The Urban Developer
AdvertiseEventsWebinars
Urbanity
Awards
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Untitled design (8)
FULL PROGRAM RELEASED FOR URBANITY-25 CONNECTING PROPERTY LEADERS ACROSS THE ASIA PACIFIC
FULL PROGRAM RELEASED FOR URBANITY-25 WHERE THE PROPERTY INDUSTRY CONNECTS
VIEW FULL AGENDADETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
print
Print
OtherStaff WriterMon 18 Sep 17

The State that Wasn’t Ready for a Building Boom

tasmania-hero

CoreLogic construction figures over the 2016/17 financial year show that projects with a value between $1 million and $5 million take an average of 8 months to construct in Australia.

To provide some context around what a $1-5 million development looks like, think projects on the scale of a service station, a 2-4 storey unit block or a childcare centre.

However, CoreLogic’s Cordell project data in the year to June reveals that Tasmania has longer construction periods than other states and territories, particularly in the $1-$5 million project space. Average construction periods over the last financial year averaged 11 months in this value range, compared to just eight months across the rest of the country.

Across civil engineering, residential, commercial and industrial builds, construction periods were, on average, three months longer in Tasmania than the rest of Australia.

In the community segment, which includes schools and hospitals, construction periods were on average five months longer.

The longer construction periods suggest a constraint on the growth of the construction industry in Tasmania, despite increasing demand for dwellings, infrastructure and commercial buildings.

Tasmania has seen an uplift in the number and value of development applications over the last two years, with the number of new project applications peaking at 270 in the December 2016 quarter. At June 2017, the number of new development applications captured going into the pipeline was 224, at a combined construction value of $352 million.

There are a few factors that warrant the uplift. The state benefitted from a 13% increase in holiday visitation in the year to March 2017, and holiday expenditure was up 15% in the same period. Interstate migration climbed in Tasmania from the year 2013, and overseas migration to the state has been largely positive for the last 5 years.

Hobart in particular experienced a strong uplift in dwelling values, which increased 6.8% in the year to June. While this may seem low compared with the double-digit growth in Sydney and Melbourne property, 6.8% per annum is still well above interest rates, bond yields and the ASX.  

Hobart’s median dwelling value is highly affordable to interstate investors at $360,000 – approximately a third of the value of the median Sydney dwellings. This low price point may be particularly appealing to first home buyers who have been crowded out of New South Wales, where first home buyers make up a historically low eight per cent of the owner occupier mortgage market.

Bullish attitudes towards this slow but steady growth market are also reflected in development applications.

There may be a few reasons that construction periods in Tasmania are longer. Being separated from the mainland and major ports, freight times may be longer for the delivery of building materials.

As there is little large scale construction on the island state, there is also a shortage of local building suppliers and builders themselves. A fundamental constraint to growth in the Tasmanian economy often highlighted are the high levels of underemployment. However, due to growth constraints and many public schools not offering years 11 and 12 until recent reforms, it is difficult to provide up-skilling opportunities for the underemployed.

In 2015, Tasmanian students had just 60% of students attain year 12 completion, compared with a national average of 75%. Construction has highlighted this skills shortage in Tasmania, at a time when the state economy could benefit from completions in housing, retail and commercial builds.


About the author

 

Eliza Owen holds a first class honours degree in economics from the University of Sydney and specialises in Commercial property, construction and the residential property market. Eliza is a property market researcher at Core Logic and her insights have featured across an array of media including her appearance at the 2015 Sydney TEDxYouth festival.

ResidentialIndustrialAustraliaConstructionConstructionSector
AUTHOR
Staff Writer
"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
More articles by this author
ADVERTISEMENT
TOP STORIES
Exclusive

‘Construction Not a Scale Game’: Hutchinson

Phil Bartsch
9 Min
Nation's build-to-rent project Charlie Parker in Sydney's Parramatta where more projects are being located and built outside the CBD.
Exclusive

Foreign Capital Still Dominates BtR but Things are Changing

Marisa Wikramanayake
7 Min
Exclusive

Fortis Reveals Plans for Coveted Bowen Terrace Site

Taryn Paris
4 Min
Exclusive

Accor Deputy Delivers Verdict on Brisbane Games Hotel Shortfall

Phil Bartsch
6 Min
Qld Budget 2025-26 Brisbane City
Exclusive

Billions Promised, Now Deliver: Industry’s Qld Budget Verdict

Vanessa Croll
6 Min
View All >
A rendering of the three-storey apartment project Arca by Red & Co at Stafford near Brisbane.
Residential

‘Confident’ Red & Co Starts Work on Stafford Apartments

Marisa Wikramanayake
Industrial

Cadence Nabs Logistics Portfolio for $170.5m

Taryn Paris
A rendering of the proposed retail, office and accommodation building along Gawler's main street. Source: John Byleveld Architects
Development

SA Developer Taps into Gawler Accommodation Demand

Leon Della Bosca
As interest in the SA capital’s north continues to grow, plans have been revealed to help reinvigorate a historic main s…
LATEST
A rendering of the three-storey apartment project Arca by Red & Co at Stafford near Brisbane.
Residential

‘Confident’ Red & Co Starts Work on Stafford Apartments

Marisa Wikramanayake
2 Min
Industrial

Cadence Nabs Logistics Portfolio for $170.5m

Taryn Paris
3 Min
A rendering of the proposed retail, office and accommodation building along Gawler's main street. Source: John Byleveld Architects
Development

SA Developer Taps into Gawler Accommodation Demand

Leon Della Bosca
3 Min
Exclusive

‘Construction Not a Scale Game’: Hutchinson

Phil Bartsch
9 Min
View All >
ADVERTISEMENT
Article originally posted at: https://theurbandeveloper.com/articles/state-wasnt-ready-building-boom