The Tasmanian property market is one that, while never having suffered from major value falls, has rarely seen massive growth spurts either. Effectively, it’s mirrored the wider trends in the Australian property market.
With that in mind, it should be no surprise that the market is rumbling on in that vein. Figures from Residex for January 2011 indicate that house prices fell in Hobart (by 1.99%), a fall roughly in line with value drops seen across the country, and most likely sparked by generally quiet conditions and the knock-on impact of the natural disasters that afflicted much of the country in January. Meanwhile, the rest of Tasmania saw minimal price falls – just 0.05% – although this could be due more to a lack of activity and country properties coming off a generally lower base (the median house price is $274,500 according to Residex, compared to $385,500 in Hobart).
Median unit prices saw similar price falls in January (0.83% for Hobart and 1.84% for the rest of Tasmania) – again, in line with the rest of the country. Rental yields continue to remain robust in Hobart, too, hovering at 4.87% for houses and 5.13% for units.
Year-on-year, Residex argues that median house values in the capital have increased by 4.68% up to the end of January, and that unit prices have increased by 5.22%. RP Data figures to the end of December, meanwhile, place overall growth in median prices for all properties at 2.2% – a solid figure given the market conditions.
"Hobart is proving to be a consistent performer," says RP Data’s head of research, Tim Lawless. "It’s showing decent yields, a generally strong performance and affordable price points."
A growing concern
However, Lawless injects a note of concern for the year ahead. "There is apprehension over employment opportunities in Tassie," he adds. "Investors should proceed with caution."
Westpac’s latest property report for the state agrees. It argues that Tasmania’s residential property market is likely to experience "challenging conditions" in 2011 as higher interest rates and a weak labour market erode buyer confidence. It stresses that unemployment is still relatively high at 5.5% and that the labour market is expected to contract further. This could lead to 2011 being a slow year for residential property, and that prolonged selling periods are likely to become more commonplace.
The report paints a rather gloomy picture. The state’s forestry and paper industries are both suffering, with the former shedding one-third of its workforce over the past year and the latter’s fortunes largely hinging on the $2bn Gunns pulp mill project in Bell Bay. Tourism, meanwhile, has been hard hit by the strong dollar. The weakness in the state’s traditional industries has led to mortgage stress and even forced sales in the latter half of 2010.
The Real Estate Institute of Tasmania (REIT) is less negative, but agrees there’s been a slowdown in the market, fuelled by concerns over the wider economic situation. Its January Market Report reveals sales are down by 6.3% compared to 12 months ago.
"That’s in part due to first homebuyers not buying any more, with the federal government’s first homebuyers boost being phased out," says REIT president Adrian Kelly.
"But also there’s quite a lot of people sitting on their hands worried about interest rates, job prospects and that sort of thing."
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