Tasmania August 2017

The month in review: Tasmania

By Herron Todd White
August 2017

It appears Tassie’s secret is out, that low interest rates, rental vacancy rates and capital entry levels partnered with stable rents translate to good investment yields and these factors appear to be the reasons behind growing investor participation in our residential market.

Comparative to other states investors have not traditionally played a large part in the Tasmanian residential real estate market, however reports on recent data by the Real Estate Institute indicate that investor activity has grown from 14% to 21% compared to the same period last year with small gains in interstate investor activity.

Currently first home owners in Tasmania are eligible for a $10,000 grant when purchasing a home however if they purchase either a newly built home, engage a builder or build themselves they are eligible for a further $10,000. State Revenue Office statistics reveal that grants paid to those purchasing new properties have declined by approximately 38% over the past twelve months indicating that first home buyers are forgoing the full $20,000 grant by purchasing established properties as they often represent better value. In doing so first home buyers are directly competing with investors in the sub $275,000 price bracket.

Local investors appear to be purchasing residential property in the lower regions of this bracket with a view to renovating it themselves for either an investment yield by building their rental property portfolio or flipping it for capital gain. By contrast, interstate investors appear to be seeking investment yields or purchasing properties to retire to and renting them in the interim. Depending on the depth of their pockets, in some cases interstate investors are spending anywhere up to $500,000 plus.

Tasmania’s slower population growth has resulted in greater diversity of property types in each suburban area where small cottages can sit next to mansions which may explain why unlike other states, investors don’t tend to focus on any particular suburb. Investor focus, of which the lion’s share is local, appears to be on either properties ripe for renovation or those with development potential.

In Tasmania’s south, the commuter suburbs of Glenorchy and Claremont, approximately ten and fifteen kilometres respectively north-west of Hobart along with New Norfolk, (a slightly longer commute being approximately 35 kilometres also to the north-west of Hobart) have been strong performers in recent months in this price bracket. The Museum of Old and New Art (MONA), a popular tourist destination sits within an approximately three kilometre radius of both Glenorchy and Claremont.

The most economical areas in the north where the greatest volume of residential sales has occurred in recent months include George Town, Newnham and Mowbray. George Town is a satellite town of Launceston with a commute of approximately 40 minutes. The majority of sales in George Town were well under $180,000 and marketed for extended periods. Newnham and Mowbray are located near the University of Tasmania Launceston campus and are therefore popular with students.