While the regional Tasmanian market tries to shake off the industrial downturn, some positive signs are emerging for the island state.
However, Hobart’s three-year house value growth is still behind the capital city average of 10.8 per cent, the figures show.
According to SQM Research, in the 12 months to November, the asking price for units grew by 2.1 per cent. Over a three-year period, asking price growth in the city grew by a healthy 6.3 per cent.
SQM also reports positive asking price growth for houses in the city. Asking prices for houses grew by 2.6 per cent in the 12 months leading to November and 1.2 per cent over the past three years.
While Hobart continues to record modest growth, Herron Todd White says that Tasmania’s regional market has been negatively affected by the manufacturing and mining downturns.
The property group reports that the closures of such economic hubs have caused “resultant ripples in their corresponding local markets”.
“Closures or contraction of manufacturing near George Town, forestry in the Scottsdale region, Triabunna’s wood chip mill and mining in have seen higher stock levels of residential properties listed for sale and declines in capital values within these sub-markets,” Herron Todd White’s November property report reveals.
While regional Tasmania has experienced employment issues of late, proposed new irrigation schemes may revitalise certain areas. The five schemes have been championed as essential to the country’s agricultural productivity by major media outlets like the ABC, and are currently under consideration for federal funding, the report says.
Locations that should see the benefits of the scheme include Scottsdale, Swan Valley, North Esk, Circular Head and the Southern Highlands.
These schemes should create jobs and increase productivity within the agricultural sector, with flow-on benefits to the housing market.
Prospect Vale is a suburb of Launceston, with tree-lined streets and a lovely, relaxed country feel. Yet the suburb is only a five minute drive to the Launceston CBD. People in Prospect Vale tend to earn 12 per cent higher wages than the median for Tasmania and work largely in the education and wholesale industries.
The area offers mostly three- and four-bedroom houses. There are a number of older three-bedroom homes for sale in the suburb with an asking price of $215,000 to $230,000. These are located within metres of the newer estates where three-bedroom homes are advertised for $400,000 to $450,000.
In the past 12 months, 57 houses have sold at a median price of $335,000, with an average of 114 days on the market. By comparison, 31 units have sold at a median price of $235,000.
Rental yields for units have jumped dramatically in the past quarter. The asking rents are up around $260 week – on a $200,000 unit, that’s a six per cent yield. Vacancy rates are also low, around the two per cent mark.
The stats, particularly for units, indicate this area is favourable for investors – it offers low purchase prices, high yields and low vacancy rates. If you are looking for good yield in a lovely suburb where people obviously want to live, this may be the ticket.
However, if you are looking for growth as part of your strategy, this area may not be the fastest moving. A few weeks ago, Tim Lawless from RP Data mentioned to me that Tasmania, and Hobart in particular, was set for around five per cent growth overall in the next 12 to 18 months.
By contrast, some areas in Brisbane might achieve growth as high as 17 per cent. As a result, if you are looking for growth, my pick may be elsewhere.
Lots of new residential houses are being built at the moment in Prospect Vale. However I believe this may be mostly due to the government’s First Home Buyers Grant of $30,000 for new builds. This grant is due to finish at the end of this year.
Growth in the area may be a little inflated due to the extra building that has been occurring as a result of the grant. Often, you will often see a slight fall in prices after a grant like this expires. However, such a downturn will generally only be temporary. Prospect Vale is worth a second look if you are in it for the long haul and want good yields.
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