Rising unemployment, government cuts and class actions make life difficult for our southernmost state.
Tasmania looks to be doing it tough at the moment. While it’s been a consistent but steady performer over the last few years, its relatively subdued population growth and economic performance has kept it from experiencing the surges in value growth that other states – particularly resources states and Victoria – have seen in recent years.
That has not necessarily been a problem, as the state in general has been rubbing along nicely. However, it seems that a faltering economy could be putting the brakes on the housing market. RP Data’s figures for January suggest a 4.5% fall in median dwelling prices for Hobart to $330,000, with unit prices dropping 6.8% in the three months leading up to the end of January.
Admittedly, this may have been influenced by the remarkably slow market conditions, thanks to the interest rate rises and economic uncertainty due to the natural disasters. Even so, while Residex figures for March show some recovery (capital growth of 0.42% for houses and -2.65% for units in Hobart) the signs aren’t promising in the short term.
It seems like a perfect storm of rising unemployment, buyer caution and a slowing of Tasmania’s already modest population growth is having an adverse effect, according to Deloitte Access Economics’ latest Business Outlook report.
“Tasmania’s manufacturers and exporters are struggling, and some of them are shedding jobs,” the report says. “And with interest rates also high – and at risk of going higher still – the state’s consumers are being careful with their money.”
It’s not just businesses that are shedding jobs, either. The state government has been instituting a number of cost-cutting measures in order to balance the books – including headcount reductions. Rob Zubin, principal of buyer’s agent, My Property Hunter, admits it’s a concern.
“There’s clearly pressure on the government coffers: we’ve been seeing several announcements over recent weeks regarding tightening of jobs. The health department was the most recent to announce a downsizing of their numbers.”
That has given Tasmania the dubious distinction of being the only state to report rising unemployment in the March ABS figures, increasing from 5.7% to 5.8%. With population growth remaining obstinately under 1%, it’s fuelling a considerable amount of caution among buyers and sellers.
Understanding the opportunities
That’s making it very difficult to read how the property market will behave, says Zubin.
“The consistent pattern that we’re hearing from the real estate agents that we speak to is that there is no pattern. Properties that you think will be snapped up linger for months, whereas those that you think no one will buy are sold within a few days. Buyers are being discerning across the board – and, where properties are listed, agents are providing vendors with realistic expectations.”
Zubin reckons that vendor expectations of selling price may have been moderated by as much as 10% – although he stresses that hasn’t translated to a 10% drop in actual prices, just vendor expectations. Even so, it’s tough out there, with sales in 2010 amounting to just 9,000 – around half of the transactions made during the boom year of 2003.
That also means there are opportunities for buyers in the right areas.
“We’re still buying, typically within 15 minutes of Hobart and 10 minutes of Launceston,” adds Zubin.
He highlights Kingston, Lindisfarne and North Hobart as good performers in the state capital; meanwhile, in Launceston, he rates Riverside
, South Launceston and West Launceston. North of Launceston, he suggests Mowbray and Newnham, due to the University of Tasmania campus and the Maritime College underpinning rental demand.
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