Back to square one?
The property outlook for the rest of the year remains bleak for the Apple Isle, despite improving consumer confidence and establishing growth rates.
The economic situation is so dire in poor old Tassie that when Deloitte Access Economics put out a recent Business Outlook report they had to invent new lows on their graph to explain the economic data.
“We’ve had to change the axes to go lower than we have ever gone before,” Deloitte confirms of the report, which reveals that Tasmania’s stagnant population is doing little to help the
state get back on its feet.
“Prospects are better elsewhere, and that’s encouraging people to leave,” the report says. “But when they do leave that cuts demand even further, increasing the economic headwinds for the state.”
Andrew Peterson from NextHotSpot.com.au says that locals may be able to spot genuine, under market buying opportunities within Tasmania, but interstate investors will generally be able to find better places to direct their dollars.
“If you are a local and know your area well enough to identify an opportunity, then fair enough, but we see better areas of growth for most investors,” he says.
“While it’s no doubt a wonderful place and I’ve got some friends and family that live there and love it, unfortunately, as an investor, it’s not your best investment destination. It’s an export economy, and that includes tourism, seafood and dairy, and these industries are heavily impacted by our high Australian dollar, which is really hurting the economy.”
30% expect house prices to rise
There is a small nugget of encouraging news for our beleaguered southern island state. In the February 2013 quarter, Tasmania recorded growth of 3.4%, more than its resource-rich neighbours in Brisbane and Perth.
While it’s not quite reason enough to crack open the champagne and prepare for the state’s recovery, it is a positive move forward for Tasmania’s economy, which struggled through much of 2012.
It looks set to tread familiar territory in the year ahead, with Tim Lawless, head of research at RP Data, pointing out that in their recent housing market sentiment survey only 30% of respondents expected Tasmania’s house values to rise over the coming year, compared to 51.2% nationally.
“The results were stronger than I expected,” he says, “in the sense that only a very small proportion of the survey respondents expected dwelling values to fall over the next six to 12 months.”
Across the country, only 8.3% of people believe that property prices will decrease in the next year, down from 14.4% in the last sentiment survey, conducted in October 2012.
“Even though consumers are becoming increasingly confident about the Australian housing market, the magnitude of the growth expectations remains reasonably tame,” Lawless adds.
“Of those respondents that thought home values would rise, about 80% of them are expecting values to rise by less than 5% over the next fi ve years.”
Around 5km north of Hobart city is Moonah, a popular suburb as renowned for its eclectic mix of period homes, cottages and art decor residences as it is for Island Markets, the largest undercover farmer’s market in Tasmania, selling only locally grown organic fruit and vegetables, meat and fish.
With the average annual price growth of 12.6% for houses and 15.4% for units, real estate agents in
Moonah have had a reasonably easy run of selling desirable properties to an appreciating market, even when the overall property market has been sluggish.
In the last 12 months, for instance, while Hobart as a whole suffered a price retraction – houses dropped in value by 1.5% and units by 4.3% – homes throughout Moonah were going gangbusters, appreciating by 9%. With a robust commercial precinct, plentiful shopping, and facilities like the Moonah Arts Centre, Putters Mini Golf and Moonah Bowling Alley providing entertainment for locals, the suburb has lots of appeal for a broad range of renters.
There are numerous opportunities to secure positive returns, especially with dual income homes, such as
the property listed for $330,000-plus by Shelley Wood from Roberts Real Estate. Boasting a three-bedroom,
two-bathroom family home next door to a one-bedroom, one bathroom unit, the property brings in a combined income of $510 per week, making it cash f ow positive to the tune of $100-plus from day one.