Market’s low has attractions
Tasmania’s market continues to flounder, but good deals abound for the astute bargain hunter. And political changes could help the situation further
Several positive business and economic development stories have emerged from the struggling state of Tasmania in recent times, but it would be ill-advised to place too much emphasis on them.
Australian Property Monitors senior economist Andrew Wilson says his sense is that regional markets in Tasmania remain flat in a reflection of the state’s economy overall. “There have been recent reports of a bit of a pick-up in activity, but I think the market is just continuing to bounce along the bottom.”
Local supply-and-demand issues have a big impact on the market, Wilson continues. “Suburban Hobart markets have low-activity drivers and the population shakeout exacerbates this. This filters out to the regional markets.”
The negative impact that continuing job losses are having on the state is unavoidable. Policy initiatives by the new government could impact on this situation, but that would be a medium-term outcome, Wilson says.
“Low interest rates could help with a slow recovery but, again, that would be in the medium term. Tasmania’s property market is currently an insipid market looking for some improvement in the state’s economy. There is a real need to create some enthusiasm.”
The most positive thing is that the markets have stopped falling and stabilised, Wilson adds. “So it is good if you look at it from that point of view. When the market is at a low point, this does invite value property buyers.”
According to the latest Herron Todd White report, Tasmania’s property market remains steady with regard to pricing, and there has been an increase in sales volumes. The report states that record low interest rates, good gross yields and comparatively low capital outlays mean the state is actually an attractive investment proposition – particularly for new entrants into the property market.
The charms of Launceston
Dissection of the state’s property market often focuses on the affordability of Hobart. However, Tasmania’s second city of Launceston shares that attribute.
Further, data from the Real Estate Institute of Tasmania show that the city has had a particularly sharp increase in house sales recently (up 34.4% over the June quarter and 11.8% over the year.)
-situated Launceston is the commercial hub for the northern part of the island state. Settled in 1806, it is one of Australia’s oldest cities and is full of well-preserved historic buildings and architecture.
Rental yields in suburbs across Launceston sit at 4% and above, with some reaching 8%, according to the latest figures from RP Data. These yields should serve as one of the market’s more attractive features for investors.
The Herron Todd White report notes that it is possible to pick up a range of older-style houses in the Launceston suburbs for under $250,000, while inner-city houses can be found for below $200,000. Modern units are available for around $250,000, while older units can be found for $150,000 up.
Suburb To Watch
Attractive and historic South Launceston is an up-and-coming suburb that possesses distinctly high appeal for renters. Close to Launceston’s CBD, yet still a quiet, largely residential area, the suburb offers investors good rental returns.
Property in this leafy area remains relatively cheap, Sandra Connelly from Bushby Property Group says. “For less than $300,000 you could buy a very decent property, which may or may not have been refitted, but of good quality.”
Full of period homes – with an appealing mix of Victorian, Edwardian and Federation architecture – plus some California-style bungalows, there are also some large blocks of land as there used to be orchards in the area.
It is a bit like Paddington or Darlinghurst in Sydney, in terms of character, with little streets and cute houses, Connelly says. “There are a lot of do-ups available.”
Although there is a small pocket of business and industry at the bottom end of the area, the suburb is predominantly residential. It is also close to Launceston’s hospital, the restaurants and nightlife of Charles Street, and a number of parks. There are two primary schools and a number of childcare centres.
People increasingly want to live in South Launceston, so rental returns should remain strong, Connelly says. “This makes it attractive to investors. We have been seeing growing interest in recent times.”
She believes the market is very healthy and that prices in the suburb will only continue to rise.