After crunching the numbers, Tassie well positioned post-COVID

COVID may have let the market catch its breath before taking off again, says PRD Hobart director Tony Collidge. Picture: RICHARD JUPE

COVID-19 has not stopped Tasmanians’ hunger for real estate.

The year 2020 is set to become another landmark year for the cumulative value of property sold across the state.

This will be the tenth successive year to set a record, which should exceed $4.1bn.

This year has been a very different year for real estate in Tasmania.

Lockdowns and lockouts have resulted in the local market transitioning to a domestic market, driven by locals who consumed 86.1 per cent of sales.

Mainland buyers dwindled to their lowest levels in 20 years (13.9 per cent of total residential transactions) but the hunger and interest transferred to “portal searching” where during the period March to July, Tasmanian real estate had more viewings by mainland Aussies than anywhere else in Australia.

As the boarders opened, so did a floodgate of inquiry with calls coming from all parts of the nation.

A continual shortage of properties for sale — and the inability of government and the building industry to supply the number of properties we need to meet demand — has resulted in prices and rents continuing to rise with no end in sight.

Victoria Dock

Sunrise over Victoria dock on Hobart waterfront. Picture: RICHARD JUPE

With the help of the Real Estate Institute of Tasmania, I have compared residential real estate sales results from January 1 to September 30 for the past three years.

The 2018 calendar year recorded the highest number of sales (11,394) over the past decade and also the highest level of mainland participation at 22.1 per cent of all sales.

Transaction numbers have dropped 9.6 per cent or 832 sales over the past three years while the total value of sales increased 0.8 per cent.

Median house prices in the major population centres have all increased with Hobart up 12.2 per cent, Launceston 13.8 per cent and the North-West centres 17.2 per cent. House, unit and land prices increased by 15.5 per cent, 13.3 per cent, and 17.8 per cent respectively.

Land sales have increased 20.8 per cent over the past year.

The number of million-dollar sales increased 26.04 per cent on previous years with 82.8 per cent being acquired by locals.

First Home Buyers are on target to record their highest number of transactions since 2009, up 9.1 per cent on 2018 totals.

However, investor numbers have dropped 36 per cent over the past two years, resulting in 714 fewer rental properties being available to rent.

As would be expected, mainland purchasers dropped by 43.2 per cent (799 sales) to the lowest level in five years.

Tony Collidge

PRD’s Tony Collidge. Picture: ROGER LOVELL

Rents rose in all areas with the exception of inner Hobart, where Airbnb properties increased supply as they re-entered the medium to long-term rental market.

This also had a softening effect on rents at the top end of the rental market and on vacancy rates in the city.

SQM Research figures show that the number of properties for sale have dropped significantly over the past three years from the lofty heights in 2013 when 4700 properties were available for sale in Hobart to 1737 today, and from 3131 to 1214 today in Launceston.

COVID-19 has created a fair degree of uncertainty.

Many prospective sellers have been concerned that prices will drop and that they may miss out.

There has been no clear evidence to date that prices have fallen.

Median prices may have moved down, which can be accounted for by an increasing number of homes at the lower price ranges selling.

A lack of properties for sale has contributed to the surge in people buying vacant land.

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They can’t find what they want so they have decided to buy land and build.

Of huge concern is Tasmania’s ability to construct residential accommodation at the levels that we currently need to meet supply.

If we have increasing numbers of people moving here from interstate, this will place even more pressure on rents and our housing prices.

Government must take some of the pressure off the private rental sector and aggressively add new public accommodation to its portfolio.

I have no hesitation in suggesting that if it wasn’t for COVID-19, Hobart and Launceston would be facing the worst rental and accommodation crisis in this state’s history.

The moat around Tassie has worked to protect us and quickly put some tempo back into our economic recovery.

From a real estate perspective, I haven’t seen the market as robust for some time.

COVID-19 may have given the market time to catch its breath before taking off again.

The shortage of supply of rentals and property for sale will continue to place upward pressure on rents and prices.

I cannot see an end to this situation in the immediate future.

Tasmania is very different to the bigger mainland cities and can’t be compared to them.

We are perfectly placed to take advantage of post COVID-19 opportunities.

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