Time is ripe for reform
While there is more positive news for the property market, industry confidence seems a bit shaky. But government and economic reform could be the answer
Much like the first fragile flowers of spring struggling to emerge from the cold ground, signs of recovery in the Tasmanian market continue to slowly break through the confines of a still chilly economy.
According to the RP Data-Rismark February Hedonic Home Value Index results, Hobart was one of the bestperforming capital cities, with growth in dwelling values of 7.7%. For the month of February, Hobart joined Sydney and Darwin
as the only cities to record positive growth.
This is good news indeed for Hobart’s market. The hope now is that the ongoing recovery of the Apple Isle’s capital city market will start to trickle down to broader Tasmania.
Unfortunately, elections – shrouded in uncertainty as they are – have a way of slowing much around them down to a standstill. And Tasmania’s state government election on March 15 has done just that.
The resulting climate of uncertainty is one possible reason for the slight fall in industry confidence revealed in the latest survey by the Tasmanian wing of the Property Council. Executive director Mary Massina of the Property Council (Tasmania) says the survey tends to be a good test of where decision-makers in the industry are sitting. That in turn provides an insight into how well the broader economy is perceived to be running.
However, the survey result seems surprising given the current signs of recovery in both the housing and office markets. Massina believes it is a reflection of the importance of the election to both the property industry and the property market, and their future.
Reform necessary for economy
There are some key, but long-neglected, policy areas the new government needs to commit to addressing in order to ensure long-term growth of the property sector, Massina says. “Government action is action necessary to reinforce the signs of economic recovery.”
First and foremost, there is an urgent need to generate employment and ensure external investment in Tasmania, she continues. “Further investment is crucial to galvanize ongoing job creation and population growth. This will ensure demand for property grows too.”
Both tax reform and reform of the planning system are also necessary to encourage investment and development in the state and its economy. With two tiers of government and 29 local councils plus other authorities, there is simply too much red and green tape – and associated costs – for many potential investors.
Massina believes there is a very innovative streak running through Tasmanian society and culture, but that is not currently reflected at a government level. “The system is old, staid and afraid to embrace the new. It needs to be more nimble and flexible, and costs need to be lower in order for Tasmania to compete against bigger, more robust markets.”
Massina is hopeful that the latest government will shape reform and drive relevant change, but in the meantime she is focusing on some of the developments underway. These include the Parliament Square redevelopment, a big new hotel on the Hobart waterfront, and a hotel development at the Museum of Old and New Art.
She adds that over the next three years there is a clear pipeline of exciting inner-city developments in Hobart, although it would be good to see such developments – and their economic benefits – more widespread across Tasmania.
“If the market continues to improve, and if policy initiatives by the new government lift some of the current key barriers to development, that would be great. There is so much untapped potential and opportunity in Tasmania. And it rewards investors: if the economy recovers there is no reason to believe that investors will not make excellent returns.”
Suburbs to watch
Meanwhile, the latest Herron Todd White report offers a range of suburb suggestions for investors who are interested in Tasmania’s property market but don’t qualify for the state’s generous First Home Builder Boost.
In Hobart, the report recommends the suburbs of Kingston, Lindisfarne and Glenorchy
. All three suburbs are within a 6–12km radius of the CBD. Median house prices for properties that fit the second home buyer profile (four bedrooms with two bathrooms) are at around $340,000 upwards.
In Launceston, the report recommends the suburbs of Prospect, Legana and Newnham. While located slightly further out from the city centre, they all offer median house prices of between $350,000 and $450,000 for four-bedroom, two-bathroom residences.
SUBURB TO WATCH
Formerly a public housing area, Chigwell has taken some time to shake off the associated stigma. But times are now well and truly changing for the northern Hobart suburb.
With much of its public housing sold to private owners, Chigwell is now popular with middle-class families due to a combination of affordable prices, mountain and river views, and leafy surrounds.
The suburb is 11km from the Hobart CBD, 4km from Glenorchy, and has easy access to the main arterial highway to the city, Tony Collidge, from PRDnationwide Hobart, says. “This means it is close to all the necessary services and amenities provided by the major urban centres.”
Three-bedroom houses, either weatherboard or brick veneer and on 650–750-square blocks, dominate the suburb. There are also a fair number of two-bedroom semi-detached properties and conjoined flats. They tend to be built well and good for renovating.
Collidge says Chigwell’s high rental returns – with yields at around 7% – are one of its major selling points. “There is also good potential for long-term growth due to the suburb’s location and closeness to amenities.”
There has been limited positive price movement in Chigwell in recent years. But Collidge is hopeful prices will soon start to go up as demand for the suburb’s affordable prices and prime location grows.