The month in review: Tasmania
By Herron Todd White
Some economic commentators are forecasting slow growth for Tasmania as although the state economic climate is looking relatively positive, its level of growth is restrained by sluggish population growth and export challenges.
From 1 January 2016, Tasmania’s First Home Owner’s Grant (FHOG) has been reduced to $10,000 (the $20,000 first home builder’s boost grant ceased on 31 December 2015) and is only available to first home buyers who purchase new homes, off the plan purchases or owner builder homes. Building confidence softened towards the end of 2015 and the newly constructed home and vacant land markets will be ones to watch during 2016 due to both the halving of the grant and the fact that purchasers can often gain better value by forgoing the grant and purchasing established or near new residential property.
Investors hold a relatively small market share of Tasmania’s residential property market however it provides some good opportunities as it generally requires lower capital entry levels compared to other states, we continue to enjoy low interest rates and it offers a relatively strong rental market with reported vacancy rates between 2.8% to 4%. These factors continue to achieve good gross rental returns for investors recently reported as between 3.9% to 8% plus.
In all state regions, centrally located suburbs that contain a good range of facilities, larger infrastructure such as shopping centres, educational and health institutions and public transport tend to be popular with renters and purchasers alike and are viewed as having the best capital growth potential.
Glenorchy, approximately nine kilometres north-west of Hobart is where the majority of residential sales under $220,000 have recently occurred for typically older style homes or units under 95 square metres. For homes in the $221,000 to $450,000 price bracket most of the sales have occurred in Kingston, approximately 12 kilometres south of Hobart. In Kingston buyers have typically purchased either modern style homes from around 140 square metres of living area or larger, older style homes. The most popular suburb for purchasers with a budget over $450,000 has recently been Sandy Bay where the suburb’s top sale of $2.1 million occurred for a 357 square metre, renovated, period home with ocean views.
For the same period in the north, the most sales below $220,000 occurred in George Town however the majority of these sales were well under $150,000 and were marketed for extended periods. Newstead is where most of the sales have occurred for residential dwellings in the $221,000 to $450,000 price bracket.
The typical dwelling sold comprises an older style, renovated house ranging between 120 and 180 square metres. East Launceston is where both the top sale and most sales over $450,000 occurred in the north. The top sale was an older style, 291 square metre, renovated home on over 1,500 square metres of land for just under $850,000.
The north west property market should continue to be approached with caution due to challenging employment opportunities. The most sales across all price brackets occurred in the Devonport area, the largest population centre. Typical properties that sold for $220,000 and under were of an older style offering up to 100 square metres of living area. The mid point price bracket is where the greatest volume of sales occurred with the typical property being of an older style with around 130 square metres of living area. The highest sale during this period in Devonport achieved $760,000 for a centrally located, period home of 336 square metres on just under 1,000 square metres of land that overlooks the Mersey River.