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Tasmania June 2017
The month in review: Tasmania
By Herron Todd White
Throughout the Tasmanian property market renovation is a popular pastime, as many houses and units have become dated and in need of an update. With the increase in demand for properties throughout the greater Hobart and Launceston regions, we are seeing many home owners who are looking to place their property on the market, either renovating their property prior to sale, or placing it on the market with an advertisement description outlining the property’s renovation potential for both the investor or owner-occupier. The term flipping properties has also become quite common in our market. Many property investors are looking to make a quick profit from purchasing a property with the intention to renovate over a six to 12 month period, then placing it back on the market at a considerably higher price than the original purchase price.
According to the latest figures home renovations have surged which has been inspired by the competitive housing market. There have been reports from the financial and housing sectors which have noted an increase in people opting to renovate instead of buying a new house. The latest Westpac Home Ownership Report noted, close to half of the respondents were thinking about going down the renovation path and one out of five had started to renovate. The report noted that in Tasmania 71% of respondents were completing renovation work at the time, and from those thinking about renovating in the near future, 23% advised it was their highest priority. The Housing Industry Association Tasmania in its latest Renovation Roundup report mentioned renovation activity in Tasmania was forecast to increase between now and 2020, which will bring the value of renovation activity to $758 million. The report also mentioned the largest rise was forecast for this year with approximately 6% growth.
Both in the north and south of the state we are seeing a split between owner-occupiers and investors. Investors do seem to be on the increase and there is a strong possibility investors will dominate the market, especially with the increase in property prices throughout mainland Australia, which could drive investors to Tasmania. We are also seeing that rising prices and strong demand for property has home owners worried about being priced out of the market, therefore they are opting to renovate.
The most popular locations for renovatable properties are within the suburbs located closer to the Hobart and Launceston CBDs as they are still at an affordable price. Also with the increase in year wide tourism throughout the state, we are seeing many properties renovated in order to be advertised for short term accommodation through Airbnb and Stayz.
As you travel further from the Hobart and Launceston CBD, there is a decrease in demand for properties.
The main renovations being completed are kitchen, bathroom and painting throughout. We are seeing varying costs for this renovation work depending on the location of the property. The closer a property is to the CBD, there is a noticeable increase in architecturally designed renovations which increases the over cost of work.
Unit renovation is also quite common throughout the state as many units are also dated and in need of an update. With generally less costs associated in renovating a unit, there is strong appeal to complete these works. Units closer to the CBD are in high demand with a current shortage in supply which is attracting many investors to the units advertised for sale.
Areas at a distance and not within the greater Hobart and Launceston areas can struggle when it comes to making a profit post renovations, as there is considerably less demand for properties in these areas. In saying this, had renovation work not have been completed in these areas, the properties may experience an extended selling period. It pays to do your research prior to commencing any renovation work as what can appear to be a simple renovation job can quickly lead to unexpected issues and delays which can prove to be quite costly. To assist with planning and budgeting home owners should take steps to determine the estimated available equity in their property.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.