Revival begins in the forgotten state

Posted on 27/02/2014  
Revival begins in the forgotten state

Things are looking up for Tasmania. There are signs of revival in its property markets – nothing sensational just yet, but the first glimmers of an upturn are beginning to appear.

If this article had been written three months ago, the prognosis would have been different. But in the latter part of 2013 a number of locations recorded a pick-up in sales activity.

In my recent research for the Price Predictor Index, I found there are only two locations in the entire state rated as “Rising Fast” markets. But gradually the number of “Rising Steadily” locations is increasing and there is an even greater number of “Consistency” markets – places which have the potential to transition to growth markets.

Three precincts are leading the way in Tasmania: central Hobart, northern Hobart and Launceston.

Hobart’s most prestigious (and expensive) markets, Battery Point and Sandy Bay, feature on our “Rising Steadily” list, as well as two other Hobart City suburbs, Mount Nelson and Lenah Valley.

The Glenorchy City area in Hobart’s north also has several growth suburbs, including Claremont, Chigwell and Glenorchy. All have median house prices in the low $200,000s.

By way of example of the growth signs emerging, the suburb of Glenorchy has recorded quarterly sales volumes of 39, 50, 50 and 60 in four consecutive quarters, a pattern of growth that is likely to lead to price growth in 2014.

As yet, there’s no sign of prices turning upwards, but that time lag between market uplift (as measured by the number of sales) and price growth is an established pattern in real estate.

Suburbs in and around Launceston feature prominently on the “Rising Steadily” list. Tasmania’s second city also features on the list of “Consistency” markets, reinforcing Launceston’s reputation for solidity.

Quarterly sales in the Launceston suburb of Invermay, for example, have increased from 14 to 20 to 30 in consecutive quarters but, once again, this has not yet translated into a notable uplift in prices. That is yet to come.

Devonport in the north, which connects Tasmania to Melbourne by ferry, is a highly consistent market. Sales in five consecutive quarters have been 79, 75, 64, 71 and 69.

This is true also of Kingston on the fringe of Hobart: sales over the past six quarters have been 54, 56, 48, 58, 54 and 50.

The places to avoid in Tasmania are headed by Queenstown, which is about as depressed a town as you will find anywhere in Australia. Set in a moonscape created by mining pollution and tree removal, Queenstown has a median house price of just $80,000, after price decline over the past five years. That market, in terms of house sales, has almost come to a complete standstill.

Another market to avoid is Brighton, just outside Hobart, where sales activity has dropped markedly in recent times.

But generally, the overall scenario for Tasmania in 2014 looks more optimistic than last year. No doubt the state election scheduled for 15 March will give ditherers an excuse to procrastinate, but smarter investors could invest a little time in checking out opportunities in Australia’s forgotten state.

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