A market apart
Tasmania continues to struggle along, but some observers feel there is light at the end of the gloomy economic tunnel
Wild, remote, untouched – these features are what give islands a certain mystique and appeal. As Australia’s island state, Tasmania possesses all of these qualities. And, conversely, they could be part of its problem.
It is the Apple Isle’s isolation that contributes to the significant number of people leaving for other parts of the country. It has also contributed to certain logistical problems for businesses in the past.
Both of these issues – in particular, weak population growth – continue to cause trouble for the state’s struggling economy. Unfortunately, this scenario also has an impact on the property market.
According to the latest RP Data CoreLogic Home Value Index results, Hobart recorded a decline of -1.0% in dwelling values over the September quarter. On a more positive note, Hobart’s year-on-year result was growth of 4.6% in dwelling values.
Newly elected Real Estate Institute of Tasmania president Tony Collidge says it is better to focus on that year-on-year result. In his view, the property market, led by the inner areas of Hobart, is improving.
However, he admits that over the last month there hasn’t been much change in the market. There has been a slight pick-up in the number of transactions overall, and that will start to flow through to prices and listings.
“I work in the northern suburbs, which are traditionally a bit slower, and we have just had our best three months in two years in terms of the number of sales. So it is starting to flow through the market slowly but steadily.”
With both the state and federal elections over and out of the way, a greater sense of stability is taking hold of Tasmania.
Collidge says everyone, be they businesses or consumers, knows what to expect now. As a result, there is a growing focus on getting things done. The new government is doing its best to generate more activity in the economy, he continues.
“That should have the flow-on effects of creating more work and boosting consumer activity, which will benefit the property market too. Generally, we are seeing more optimism and confidence down here than there has been for many years.”
Public sector cuts
One development worth commenting on is the big cuts that are being made to Tasmania’s public sector workforce in a bid to save $370m.
Over the next four years the government will be slashing a total of 1,200 jobs from the 27,000-strong public service. With one public sector worker for every 20 residents, Tasmania has a much higher ratio of public servants than any other state or territory.
Despite this, Collidge doesn’t think the move will have a major impact on the property market, particularly on investors. “I suppose it might slow things down a little because some people who were planning to buy might now not buy.”
Taking an optimistic view
Meanwhile, the latest Herron Todd White report also paints a brighter picture of the country’s most affordable state and its future.
It states that over the past seven years the Apple Isle has been forced to make fundamental changes to its economic make-up. This includes relinquishing reliance on an inefficient manufacturing sector and, instead, adopting “innovation and future thinking around niche markets”.
Examples of this include government irrigation infrastructure spending; wind farm development; funding of new cattle farms and dairy processing plants; and private investment in tourism (eg the Mona Gallery).
According to the report, having made such changes, Tasmania is now at the beginning of an upswing in its economic cycle, although some struggles do remain, notably the issue of freight transport. Overall, these sustainable changes will, in turn, underpin growth in the residential property market after a long downturn.
SUBURB TO WATCH
Oakdowns: Surprise performer
Oakdowns: Surprise performer
Developed as a private housing area in the 1990s, Oakdowns is now an up-and-coming area approximately 20 minutes southeast of the Hobart CBD.
The suburb has seen solid capital growth of 12% during the past 12 months and recorded a healthy 3% in the last quarter, largely defying the slow Hobart market.
Natalie Downton, from LJ Hooker Hobart, says the suburb’s position near the coast means it offers a beachy, rural lifestyle out of the hustle and bustle but with the advantages of relative proximity to the city.
There is a mix of two- to three-bedroom strata title units in small blocks and three- to four-bedroom houses on average-sized allotments of 650sqm.
Most properties are pretty new and they are all brick veneer, Downton says.
“If you are looking to live in Oakdowns, the type of property to go for is a rendered three- to four-bedroom family home with a garage and good backyard. However, investors buying units are getting very good returns.”
One of the primarily residential suburb’s major attractions is its affordability, Downton says. “You can get brand-new three- to four- bedroom homes for approximately $340,000, or a villa unit for the mid to high $200,000s.”
There are no particularly notable best and worst streets – they are all pretty much on a par, Downton says. “But there is a fair bit of building and development going on. I think that once that is finished, there will be significant price growth.”