Research

State of Markets - TAS February 2015

By Reporter

The steadily moving Tasmanian market looks set to pick up over 2015 

In the 12 months to December, property values in Hobart rose by 3.5 per cent, according to CoreLogic RP Data. This figure puts Hobart fifth in the state capital standings for annual growth.

However, the city placed first among the state capitals for growth over the month of December, with a rate of 2.7 per cent.

The research house reports that the median price for a dwelling in Hobart is now $341,500. This is the lowest median price of any state capital – and significantly lower than the next cheapest location, Adelaide, which recorded a median price of $410,000.

CoreLogic RP Data head of research Tim Lawless anticipates growth in Tasmania’s capital to be moderate in the coming months.

He points to downturns in the agricultural and tourism sectors as key factors in Hobart’s weaker property performance post-GFC compared to other capital cities. Hobart dwelling values remain 3.9 per cent lower than what they were at the start of 2009.

Mr Lawless explains that more recently, housing market conditions have started to improve across Hobart. A recent study from CoreLogic RP Data suggests that transaction numbers have recorded a sharp rise from a low base and dwellings show a remarkable level of affordability compared to other capital cities.

As demand from lifestyle buyers continues to rise, Mr Lawless expects Hobart home values to continue their moderate growth trend during 2015.

SQM head of research Louis Christopher also put Hobart in the spotlight in a recent interview, citing “movement” in the market. He says that historically, Hobart has been a weak economy, has experienced weak-to-negative population growth and subsequently, a weak housing market.

However, he says that the lower Australian dollar helps the Tasmanian economy on many levels.

With these factors in mind, Mr Christopher says that prices are well undervalued by historical standards and are in a prime position to move upwards in 2015.

In focus

Between the 1960s and 1980s, public housing was widespread in the greater-Hobart suburb of Claremont. However, most of these houses have now been sold off and bought predominantly by owner-occupiers.

Residents can shop at the Claremont Plaza, and choose from a range of restaurant options at this location.

The travel time to Hobart’s CBD is about 20 minutes.

Claremont has a TAFE campus, a senior secondary college, two government primary schools and one private primary school. It has sporting ovals and parks and is home to the famous Cadbury Chocolate Factory.

The market comprises a mixture of older weatherboard homes and new developments, many of which have great views of the Derwent River.

Although CoreLogic RP Data reports a median price for a two-bedroom unit as $215,000, I am aware of properties of this type being advertised for about $150,000, with rental returns of six per cent.

If an investor puts the time in, they will be able to find some great opportunities in Claremont. I recently found neat little weatherboard dual occupancy advertised for just over $200,000.

It’s currently rented for a total of $400 a week, and has the potential for a large block of land to be developed. This equates to a rental yield of over seven per cent together with an add-value opportunity, all for under $300,000.

Rental yields in the suburb are very competitive, even when compared to Hobart city. SQM Research will show you that the asking price for a three‑bedroom house in Hobart is $478,900, with a rent of $444 per week. This translates to a rental yield of 4.82 per cent, which is strong by any capital city standard.

To compare, SQM reports that the asking price for a three-bedroom home in Claremont is $261,900, with a rent of about $300 per week.

That’s a very healthy rental yield of 5.9 per cent. Investors who purchase a two-bedroom unit for just under $200,000 can expect a rental yield of 6.6 per cent.

I feel the outlook for the area moving into 2015 and beyond is very good. Properties in Hobart are currently somewhat undervalued and are due for an increase. Moreover, the area’s increase in rents over the past couple of years suggests that a growth spurt is on the horizon.

The key indicators for property price growth are population, infrastructure, demographics, economics, supply and demand, and yield variation. Although wider Tasmania has been troubled by economic issues in the past, I feel that the Claremont market is resilient.

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  string(144) "

Property investors are now able to identify and bid on auctions remotely using a new live-streaming functionality launched by Gavl.

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Called “Request an Auction”, the new functionality enables users to watch and bid on any Sydney or Melbourne auction remotely.

Through Gavl, prospective buyers are now able to register to bid on their preferred auction. The platform will obtain permission from the listing agent and confirm within 48 hours.

Vendors can also request to have their auctions broadcast to a larger buyer audience.

Co-founder Joel Smith said that auctions streamed on Gavl attract 47 per cent more viewers than traditional ones.

He said that Request an Auction will be valuable for remote buyers.

“Buyers are able to have Gavl attend any auction they nominate, so they will never have to miss out on an opportunity due to logistical complications in physically attending the auction.

“Vendors, too, have the opportunity to directly book an auction with us, so they can open up their event to buyers all around the world. With more potential buyers, they’re giving their property the chance to receive more bids and maximise their sales result.”

Mr Smith said that prior to the Request an Auction app, buyers were limited to what they could achieve through the Gavl technology.

Gavl is a live-streaming and bidding platform for real estate auctions.

Mr Smith said that it has streamed more than 6,000 auctions, which have achieved 3.5 million views from 50 countries.

Gavl’s Request an Auction function is currently being offered in Melbourne and Sydney only.

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Boost for investors as app sets up off-site bidding
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Having to split her time between Hong Kong and her original base of Sydney has not slowed Julia Tita’s goal of building a high-performance Australian property portfolio. Instead the resulting alterations to her strategy have positively impacted her investing success.

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Having recently purchased her 6th property, Julia joins host Tim Neary to discuss her journey, share her ups and downs over the years, and reveal her thoughts on why some properties are better than others.

Julia also explains why she no longer makes a move without the help of a buyer’s agent, why working with a strong team of specialists is extremely important and discloses her long-term property ambitions.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

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How a move to Hong Kong impacted Julia’s Australian property goals
object(stdClass)#1204 (52) {
  ["id"]=>
  string(5) "18159"
  ["title"]=>
  string(88) "‘Common’ referrer practice of being paid on both sides of the fence coming to an end"
  ["alias"]=>
  string(82) "common-referrer-practice-of-being-paid-on-both-sides-of-the-fence-coming-to-an-end"
  ["introtext"]=>
  string(246) "

The practice of property investment firms sharing undisclosed kickbacks among the supply chain involved in development sales will be outlawed in NSW on 1 July this year under the Real Estate Reform being handed down by regulators in NSW.

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Property commentator and valuer, Suburbanite’s Anna Porter, said the reform will address conflicts of interest.

She said they arise when a mortgage broker, accountant or financial planner receives part of the commission from the property firm, who receive their fees from the developer or seller.

“This puts the broker into a position by which they are being paid on both sides of the fence,” she said.

“Until now this has been a grey area and there was nothing stopping this practice.” 

Ms Porter said this has been a common practice in the industry.

"Some well-known mortgage broking firms openly admit to receiving $5,000–$10,000 per referral in their pocket.”

She also said this process has been going on for decades.

"Property investment firms commonly pass some of their commission on to the mortgage broker, accountant or financial planner as a reward to them for passing on the referral. This means that many brokers or financial service providers are making significant amounts of money just to refer on to a property firm, often totalling hundreds of thousands of dollars a year," Anna Porter said.

Ms Porter said the Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 will be in force from July this year, and will prohibit this practice unless the broker or referring partner also holds a real estate industry license.

"Under the new laws, if the broker takes a referral fee from the property firm, they will have to be a licensed real estate agent and also hold a corporation’s license,” she said. 

“Subsequently, every transaction that they receive a referral fee from, they will be putting their license up against the transaction and taking full liability for the conduct, practices and outcome of that transaction, even if they have little to do with the transaction; they are a party to it financially and therefore take as much risk as everyone else in the transaction.”

Mr Porter said where a referrer holds a real estate license, and receives a part of the sale commission, they may find themselves in breach of the ethical requirements under the act.

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‘Common’ referrer practice of being paid on both sides of the fence coming to an end

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