are making strategic decisions, many capitalising on the option of purchasing new property in the outer suburbs as opposed to the purchase of pre-established dwellings in the inner areas. New homes in suburbs such as Kingston, as well as established homes in working class suburbs such as Moonah, which have median house prices of under $330,000 and $280,000 respectively, are the preference for many buyers.”
Despite these lower overall results for Tasmania, many experts see the island state producing solid and steady growth over the near and long terms.
“Tasmania will experience steady levels of growth during 2010, with Hobart being at the forefront for activity,” says Aaron Maskrey, residential research director PRDnationwide. “While no real downturn has been evident throughout the Tasmanian market, to some extent Hobart experienced its first softening of the market during 2008, where median price decreased by $20,000. This could be identified as the bottom of the property cycle for a thriving market such as Tasmania.
“It could be assumed that after a brief stabilising period, through the global financial crisis, the Tasmanian real estate prices have once again continued on a sturdy upward trend,” adds Maskrey.
Maskrey also notes that Tasmania has not experienced the rapid demand that comes with the resource boom that other states have experienced (like WA and Queensland) and for this reason has not experienced any significant boom periods in rising prices.
“This trend as the quiet achiever will most likely continue throughout the next 12 to 18 months; for comfortable long-term capital gains Tasmania is a sure, safe bet. Where Tasmania’s real estate values currently sit, the market provides plenty of opportunity for future growth.”
Buyer’s agent Rob Zubin of My Property Hunter agrees that Tasmania has and will remain steady in terms of sharp increases and rapid falls.
“This is particularly important for both new and seasoned investors looking for a long-term low-risk investment because there isn’t the same level of volatility in the market when compared to some of the bigger centres on the mainland.”
Maskrey says investors should stay away from suburbs that have already achieved high price levels, as potential for growth is limited in the nearby future. “Suburbs like Battery Point and Sandy Bay would leave limited room for high capital growth as they have already experienced a significant growth spurt in price and are likely to plateau,” says Maskrey.