While Tasmania is still facing economic headwinds, its property markets appear to be on track to stage a long-awaited recovery this year
Being a small market, it’s always going to be tricky to get an accurate reading of the trend in Tasmania.
In the May quarter prices dropped slightly, but they recovered in the June quarter. The July data from CoreLogic RP Data showed dwelling prices edging even higher. During the past 12 months, median dwelling values have risen by 2.5% and added 1.1% during July alone.
Tim Lawless, head of research at CoreLogic RP Data, notes that the housing market across Hobart is once again on an improving trend. However, he points out that the market still has some way to go before staging a nominal recovery, with dwelling values remaining 6.6% lower compared with the previous 2009 peak in dwelling values.
Another promising trend, according to Lawless, is the sustained high rental yields that Hobart is achieving. Both houses and units are currently racking up a 5.2% gross rental yield.
“Hobart is the most affordable city, with the median house price sitting at just $320,000,” he says. “It’s also the only capital city where yields haven’t deteriorated over the year and where rental growth has kept pace with value growth.”
However, the data from Domain shows a slower market, with house prices falling by 1.6% during the year. Andrew Wilson, chief economist at Domain, blames the weak local economy for the underwhelming results.
“The underperforming local economy continues to hinder a sustained revival in buyer activity and price growth in the Hobart housing market,” he says. “Increased investor activity and higher numbers of first home buyers are set to support the market over the remainder of 2015, though median house price growth is likely to be moderate at best.”
Economic bright spots
Despite the volatile stats, there are signs that Tasmania has strengthened.
“The Apple Isle has been going from strength to strength,” says Deloitte Access Economics in its Business Outlook report. “The value of work underway has held steady so far in 2015, with the value of engineering construction projects underway staying above the $1 billion threshold. That’s a pretty big deal when you consider that in 2010 the total value of investment projects was well under $500 million.”
Deloitte Access Economics also points out that the subsequent fall in the Australian dollar and the shift to lower interest rates has been instrumental in turning around Tasmania’s fortunes.
“Growth in the economy has been rather better for a while now, and unemployment is less of a drama than it used to be. Indeed, better news has been seen across a number of areas, including in retail, where turnover growth in Tasmania has largely been matching national gains of late, and in car sales which have also shown a solid recovery in recent months. Visitor arrivals have risen on the back of the lower $A, and occupancy rates in Tasmania are up. And as some of the gloom surrounding Tasmania’s economy has lifted, small business confidence has been showing signs of improvement.”
Outperformers near the CBD
Sydney and Melbourne are not the only capital cities recording high double-digit growth in prices. Hobart’s inner-city suburbs have also racked up massive gains during the past 12 months. Hobart houses led the top performers, with median prices surging by an eye-watering 20% during the year. In the July quarter alone, it added another 10%.
Mount Nelson and Bellerive also recorded strong gains of 16% and 14% respectively.
SUBURB TO WATCH
Taroona: Hot Tassie suburb is turning heads
It might be famous for being the childhood home of the Crown Princess of Denmark, but this suburb is coming on to the radar for different reasons entirely. For starters, it has an auction clearance rate of 100%, indicating tight demand, according to DSRdata.com.au.
More evidence that houses are being snapped up is that they typically spend just 49 days on the market, which is very low for Hobart, according to CoreLogic RP Data. The data also shows that the average hold period is a high 10 years, indicating that many residents enjoy the place so much they don’t want to sell.
Located 7km from the Hobart CBD, Taroona boasts nature at its best, including Taroona Beach, Derwent River and lovely parks. Three-bedroom houses on Baringa Road can be picked up for less than $500,000. They have easy access to the CBD, Kingston and local shops. Some even have scenic views of the Derwent River. There are also some good opportunities in this suburb to add value through renovation.
