Property Report. Tasmania

Transcription

1 Property Report Tasmania

2 Upgraders & investors reap rewards Welcome to this edition of the Westpac/ Property Report, a first hand look at how Australia s residential property market is performing on a state by state basis. This report is based on the observations of s fully qualified registered valuers in over 58 offices across Australia. The Australian residential property market is currently experiencing mixed fortunes. While first home buyers have all but exited the market, investors and upgraders are moving in, reaping the rewards of comparatively low interest rates and high tenant demand a by-product of deteriorating affordability. Population growth continues to underpin many of our state capitals. Melbourne in particular is becoming home to as many as 2,000 new residents each week, and along with support for owner occupied homes, this influx is fuelling demand in the rental market. As affordability continues to deteriorate amid rising interest rates and ongoing price appreciation, new investor hot spots are emerging. In Sydney, the western and southern suburbs have experienced rental growth of up to 9% in 2009, delivering yields in some areas of 8% a figure once regarded as unthinkable for the harbour city. Not surprisingly, these areas have become immensely popular with investors, and as with other capitals, these tenant hubs are likely to experience strong capital growth. The prestige end of the residential market continues to build confidence following stable job numbers and stronger retail sales. Higher end properties have benefited from the strength of the finance sector and the rebound of the resources sector. The sale of Angela Bennett s Mosman Park home in Perth established a new record, not just for West Australia, but for the Australian market as a whole. The mining heiress achieved a sale price of $57 million, far eclipsing previous records. In regional markets, the drought continues to take its toll on property values, despite flooding in many areas. Cities with broad based economies within commutable distances to major employment centres are enjoying rising values. However in areas heavily reliant on water or rural industries, values have plunged. The mining sector is increasingly becoming a driver of regional property values. In Queensland s Surat Basin, the proposed Wandoan Coal Project is expected to have a significant impact on the surrounding economies and property values, of townships like Chinchilla and Roma. However it s also clear that when mines or other key industries pull out of an area, the effect can be devastating. Tasmania in particular is facing the closure of a number of local industries, with property values likely to stagnate as a result. As we move through 2010, the property market faces the conflicting forces of growing economic prosperity and population growth, versus the effect of higher interest rates and reduced affordability. It s a combination that heavily favours investors and upgraders, with first home buyers likely to remain challenged over the year ahead. Brendon Hulcombe Chief Executive Officer, 1

3 Tasmania The Tasmanian property market is currently characterised by a serious shortage of homes in key residential regions. Limited land in some markets, particularly, is counterbalanced by reasonable land supply through parts of the state s north west and most sectors of the east coast. Many properties in the higher price brackets have languished on the market for in excess of six months. Overall, residential property in Tasmania is experiencing a slow recovery. Auction clearance rates in have averaged around 40%, and though there has been perceived bargain hunting within the top end of the market, many vendors have been forced to sell higher-end stock for whatever price the market will offer. With the election settled, the residential property market is expected to take a steady as it goes approach with no great surprises on either the up or down side. Prestige properties languish The prestige market in Tasmania has borne the brunt of an economic downturn. There have been a few recent examples in the prestige suburbs of and where homes purchased for around $1 million in 2007 have sold for well below their original purchase price. Many properties in the higher price brackets have languished on the market for in excess of six months. Only limited residential sales are being achieved in the $1,000,000-plus range, though valuations above this are more common within the suburbs of Sandy Bay, Battery Point and the CBD. The east coast growth centres of Kingborough and the Port Sorell/Shearwater region are also enjoying growth. The Shearwater region in particular is benefitting from the planned construction of a new school, a project that both main political parties committed to in the election campaign. Elsewhere in the state, it is not uncommon to still see dwellings valued below $70,000 in some west coast townships. The Fingal Valley has some of the cheaper properties in the state. A somewhat dilapidated home purchased in the area for $35,000 in 2004 was recently valued at around $80,000. 2

4 Sector based uncertainties impact values Outside of the main metropolitan areas, a number of Tasmanian regions are bearing the impact of industrial change. In the state s north west the closure of the McCain s vegetable processing plant at Smithton along with a number of pulp mills, is expected to have a negative impact on property values. Ongoing uncertainty regarding the Gunns pulp mill development continues to impact the stagnating George Town market. At the lower end of the market yields of 10% are achievable. On the west coast, the mining town of Rosebery has recorded the lowest level of growth of all Tasmanian townships in the past quarter. Values have plunged in recent months following reports of possible lead contamination to the town s water supply as a result of local mining activity. Law firm Slater and Gordon announced a class action on behalf of 28 current and former residents who claim contamination from the area s MMG mine. The issue has seen Rosebery s median value drop from $108,000 to $91,000 (yearly quarter on quarter) a fall of 16%. Yields hold steady Yields have remained fairly constant throughout the economic downturn, and vacancy rates have remained at around 2%. In the prestige market, gross yields of less than 4% are typical. Mid-priced properties are commanding yields between 5% and 6%, while at the lower end of the market, where locations are less attractive, yields of 10% are achievable. 3

5 Stage of the property cycle Tasmania Houses, March 2010 Declining Market Peak of Market Rising of Market Bottom of Market Start of recovery Rental vacancy trend Tasmania Houses, March 2010 Increasing Sharply Increasing Steady Tightening Tightening Sharply 58 Offices, 600 People, Every State & Territory Looking for peace of mind with your property decisions? Ask to help. From pre-purchase property valuations to tax depreciation schedules for investors, from commercial, to residential, to rural property, we have someone in your corner working for you. Ph htw.com.au Rental vacancy trend Tasmania Units, March 2010 Increasing Sharply Increasing Steady Tightening Tightening Sharply Source: The information in this report has been prepared by. The information is current as at the publication date only. Westpac Banking Corporation accepts no responsibility for its accuracy or completeness. The information contained in this report is provided in good faith and has been derived from sources believed to be reliable and accurate. However, the report is not intended to be comprehensive or render advice and neither Herron Todd White nor any persons involved in the preparation of this report, accepts any form of liability for its contents. This report is Copyright, and cannot be reproduced without written permission of. Copyright