TasmaniaProperty Report – January 2014

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Tasmania – Property ReportJanuary 2014

National Overview

This quarter we look around the nation to identify affordable properties with the potential to deliver healthy long term gains suitable for first home buyers and also investors. If there is one word that could sum up the key driver for growth, it would have to be ‘infrastructure’. New road / rail links are bringing affordable outer suburbs closer to city centres and employment hubs. New hospitals or tourism precincts are creating jobs. These are valuable factors that will underpin long term capital gains.

ALL ABOARD – NEW RAIL LINKS LET SUBURBS REACH FULL POTENTIALThe inner Sydney property market looks set to be transformed by a number of new light rail systems. Key areas to benefit include the inner west’s Dulwich Hill and Kingsford in the east.

The construction of South West Rail Link is likely to underpin growth in the first home buyer belt of Sydney’s south west, with suburbs like Elizabeth Hills, Gregory Hills and Oran Park well placed to reap the rewards.

For investors with a speculative leaning, suburbs with proximity to Brisbane’s proposed Underground Bus and Train (UBAT) link could offer long term capital growth. The connection is earmarked to run from Dutton Park in the south to Victoria Park in the north, though it’s worth stressing the project is only a proposal at this stage.

ROAD LINKS BRING OUTER SUBURBS CLOSER INThe duplication of Adelaide’s Southern Express Way – due for completion in mid-2014, will vastly improve commuter access to Adelaide’s south. Suburbs like Seaford, Seaford Rise and Port Noarlunga South all offer significant lifestyle benefits and the new road link should bring capital growth to the region.

NEW COMMUNITY INFRASTRUCTURE CREATES OPPORTUNITIESMelbourne’s Broadmeadows is a classic example of an uncut gem for investors. House prices start at the low $350,000s, yet the suburb is located just 16 kilometres north of the CBD. A major investment in community facilities is expected to enhance the area’s appeal.

For investors with a speculative leaning, suburbs with proximity to Brisbane’s proposed Underground Bus and Train (UBAT) link could offer long term capital growth.

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Tasmania – Property ReportJanuary 2014

For investors with a five year timeframe, the additional employment generated by the Queensland’s Sunshine Coast University Hospital (due for completion in 2016) should support property values from Caloundra to Maroochydore.

CONSIDER NEIGHBOURING AREASFaced with affordability challenges, it can pay to look at areas where neighbouring suburbs have experienced strong price growth. This is especially true in the Perth suburbs of Parkwood and Lynwood, which remain priced below $500,000 while adjacent suburbs are commanding price tags in excess of $650,000. When suburbs share the same infrastructure facilities, notably transport links, there’s a good chance that price growth will ripple outwards.

A FINANCIAL HELPING HANDIn a number of locations, first home buyers are being encouraged to consider new builds with the enticement of additional state government support. This is especially the case in Tasmania where the recently inflated First Home Builder is seeing buyer interest grow in suburbs along Hobart’s eastern shore in particular Old Beach, Howrah, Tranmere and Oakdowns.

Brendon HulcombeCEO - HERRON TODD WHITE

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Tasmania – Property ReportJanuary 2014

Tasmania

Tasmania’s property market remains stable though higher sales volumes were achieved towards the end of 2013. Nonetheless capital growth rates remain elusive. With this in mind, it is important for first home buyers and investors to focus on centrally located suburbs offering a good range of facilities, which are popular with renters and buyers alike.HobartOPPORTUNITIES FOR FIRST HOME BUYERSTasmanian first home buyers were presented with a generous helping hand at the end of 2013 with the announcement of the increased First Home Builder Boost (FHBB).

First introduced in January 2013, the FHBB was originally worth $8,000 for first home owners purchasing a newly built home or who are building a new home. However the Boost failed to generate significant levels of building activity and employment within the state’s construction industry.

As a result, the FHBB has now been increased to $23,000 for contracts entered into between 7 November 2013 and 31 December 2014. Coupled with the $7,000 First Home Owner Grant, this means first home buyers building or buying a brand new home can access entitlements worth $30,000.

For first home buyers keen to take advantage of the more generous FHBB, suburbs along Hobart’s eastern shore are proving popular. In particular, higher volumes of land sales relative to other suburbs have been achieved in Old Beach, Howrah, Tranmere and Oakdowns. Median lot prices in these suburbs range from $100,000 to $190,000.

Old Beach, Howrah and Tranmere are waterside suburbs – Howrah being located closest to Hobart’s city centre. Tranmere is a fast growing riverside suburb located approximately 15 kilometres from the CBD. Over 90% of residential property in Tranmere is owner-occupied and the suburb is popular among families, which bodes well for long term growth prospects.

Suburbs on the outskirts of Hobart offer greater affordability for established home buyers though care must be taken. Homes are available in the likes of Gagebrook or Bridgewater for as little as $100,000. However along with Herdsman Cove and Risdon Vale, these suburbs

Tasmanian first home buyers were presented with a generous helping hand at the end of 2013 with the announcement of the increased First Home Builder Boost (FHBB).

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Tasmania – Property ReportJanuary 2014

contain significant amounts of public housing and in some cases commercial industry. Despite their affordability, these locations offer limited employment prospects and property values have been hard hit by the downturn. Given Tasmania’s current, slow economic climate there is little prospect of an upturn in the immediate future.

OPPORTUNITIES FOR INVESTORSThe Hobart suburb of Kingston is a fast growing area approximately 15 kilometres south of the CBD. It is also the location of a large Vodafone Call Centre that offers valuable local employment opportunities. While Kingston has generally higher prices, it may offer investors stable rental returns and capital growth.

LauncestonFirst home buyers/builders are purchasing affordable blocks of land in the Launceston suburbs of Prospect Vale, Newnham and the satellite villages of Longford and Perth. Median prices for vacant land in these suburbs range from $84,000 to $100,000.

The townships of Legana, Riverside and Prospect have also experienced higher volumes of vacant land sales with median prices ranging from $115,000 to $159,000.

These suburbs all offer a good range of services and facilities, and are popular with renters and owner occupiers. Longford and Perth tend to be the more affordable and are sought after by commuters.

To the north, Ravenswood, Rocherlea and George Town offer homes available for less than $100,000. However these suburbs are generally lower income areas that attract limited investor interest.

Along with Central Launceston, suburbs such as Newstead, South Launceston, West Launceston, Invermay and Kings Meadows have recently experienced increased volumes of sales. Central, older style units and modern residential units in Prospect and West Launceston are available from around $250,000. Older style units in South Launceston, Prospect, Invermay and Riverside can be purchased from $150,000. Older style houses in Kings Meadows, Invermay and Newnham are listed from just under $200,000.

North West TasmaniaThe most popular areas of the north west offering affordable vacant land for first home buyers include Park Grove, Shorewell Park, Stony Rise and Shearwater. Median land prices in these areas range from $77,000 to $100,000.

For investors considering the north west region, older 2- and 3-bedroom homes can be purchased from around $200,000 in Devonport.

The recent opening of the Nelson Bay River iron ore mine in the Tarkine is set to create 120 additional jobs. With this in mind, properties in Burnie, Wynyard, Table Cape, Rocky Cape or Sisters Beach – all within a 45 minute commute to the mine, may offer rental demand plus the potential for some capital growth.

Along with Central Launceston, suburbs such as Newstead, South Launceston, West Launceston, Invermay and Kings Meadows have recently experienced increased volumes of sales.

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