First National Real Estate State Chair, Deanne Lamprey, anticipates Tasmania’s house, land and unit prices will stabilise in the coming six months, mainly as a result of the recent announcement of up to 1000 job losses in the region, with the closing of McCains’ Wesley Vale and Burnie mills next year.

“The $20 million joint government assistant package should help with these losses on the coast,” Ms Lamprey said.

Ms Lamprey said a large number of units were being constructed with prices starting from the high $200K range. These are primarily being purchased by retirees, thereby stabilising the increasingly competitive apartment property prices in Tasmania.

“The shortage of skilled labour and builders in Tasmania means land prices will also stabilise because not as many new homes are being built as are needed.”

The slow down in the Tasmanian property market, according to Ms Lamprey, follows increases in house prices of up to 5 per cent in the last six months of 2009, driven mainly by the first home buyer market under $200K.

“At the end of June, 160 properties were listed in Burnie and 28 properties listed in Somerset, after 261 recorded sales in Burnie, with a median of $202,500 and 44 in Somerset with a median of $219,800 for the first six months of 2009,” Ms Lamprey said.

“As at the 14 December, 231 properties listed in Burnie and 48 in Somerset, with 22 recorded sales in Somerset with a median of $215,000 and 112 in Burnie with a median of $210,000.”

Unit prices in Tasmania stabilised in the second half of 2009, and land prices fell.

“Vacancy rates rose by up to 5 per cent, partly as a result of renters now becoming first home owners as well as job losses in the area with more predicted for the first six months of 2010,” Ms Lamprey said.

Rents in the region stabilised as the higher vacancy rates dictate rents, although Ms Lamprey feels these may fall slightly over the next six months.

“Our office is starting to see an increase in applications for properties, so I think available rentals will be snapped up quite quickly.

“Rents will also stabilise as a large choice of properties remains available for potential tenants to choose from.”
 
Currently, Ms Lamprey attributes around 10-20 per cent of Tasmania’s sales activity to investors and expects this to increase by an additional 15-20 per cent in the first half of 2010.

“The reduction in the First Home Owners Grant Boost at the end of December will drive this change in investor activity,” Ms Lamprey said.

“We have received many comments from investors that they will consider purchasing again once the Boost ends as they do not want to compete with first home buyers who they feel have pushed prices up in the market.  As always, investors are looking for bargains.”

Ms Lamprey believes investors will inevitably replace first home buyers in the market.

“While we are seeing a reduction in the number of sales, prices are stable and investors are already coming back and I expect this trend to continue,” Ms Lamprey said.

Interest rates are predicted to increase in the first six months of 2010, but Ms Lamprey said we are still enjoying interest rates at record lows, and with superannuation still performing poorly, property is the best and safest investment.

“We are probably the most affordable state in the country, with prices not rising dramatically,” Ms Lamprey said.

“Gross rental returns remain at approximately 6 per cent, representing excellent investment opportunities.”

The major buyers in the property market are Generation X – those aged between 32 and 45 years but it is predicted sales with this segment will decrease over the next 12 months as a result of job insecurity in the region.

The proposed introduction of the government’s emissions trading scheme will have a minimal positive impact on the property market.

“Emissions trading is a good place to start, but the real difference will be made by individuals, not by companies,” Ms Lamprey said.