The month in review: Tasmania
By Herron Todd White
Well can 2018 match the performance of 2017 in the land south of Bass Straight?
Pondering the coming year it’s hard not to feel confident looking over the Hobart CBD skyline with cranes in the air!
As has been well publicised, Hobart lead the nation in terms of percentage capital growth during the past year. What was less publicised was the fact the city also had the highest rental cost growth. These factors actually meant that many investors to the market were able to maintain yield levels.
So what is going on?
The tourism market is as they say, booming. Many dwellings are being withdrawn from the rental pool or purpose bought for the sole purpose of Airbnb style accommodation.
The population is growing (yes slowly) but extra people require extra houses.
And the economy has regained the confidence and momentum that was lost post GFC.
These factors are placing pressure on housing availability.
With ongoing near full vacancy applying continued upward pressure on rents and pressure on housing availability, we expect another stellar year for the Apple Capital in 2018 and would not be surprised to see double digit growth in house prices again.
What could go wrong?
The following factors would appear to be the short term risks:
- a) A State Election has been called for early March. Without getting political, the election of a minority government or a government in coalition with the ‘The Greens’ could place some uncertainty into the market.
- b) Any reduction in the First Home Buyers/Home Builders Grant may do the same (not proposed to our knowledge). Conversely if a newly elected government ‘improved’ the package, it may add further impetus to the market.
- c) Negative media on cooling Sydney and Melbourne markets may dampen local enthusiasm.
- d) Finally, a sharp upward movement in interest rates (again considered a low side risk).
Outside of the capital, Launceston is also continuing the march forward. Capital projects such as the Silo’s, University relocation and new hotel in Tamar Street are providing local confidence. Again near full rental vacancies and capital growth are providing encouragement for the residential investor.
Devonport, while not enjoying the capital growth of the larger two centres, is certainly moving in the right direction. The CBD redevelopment and new tourism expenditure again providing local confidence.
Many regional coastal centres we consider are likely to continue to benefit from the ripple effect as people buy that holiday home with new found equity or the ‘mainlander’ buys that holiday/investment property.
In short, we remain confident for 2018!
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