Bleak outlook for the year ahead
There are no two ways about it: Tasmania’s property market is in the doldrums, and it’s likely to stay that way… in the short-term, at least
With a 7% unemployment trend, the Tasmanian economy is struggling. This is well above the decade average of 6%, and tree-changers have all but disappeared from open homes.
“High unemployment and the outflow of young people have been large contributors to the state’s flat market,” says RP Data senior research analyst Cameron Kusher.
“Hobart and Tasmania are not attracting the influx of retirees as they did in 2003-04, even though prices are lower,” he explains.
“I can’t see what is going to turn it around until the world economy gets better and people start buying holiday homes, and the tree-change and sea-change [buyers] become prevalent again.” Kusher says Hobart is one of three cities – together with Brisbane and Perth – that holds the distinct honour of boasting home values that are presently below what they were five years ago.
Adjustments to official interest rates are having less effect now than they had in the past, he adds, which is to be expected, “given that households are saving around 10% of their disposable income, and are showing a preference for saving and paying down debt rather than spending.”
Confidence declines as economy slumps
With negative capital growth rates recorded across all dwelling types –and in both country and metropolitan areas – it’s no surprise that confidence in Tasmania’s property market continues to decline, with new research confirming that it remains the lowest in the nation.
The latest Property Council of Australia – ANZ Property Industry Confidence Survey, which polled more than 3,000 professionals from the property and construction industries, reveals that Tasmania suffered the sixth consecutive period of negative confidence.
This is despite the release of the Premier’s Jobs Package in December 2012, an initiative that will support the creation of over 3,300 jobs and leverage around $375m in private investment.
“This is our sixth survey in the series and it shows that confidence in Tasmania’s property industry is not recovering,” says Mary Massina, executive director of Property Council Tasmania.
“The key issues of state economic growth and stalling construction activity levels show that the state’s biggest private sector industry is doing it extremely tough, which adversely impacts on Tasmania’s economic growth,” she says.
Construction crews abound in Hobart’s CBD
While the statistics and experts continue to paint a dreary picture of Hobart’s growth and prosperity, there are a few bright patches to be thankful for.
A new residential and retail precinct on the corner of Melville and Elizabeth Streets in Hobart’s CBD is set to be built on the car park site that is currently home to the Sunday Farm Gate Markets. The $70m project will eventually provide accommodation for 400 students, and is being largely funded through the National Rental Affordability Scheme.
The project follows on from the announcement of a $75m creative arts hub, to be built in Campbell Street by the University of Tasmania, which was given the green light in December last year.
Meanwhile, unprecedented development is taking place on Hobart’s waterfront, with major projects including Macquarie Wharf No. 2 and the Institute for Marine and Antarctic Studies development.
“It’s all very, very exciting but what we need to ensure is that when those products are finished, there are more developments to look forward to and that’s the concern at the moment,” Massina says
Building uplift on the cards?
There was some suggestion that the recent spate of bushfires may spur on, even more activity in the building sector, but Massina remains cautious.
“Despite some comments that there may be an increase in construction activity due to the recent devastating bushfires, it is likely to be minimal,” she says.
In fact, she believes the overall outlook for Tasmania’s property market throughout 2013 remains bleak, with the state’s poor economic outlook “... potentially resulting in a further drop in investment across the residential and commercial property sectors.”
“Weak residentail construction activity expectations present further downside risks to Tasmania’s property industry going forward,” she adds.
“The time for action is now and if the Government works with the property industry, we will have an opportunity to safeguard jobs and ensure the viability of the state’s biggest private sector industry.”
Historic homes up for grabs
Ever fancied the idea of restoring a piece of history to its former glory? In Tasmania, you’ll find colonial homesteads, Georgian mansions, Victorian townhouses and Federation cottages dotted throughout modern neighborhoods – and thanks to the state’s age and strong community connection, many of these heritage-listed, historic properties are still standing in good condition. Better still, they won’t break the budget, with prices starting in the low $400,000s.
At a time when the rest of the city and indeed, the state is going through a period of backwards growth, the seaside suburb of Carlton – situated around 40km from the centre of Hobart – has bucked to odds to enjoy 12 month capital growth of 4%.
Even more appealing is the town’s long-term track record. With an average annual growth rate of 16.5%,
Carlton is one of Tasmania’s best performing suburbs.
Local real estate agent Stephen Wilson from The Professionals Sorell, describes Carlton as “a very picturesque part of the world”, which is renowned for its summer swimming and surfing spot, Carlton Park Beach, a 2.7km-long stretch of sand.
“The Carlton River comes out around 300-400m down the beach from the surf club, which is great from a recreation point of view,” he says.
“Nearby Sorell, which is about 10 minutes away, has all of the facilities that a young family could want and a further five or six minutes from that is the Hobart airport. So, within a 20 minute drive you’ve got a range of shopping facilities and access to a host of different amenities.”
Attracting a median weekly rent of $275, Wilson says Carlton holds broad appeal for holidaymakers and owner-occupiers alike.
“There are a variety of properties in the area, with substantial family homes on elevated streets, and you’ve also got an assortment of places built as holiday homes,” he adds.
“It’s a great spot for a weekender for those that live in Hobart, and depending on your needs and your goals, there’s quite a lot of scope for different properties and lifestyles.”