The Real Estate Market in Southern Tasmania

1995 to 2018

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.

International MarketThe Global Financial Crisis had a big effect on the Southern Tasmania Market.

National MarketAs prices soar in other parts of Australia, buyers turn their attention to Southern Tasmania. In comparison to mainland states, Southern Tasmania property prices are low with exceptionally high rental returns.

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

Government InterferenceThe First Home Buyers Government Grants have affected the Tasmanian market for new home and land purchases. The recently announced 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 InstitutionsLower interest rates have a big impact on property affordability. Financial institution lending practices effect the market.

Other Local FactorsAirbnb – Believed to be over 2,000 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, another factor, the Chinese leader’s visit to Tasmania and the resulting increase in Chinese investment in Tasmania.

Confidence – At this time the overall confidence in the market is high.

Land – The availability and number of allotments. Land tends to be sold in stages due to the huge taxation implications, developers have to pay if they sell all in one financial year.

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

What is the best month to sell my property?

Without doubt, historically February and March

The Real Estate Market Southern Tasmania based on property sales 1995 - 2018

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

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

About Our Market

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Average Residential Real Estate Sales inSouthern Tasmania Per Month Since 1995

Average Market Sales per month over last 23 years

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Average Residential Real Estate Sales in Southern Tasmania Per Month Since 1995

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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.

The Current MarketThe Southern Tasmanian Real Estate market as at 30 June 2018.

I have never known a market like this one - rising property prices and a massive shortage of properties for sale. In some areas up to 60% less stock than normal.

Based on the number of sales per month, we are now in a SELLERS MARKET, not a BOOM MARKET (as stated in the press). Prices have increased due to the shortage of stock. In the past year, property values have grown over 13%.

Stock for sale is down on average around 40%.

The Government’s decision to only subsidise the First Home Buyers Grant for NEW home purchases (designed to stimulate the building industry) is one of the reasons for the stock shortage currently being experienced in the market. The so called ‘Domino Effect’, for example, a first home buyer buys a low priced property in Risdon Vale, then that seller

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Total Residential Property Sales in Southern Tasmania

Month by Month Commencing January 2016

2016 2017 2018

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 Salesover last 23 years

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Total Residential Property Sales in Southern Tasmania Month by Month Commencing January 2016

upgrades to Geilston Bay and the Geilston Bay seller buys in South Hobart.

This process is rarely seen in the current market. Very few contracts are subject to sale.

Another reason is the lack of migration interstate, because there is plenty of employment in Tasmania. The building industry in particular is booming, leading to a flow on effect to hardware stores and building suppliers etc.

Also the high number of renovations may have some effect on the market stock.

The market would seem to be more driven by local retirees, and investors. Approximately another 20% are mainland investors and buyers with a sprinkling of overseas buyers.

There is an extremely high demand for property and it is common to receive a dozen offers on a single property.

Property prices in Southern Tasmania are now at a level where many locals are thinking “do I really want to pay that much for property?”

The Current Market

Real Estate

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

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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

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