The Real Estate Market in Southern Tasmania

1995 to 2019

Real Estate

Key factors that drive the

Southern Tasmania Market

by Nigel Heaven

Director of Property Marketing & Management Pty Ltd Involved in over 2000 property sales in the past 23 years

Real Estate

What affects supply, demand and prices?

DemographicsMigration to Southern Tasmania is accelerating. Put simply, more people means more demand for property.

National BuyersIn comparison to mainland states, Southern Tasmanian property prices are low with exceptionally high rental returns which attracts mainland investors.

Economic GrowthAs the economy grows and wages increase, more people can afford to buy property. High employment promotes property sales growth.

Government ElectionsBoth Federal and State Government elections usually result in a reduced number of real estate transactions.

Government PoliciesThe First Home Owners Government Grants have effected the Tasmanian market for new home and land purchases. 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 FactorsAirBnB – Esitmated to be over 5,000 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

• The Chinese leader’s visit to Tasmania and the resulting increase in Chinese investment in Tasmania.

Confidence – Atthistimetheoverallconfidencein the Tasmanian market is high.

Land – The availability and number of allotments. Land tends to be sold in stages due to the huge taxation implications that developers have to payiftheysellallinonefinancialyear.

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.

SUPPLY, DEMAND AND PRICES

The Current MarketThe Southern Tasmanian Real Estate market as at April 2019. Based on the number of sales per month, we are now in a Normal or Balanced Market.

The Heat Is Going Out Of The MarketWhile property prices are falling across Australia, prices in Southern Tasmania are steady.“Are we still flying under the radar?”Prices at this stage are holding, but declining property values may be just around the corner. In Hobart’s outer areas, the total number of sales combined for January, February, March and April 2018 was 2,013.This year a combined total of only 1,656. A huge drop of 357 sales. Portrayed in the graph below shows a substantial drop in the number of property sales this year which is continuing.

Property Inspection Feed BackFeed back from open homes is that fewer buyers were in attendance and general enquiries on listings was in decline – a stark difference to 12 months ago.

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Total Residential Property Sales in Southern TasmaniaMonth by Month Commencing January 2017

2017 2018 2019

The above graph was compiled from figures supplied by the Real Estate Institute of Tasmania.  The above graph was compiled from figures supplied by the Real Estate Institute of Tasmania.  The above graph was compiled from figures supplied by the Real Estate Institute of Tasmania.  The above graph was compiled from figures supplied by the Real Estate Institute of Tasmania.  

Average Market Sales over last 23 years

2019

Total Residential Property Sales in Southern Tasmania Month by Month Commencing January 2017

Is There An Approaching Downturn in The Market?A lack of stock for sale is helping to keep prices steady. Southern Tasmanian property prices are of a level where locals are thinking …“do I really want to pay that much for a property?”

While our mainland property investors are seeing a substantial drop in both Sydney and Melbourne prices, are returning to buy in those markets at reduced prices of $100,000 or more.

On the positive side, higher rental yields in Southern Tasmania, combined with exceptionally low rental vacancies, are an attraction to mainland buyers.

Unfortunately, the smaller Southern Tasmanian real estate market is more exposed to things beyond it’s control. If the Government policy on negative gearing or stamp duty were to change, who knows what effect that may have on our market?

Experience and intuition tells me the Winter market may be a tough one for sellers - but great for buyers.

The Current Market

The Real Estate Market Southern Tasmania based on property sales 1995 - 2019

Sellers MarketAround 500 - 600 sales per month

Top of Cycle (Boom)600 plus sales per month

(last occurred years 2002-04)Highest monthly record 874

sales in August 2003

Normal, Balanced or Recovery MarketAround 350 - 500 sales per month

Buyers MarketLess than 350 sales

per month

• Price growth positive

• Sales are extremely high

• Unlimited investors

• Rental yields stable

• Prices fall

• Sales numbers down

• Few investors

• Rental yields fall

• Prices rising

• Sales increase

• Tons of investors

• Increased rental yields

• Prices are steady

• Sales numbers improve

• Investor numbers increase

• Rental yields improve

Types of markets that I have experienced in Southern Tasmania based on the monthly number of sales

When is the best time to sell my property?

In a boom market 600 plus sales per month

(last boom 2002/04)

As portrayed in the above chart and graph opposite - Number of sales in Southern Tasmania Financial year by year

What is the best month to sell my property?

Without doubt, historically February and March

As portrayed in the graph opposite - Average Residential Sales in Southern Tasmania per month

Our MarketHistory from

1995

424

455480

433

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421 426

444 442

384

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1995

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Average Residential Real Estate Sales inSouthern Tasmania Per Month Since 1995

Average Market Salesover last 23 years

433 Average sales per month

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Average Residential Sales in Southern Tasmania Per Month Since 1995G:\SALLY\Reports\Graphs\propertty sales in Sth tas financial year x year

4216

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4389 4839

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Number of Sales in Southern Tasmania Financial Year by Year

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Number of Sales in Southern Tasmania Financial Year by Year

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.

Real Estate

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Total Residential Real Estate Sales in Southern Tasmania Month by Month Commencing January 1995

1a Bligh Street, Rosny Park (opposite Eastlands)

03 6244 5588 sales@pmmrealestate.com.au

www.pmmrealestate.com.au

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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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Total Residential Real Estate Sales in Southern TasmaniaMonth By Month Commencing January 1995 

1995 1996 1997 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2010

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2013 2014 2015

2016

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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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Total Residential Real Estate Sales in Southern TasmaniaMonth By Month Commencing January 1995 

1995 1996 1997 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2010

20112012

2013 2014 2015

20161995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018