03 May Why buyers love Tassie
We visit beautiful pristine Tasmania with its unofficial Ambassador John Lindeman. John passionately believes in the apple isle and it appears from the figures he shares with us that he is not the only one.
Kevin: I’m pretty excited about talking to John Lindeman because John is going to give us a bit of an overview on the Tasmanian market. The reason I’m excited – apart from John’s a lovely guy and I like talking to him – is the Tasmanian market looks like it might be turning. There might be some good signs on the horizon.
John: Hi there, Kevin, and hello, everyone.
Kevin: Nice to be talking again, John. Now, I know you spend a bit of time in Tasmania and you know that market quite well. Tell me what’s happening.
John: Well, you wouldn’t think much was because Tassie contains only 2% of our entire population and only contributes 1% of the gross domestic product, so it’s not really significant in terms of that. But what I did realize when I looked at the history of the housing market is quite an interesting phenomenon that has occurred in the past, and that is that the last time we had a big boom in Sydney and Melbourne in 2000 to 2003, when it stopped, suddenly in one year, Hobart’s house prices shot up by 50% in just the one year. That was in 2004-2005. This is using official ABS data.
When I looked at the cause of that, it was mainly investors from the mainland looking at opportunities to invest in Tasmania. At that time, Hobart’s house prices were about a third of that of Sydney’s and that’s exactly what it is right now. I think that all the conditions are right for if the growth slows down in Sydney and Melbourne, it might kick off in Hobart especially.
Kevin: Yes, it’s well poised. It’s nice and close to the mainland, nice and close to both Sydney and Melbourne, as well. Here are some people who are almost putting them in parallel with Brisbane – Hobart and Brisbane – as the two big improvers this year, John.
John: That’s right. In particular, Hobart. I wouldn’t say that so much for the rest of the state because they have a lot of economic issues there, but certainly Hobart. It’s a very cosmopolitan city. It’s only a fraction the size of the mainland cities, but it has everything and it’s a market that has a lot of potential.
Kevin: Okay. Let’s continue to talk about Hobart, then, because that seems to be the area that has the most promise. What are the good areas, and what are the areas maybe to avoid in Hobart?
John: Hobart has a large percentage of ex-housing commission stock, and these tend to provide very high rental yields. It’s very low price. You can buy in the outer suburbs, Bridgewater and Rokeby and those sorts of places. You can get properties under $200,000 that are producing great returns of around $250 a week.
John: So if you’re after cash flow, these are really good areas, but then if you go to the higher priced areas, that’s where I think the growth is likely to kick in. The more well-established inner urban areas, there’s a lot of growth potential there.
Kevin: Give me an idea on price range when you’re talking about the upper price range in Hobart. What is it, John?
John: Well it’s a lot less than what it is in the mainland cities.
John: The median in Hobart’s about $370,000. When you compare that to $1 million in Sydney, you can see the difference. If you buy a property for $1 million in Hobart, you’re buying a property that’s on the waterfront, excellent views, close to the CBD, and Sandy Point, those sorts of places, which is about as high as you can get in the Hobart market.
Kevin: I was in Hobart I November last year, actually. It’s a beautiful spot to drive around. And it’s not hard to get around, either, John, is it? I found that very, very easy.
John: Yes. Well, the population of Hobart is only 200,000 people, which is double the size of Darwin, so it’s not a big city, but because it’s a state capital, it has all the infrastructure – the government administration, all the shopping, everything is there, so it has everything you need.
Kevin: Just talking about infrastructure, are there any major projects on the horizon that are probably going to auger well for the future of Hobart?
John: Not really. I wouldn’t say there’s a lot of infrastructure development going on in Tassie at all. It doesn’t need a lot. When they build roads and bridges, they don’t need to do a lot of work, and there’s really no need for anything – no major projects that I’m aware of going on or planned.
Kevin: John, great talking to you. John Lindeman is from Property Power Partners giving us that overview on Tasmania.
John, thank you for your time.
John: That’s a pleasure. As I said, it’s a friendly place, a lot of it’s clean, green, and pristine, and I think there’s a good chance that we could find a big leap in prices in the way that we saw ten years ago.
Kevin: Good people visit there, too, John, don’t they? Like you.
John: I wish there were more of them coming, but of course, tourism is the future of Tassie. It has a lot of potential for investors right now.
Kevin: Good, John. Thank you very much for your time.
John: That’s a pleasure. Thanks, Kevin. Bye, everyone.