The Real Estate Market in Southern Tasmania

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1 The Real Estate Market in Southern Tasmania 1995 to 2018 Real Estate

2 by Nigel Heaven Director of Property Marketing & Management Pty Ltd Involved in over 0 property sales in the past 23 years Real Estate Key factors that drive the Southern Tasmania Market SUPPLY DEMAND AND PRICES What affects supply, demand and prices? Demographics Migration to Southern Tasmania is accelerating. Put simply more people means more demand for property. International Market The Global Financial Crisis had a big effect on the Southern Tasmania Market. National Market As prices soar in other parts of Australia, buyers turn their attention to Southern Tasmania. In comparison to mainland states, Southern Tasmania property prices are low with exceptionally high rental returns. Economic Growth As the economy grows and wages increase, more people can afford to buy property. High employment promotes property sales growth. Government Interference The First Home Buyers Government Grants have affected the Tasmanian market for new home and land purchases. The recently announced Stamp Duty relief may have some effect on the market. Unfortunately Government interference usually results in a rise in property prices. Interest rates and Financial Institutions Lower interest rates have a big impact on property affordability. Financial institution lending practices effect the market. Other Local Factors Airbnb Believed to be over 2,000 in Tasmania which reduces property stock for both rent and sale. University Expansion Overseas and mainland students need extra accommodation both to buy and rent. It is believed the number of students has more than doubled. Tourism Boom The so-called Mona Tourism effect on the property market, another factor, the Chinese leader s visit to Tasmania and the resulting increase in Chinese investment in Tasmania. Confidence At this time the overall confidence in the market is high. Land The availability and number of allotments. Land tends to be sold in stages due to the huge taxation implications, developers have to pay if they sell all in one financial year. Local Climate - The temperate climate of Southern Tasmania is attractive as global warming takes hold. As can be established from the above factors, there are numerous conditions which may effect our local real estate market.

3 The Real Estate Market Southern Tasmania based on property sales Types of markets that I have experienced in Southern Tasmania based on the monthly number of sales Sellers Market Around sales per month Prices rising Sales increase Tons of investors Increased rental yields Price growth positive Sales are extremely high Unlimited investors Rental yields stable Top of Cycle (Boom) 600 plus sales per month (last occurred years 2-04) Highest monthly record 874 sales in August 3 Prices are steady Sales numbers improve Prices fall Sales numbers down Few investors Rental yields fall Normal, Balanced or Recovery Market Around sales per month Investor numbers increase Rental yields improve Buyers Market Less than 350 sales per month When is the best time to sell my property? What is the best month to sell my property? In a boom market 600 plus sales per month (last boom 2/04) Without doubt, historically February and March As portrayed in the above chart and graph opposite - Number of sales in Southern Tasmania Financial year by year As portrayed in the graph opposite - Average Residential Sales in Southern Tasmania per month

4 About Our Market 9000 Number of Sales in Southern Tasmania Financial Year by Year Average Number of Property Sales /96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 Financial Year Average Residential Real Estate Sales in Southern Tasmania Per Month Since Average sales per month Average Number of Property Sales Average Market Sales per month over last 23 years The sales numbers used to complete the above graphs were provided by real estate agencies to the Real Estate Institute of Tasmania and include all land, units and house sales.

5 The Current Market 600 Total Residential Property Sales in Southern Tasmania Month by Month Commencing January Number of Property Sales Average Market Sales over last 23 years Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The Current Market The Southern Tasmanian Real Estate market as at 30 June I have never known a market like this one - rising property prices and a massive shortage of properties for sale. In some areas up to 60% less stock than normal. Based on the number of sales per month, we are now in a SELLERS MARKET, not a BOOM MARKET (as stated in the press). Prices have increased due to the shortage of stock. In the past year, property values have grown over 13%. Stock for sale is down on average around 40%. The Government s decision to only subsidise the First Home Buyers Grant for NEW home purchases (designed to stimulate the building industry) is one of the reasons for the stock shortage currently being experienced in the market. The so called Domino Effect, for example, a first home buyer buys a low priced property in Risdon Vale, then that seller upgrades to Geilston Bay and the Geilston Bay seller buys in South Hobart. This process is rarely seen in the current market. Very few contracts are subject to sale. Another reason is the lack of migration interstate, because there is plenty of employment in Tasmania. The building industry in particular is booming, leading to a flow on effect to hardware stores and building suppliers etc. Also the high number of renovations may have some effect on the market stock. The market would seem to be more driven by local retirees, and investors. Approximately another 20% are mainland investors and buyers with a sprinkling of overseas buyers. There is an extremely high demand for property and it is common to receive a dozen offers on a single property. Property prices in Southern Tasmania are now at a level where many locals are thinking do I really want to pay that much for property?

6 Total Residential Real Estate Sales in Southern Tasmania Month by Month Commencing January Number of Property Sales a Bligh Street, Rosny Park (opposite Eastlands) Real Estate