Tasmania

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The Smartline Report – February Edition

The month in review: Tasmania

By Herron Todd White
February 2015

Hobart and Launceston
2015 commences with a positive outlook for Tasmania with improving economic data, particularly in the south. Increases in employment participation and retails sales, falling unemployment and relatively stable inflation are all positive economic indicators.

Should the economy continue to bubble along, the scheduled staged reduction of the First Home Builders Boost (FHBB) (at 31 December 2014 and again in June 2015) is a potential pitfall for both Tasmania’s property market, particularly within the newly constructed first home buyer segment, and construction industry.

After a lacklustre uptake of the $15,000 grant available in 2013, the government boosted the grant to $30,000 for newly constructed homes in November 2013 until 31 December 2014 with the intent of stimulating a flagging economy and business sentiment.

As of 1 January 2015, the grant has been reduced to $20,000 with a further reduction to $10,000 scheduled for homes built after 30 June 2015.

There have already been calls for the government to increase and extend the FHBB grant program to maintain economic and employment momentum within the construction and real estate sectors. It will be worth watching how government responds in the near future given state budgetary challenges.

With a further $10,000 reduction to the FHBB grant after June 2015, suburbs to watch are those where first home buyers have been active. Suburbs that have experienced higher volumes of land sales within a first home buyer price bracket in the south include Tranmere, Old Beach, Howrah, Oakdowns and Kingston. In the north they include Prospect Vale, Newnham, Riverside, Legana and Perth. Premium prices for newly constructed homes within this market bracket were being achieved and it could be expected that there may be pricing movements post June 2015. It would also be expected that with the significant reduction of the FHBB grant (from $30,000 to $10,000 after June 2015) there would be more activity within the established residential
property market at a first home buyer price level, where investors and first home buyers compete.

The north-west property market should be approached with caution due to declining employment opportunities within this part of the state which climaxed in the latter part of 2014 with mine closures. Economic data supports this with government reports stating that while unemployment rates are lowering in the south and
north they are increasing in the north-west.

It would appear that Tasmania may be starting to crest a challenging economic period brought about by global economic conditions and contraction of its traditional industries. New opportunities to support and grow its agricultural and tourism sectors such as the proposed five new irrigation schemes are brewing, promising an exciting and interesting future.

Tassie has already seen the scope of its traditional industries constrict, something other Australian regions are yet to fully grapple with.

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Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325