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'Buyer Beware' in Tasmania’s Booming Housing Market

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Tasmania's low supply of dwellings, low median price, tight vacancy rate and upswing in employment conditions has ensured solid capital growth for the island state in recent years.

While Tasmania’s market has certainly been experiencing better days, RiskWise Property Research chief executive Doron Peleg says there are still associated risks when entering the property market and prospective buyers’ should do their research.

“Things have certainly been good, however, the market has started to show some decelerated price growth and there has been a marked reduction in enquiries,” Peleg said.

“Tasmania is an extremely small market which means it is much more exposed to external events that reduce intra-state investors demand for housing.”

A recent BIS Oxford Economics report expects Hobart’s recent price growth momentum to continue into 2019 due to the capital’s deficiency of available dwellings.

Hobart's median house price soared 7.2 per cent over the March quarter reflecting a significant 20 per cent rise on the previous year, according to Real Estate Institute of Australia figures released last month.

Peleg says Tasmania’s property market has seen strong capital growth last year, particularly for houses with good access to the CBD.

RiskWise CEO Doron Peleg says houses are typically held by owner-occupiers for an average of 10.1 years. The unit market, he says, is driven by investors, a large component of which are interstate-based.
RiskWise CEO Doron Peleg says houses are typically held by owner-occupiers for an average of 10.1 years. The unit market, he says, is driven by investors, a large component of which are interstate-based. Supplied

However, Peleg noted Tasmania’s economic growth was the second lowest in Australia and has the lowest median weekly wage and wage growth.

“The annual median income is only $57,200 per household, the lowest in Australia.

“This means, that a large proportion of the jobs are low salary ones. The annual salary growth is also the lowest in the country.”

With only 210,000 dwellings statewide, housing affordability remains an issue and Hobart has overtaken Sydney as Australia's least affordable capital for renters.

Peleg said government has committed to spend $125 million over five years on providing more affordable housing, along with providing stamp duty cuts for first-home buyers and a $20,000 first-home builders grant.

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Article originally posted at: https://theurbandeveloper.com/articles/buyer-beware-in-tasmanias-booming-housing-market-