With cheap dwelling prices and reasonably high yields, Launceston might look like an appealing option for investors not looking to spend a great deal. But for those hoping to add a Tasmanian property or two to their portfolio, there may be better options available, says Rob Zubin, the principal of My Property Hunter.
“The economic drivers are not as evident when you get away from Hobart,” he adds.
Just recently, car parts maker ACL Bearing shut down its Launceston factory, resulting in the loss of 136 jobs.
“Another flow-on effect from the diminishing car industry in Australia,” says Zubin.
Even though Hobart has its own challenges, there seems to be more bright spots there than anywhere else in the state.
“Over the next year or so I think property prices will stabilise in Hobart and in some selected areas you would expect to see some growth,” he says.
“Elsewhere I would be a little bit concerned at this stage for the next year or so. I would be careful about the process of assessing property – just make sure you do your due diligence in areas outside Hobart.”
Nevertheless, Zubin argues that Tasmania is a good option for any investor looking for a balanced portfolio.
“A good time to buy is when prices are depressed, and property prices at the moment are depressed.
“With the economic activity happening and projected to happen in Hobart, it will definitely have a flow-on to more confidence and more property activity.”
Zubin cites two major redevelopments as evidence of this:
- The $100 million Myer redevelopment which is expected to employ 500 people during the three years of construction.
- The $465 million redevelopment of the Royal Hobart Hospital. This has been under construction since late 2010 and is expected to be completed in 2016.
Zubin says that if you’re not looking to spend no more than $250,000 and understand that investing is about holding for the medium-long term, then perhaps Launceston could be somewhere to consider. However, it is important that the specific suburb that you’re looking at has several promising factors, such as low vacancy rates, high rental yields (preferably 6% or more) and a high demand for rental properties.
But at the end of the day, Zubin says it’s Hobart that has the stability and diversity in its economy, plus a larger population size (220,000) than Launceston (106,000).
“As you get further away from Hobart you have too much dependence on one or two industries,” he adds.
And no matter where you choose to buy in Tasmania, it helps if there is a bus stop within walking distance.
“That’s a key requirement for many people living in Tasmania, because we don’t have trains it would be best to be close to bus lines,” says Zubin.
What Hobart can offer which Sydney cannot
Despite all the well-known positives of investing in places like Sydney and Melbourne, Hobart offers investors benefits which other capital cities can’t.
“When you compare it to other capital cities, it is exceptionally cheap and there are also generally more healthier returns than you would expect from the other capital cities.”
Additionally, a recent Deloitte Access Economics Investment Monitor Report claims there has been rising agricultural demand and tourism flows from Asia, which could be a further boost to the Tasmanian economy.
Tasmania was also spending less on infrastructure than any other state. It spends just $700 million, compared to the Northern Territory ($1.8 billion).
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