Solid recovery appears underway
Affordability, good rental returns, low vacancy rates and strong sales, are just some of the things that are making investors smile these days
Tasmania’s property market is often the victim of bad press. However, things have begun to turn around.
“According to recent figures from the Real Estate Institute, Tasmania achieved its highest number of sales in five years during the March quarter.
Sales numbers climbed 12.1% on last year and the upswing was recorded across the state. Specifically, house sales in Hobart shot up 20.5% on last year, while Launceston led the charge at 24.9%.
Additionally, mainland buyers rose to 17% of all sales, and investor figures were up 2% to 16% of all buyers.
“These figures are indicative of the Melbourne and Sydney markets being near the top of their run, with many mainland investors looking for other destinations to invest, which are positive signs within our property market,” says Tony Collidge, president of REIT.
Reasons to be optimistic
Collidge says it’s important to be optimistic about the Tasmanian market for the following reasons:
- Market confidence is definitely improving
- Continued strong sales growth in 2015 will see time on market decrease and upward pressure on prices
- Low vacancy rates and good rental returns make investment in Tasmanian real estate worthwhile
- Most Tasmanian real estate is coming off a strongly depreciated/low base, creating an opportunity for strong capital growth in the future
- Tasmania remains the most affordable market in Australia
“The upswing in our market can be attributed to an improvement in confidence across all sectors of the economy,” says Collidge.
In particular, the state is rising as a tourist destination. Tasmania recently won more awards than any other state or territory at the Australian Tourism Awards (winning 10 out of 29 categories).
The industry contributes $2.4bn to the state economy per year and directly and indirectly employs 28,000 Tasmanians.
The Tasmanian government’s ultimate goal is to attract 1.5 million visitors to their state every year by 2020, which could create a further 8,000 jobs.
In fact, last year 190,000 tourists visited a winery during their stay in Tasmania. This is up 18% on the year before.
Moreover, Collidge says the state government is encouraging growth and development, saying it has stopped its public service reduction program and is seeking to stimulate employment.
“This, combined with low interest rates and one of the country’s most affordable marketplaces, has paved the way for a resurgence in the market,” says Collidge.
However, there are two things which worry Collidge. These include the state’s economic vulnerability and the government’s ability to maintain and encourage job growth.
Where to target right now
The beauty of the current market in Tasmania is that it provides great opportunities for patient investors to achieve good yields with low vacancy rates, and the possibility of good capital gains. However, there is always a catch.
“Chasing high yields doesn’t always provide the best outcome, and the cheapest properties are not always the best,” says Collidge.
Five suburbs which Collidge thinks are good options to invest in Tasmania include Moonah (5km from the Hobart CBD), Bellerive (7km from the Hobart CBD), Trevallyn
(1km from Launceston), West Hobart (2km from the Hobart CBD) and Devonport
(98km from Launceston).
“If I had $500,000 I would buy a home in Bellerive,” says Collidge.
Meanwhile, for Linda Phillips, national research manager at Propell Property Valuers, there are five standout suburbs.
- Geilston Bay – close to the main feeder road to the city
- Snug – the next growth area within 10 minutes’ drive of Kingston with a satellite retail area
- Lenah Valley – close to the city and is a transport area
- New Town – close to the city and is a transport area
If Phillips had $500,000 and could put it anywhere in Tasmania, she says she would put it in Lindisfarne, located six kilometres from the Hobart CBD.
She likes the large, older homes with opportunity to subdivide. It is also within 10 minutes of the Hobart CBD and has good facilities including medical centres, retirement homes and a supermarket.
SUBURB TO WATCH
Howrah: Beachside beauty on the rise?
For a beachside suburb that’s about six kilometres from the Hobart CBD, Howrah has a lot going for it. Let’s start with the fact that houses here have a median price of less than $400,000. For that, you can get your hands on a three-bedroom house near Mortyn Pl or Jasmin Ct, which have the double benefit of being quiet streets yet very close to great amenities including shops, transport, schools and the beach.
In addition to having the luxury of watching the water, many residents there also benefit from stunning mountain views.
The vacancy rate of Howrah is a very low 0.45%, according to Real Estate Investar. And the fact it has not grown a huge amount over the past five years or so makes this suburb a prime candidate for experiencing a jump in values in the medium-long term. The gross rental yield of 5% is also good news for investors.
It is also very close to Bellerive and Rosny Park which offer a range of commercial services that residents of Howrah can take advantage of. In Howrah itself is the Shoreline Shopping Centre and a number of schools and parks.