TAS Time to Hype Hobart Thread?

http://www.themercury.com.au/real-e...s/news-story/b25318596b1509bde4234c014f24ec77

Properties are selling fast as reported by the Mercury

 

Hmmm I have couple of those suburbs saved on my Realestate.com app and they are still there without an offer in place.

 

They are often not advertised as 'under offer' but when you ring they are. Eventually they are classified as 'sold' when the deal is finnished

 

Best time to buy might have been a year ago ( or 2002 ) , BUT , it's only just started moving and mainly inner circle .

IMHO it's got a way to go yet . Similar to parts of Brisbane .

We looked closely a year ago , but found ( and wanted ) better returns in Launceston , which is just starting to wake up ( current vacancy rate 1.5 % and stock on market in gradual down trend , and ? slight uptick in prices ) . I expect it to follow Hobart . It did last cycle . There are some seriously nice properties in Launceston if you keep an eye out . Most people don't know that Melbourne was settled as a result of an expedition from Launceston ....

Cliff

 

Cliff provided some great insights to Launceston a few months ago (unsure of thread).

 

OK

Townsville ... HIGH Vacancy rates . Somewhere central like north ward superficially has mixed messages , with the annual price showing an increase , but the monthly prices show a steady decrease but with a vacancy rate of 5.9 % , Seriously ? ... Townsville will be somewhere to buy at some stage , but IMHO it's on a par with Perth at the moment .

Wollongong's already boomed ( up 70 % )

Cairns ...is a possibility and has shown some recent growth and has lower vacancies than Townsville Mmm , but still highly reliant on tourism , Much hype about a major development that seems very Wobbly and according to reports in now unlikely to go ahead . If you like rolling a dice , fine and we seriously looked at it in the early 2000's . Chrispy did very well there . At that stage we went Rocky and Townsville and did very well there .

Of all of the North Queensland costal towns , Cairns is the only one that doesn't look like a basket case , However , historically they only really take off once Brisbane booms , and that hasn't happened , so I'll only look at the North Queensland once Brisbane booms and we're still waiting for that aren't we .....

Geelong ? also already boomed

It's gone up 70 % in the last 8 years as opposed to 27 % in Hobart and 2/3rd of the rise in Hobart ( 7000 ) has happened in the last year .

Hobart is around 10 % above it's previous peak .

Once you get past the middle ring in Hobart , you're looking at a 10 % rise in the last 8 years in somewhere like Glenorchy .

Launceston .. Well unlike Hobart which has passed it's previous peak , the two suburbs we bought in , Launceston and South Launceston are still below their previous peaks . Last cycle they moved about a year later than Hobart. One of the one's we bought , we paid less than the previous owner paid seven years ago and the better one , we paid the same .

Unlike Cairns which has a boom bust economy , Hobart is a diversified city and Tasmania is in the process of re inventing itself with a strong education emphasis ( Launceston has just moved large parts of it's uni to next to the CBD to position itself as a " University City" ) . It's also developing a increasingly strong agricultural industry , with big players like Brown Brothers making large purchases down there . Tassie is attracting various minorities , being a target destination for retiring members of the LGBT community and also "White Flighters " . It's also attracting retiree's from Sydney and Melbourne who can cash up their 1.5 -3 million house in the burbs in sydney and buy a very nice waterfront property on Tasmania's North Coast . I was seriously tempted to buy a waterfront house in Lutana with a Jetty and development potential for around 600 K early this year .

Strongy . If you're going to be realistic about suggesting alternatives , why don't you do some basic research , because those suggestions , suggest to me that you really don't know what you're talking about when it comes to Tasmania .

Cliff

 

Cliff in your opinion, how many international buyers are buying into Tasmania? Are they mainly locals using their equity, cashed up mainlanders or retirees?

 

In Tasmania , lots of buyers would be considered international .... from overseas places such as Melbourne and Sydney . They are the significant driver . Many of them are retirees . I've met two in last week on the northern beaches in last week . One LGBT couple who have retired there and were visiting in Sydney and a Sydney couple who are in their 50's and about to move down to Hobart .

Given it's size , Tassie doesn't need asian buyers to drive it , though when we were down in Launceston , there was a growing nepalese community , who seemed to be integrating very well and are considered very good tenants by the pm's . Pleasant , nice , reliable .

Cliff

 

I dont know enough about Launceston's local economy, to comment or add value here, but Cliff has some valid points.

I really think much of Tassie's economic success will depend on exports. If Trump seriously slaps China with high import taxes that will cause a significant rift in those countries' trading relationship. But this global incident though seemingly unrelated to little old Tas, could benefit Tas, if it happens.

See, in that instance China will look to other trading partners such as AU, NZ, and CA, to get their fix of 'healthy' products (baby formula, fresh food, vitamins, woolen products, honey, et al... you know, the usual 'range' of products you see when you walk past one of those Chinese 'boxing' shops aka 'healthy stores').

This is where Tas exports to China has a chance to do very well. I know Launceston produces some of these healthy products, even things like wine will do well. Of course, I mentioned salmon trade which IMHO will explode in the coming decade for both local and foreign demand. With China having overfished much of their 'legal' waters (seriously.. I watched a 2015 3-part Netflix doco about how there is such little fish left in China's legal seas, the fishermen went out of business so they started fishing the only thing left - jellyfish (which literally has zero nutricional value!!) - which they then sell for a pittance in hawker markets back on the mainland).

China's diet may be transitioning to a more western style (sooo much beef imports aa they develop a taste for it) but seafood is also a core food stock.

Tas's salmon, oyster, trout, clam, and any other farm-fish trade they have going on, I think will explode on the local and international stage.

It may sound like a long shot and I'll be interested to read back this comment in 10 years but, I really think shipping-based parts of Tas will do well lile Burnie (biggest shipping ports/industry in the state). Places these small dont need a lot of oomph to see gains, because they are coming off of low bases.

Sure, I have little data to back all of this up so I can handle and respect any criticisms here. But for those with established portfolios who are ready to roll the dice a bit based on a long term global-food-demand view, Tas I beleive will be a winner.

 

In recent months all the properties I've had tagged while refinancing and extracting Equity out of my PPOR have now sold up with seemingly little of the same value replacing them in the same areas. Other area's I've considered haven't done this. While I'm a noob and looking at my first IP, too me this speaks of the market and supply and demand situation down there.

 

I can remember contributing to another very similar thread on here at the beginning of the year - many of the same points and arguments where made then. As a Hobart local, I would also like to make the following observations:

- Market heat and momentum has increased dramatically since then.
- This heat has firmly swung the market towards the sellers favour.
- Growth upside has been strongly realised in recommended areas since the beginning of the year.
- Investors who are now asking questions about Hobart are acting via commoditised data/recommendations (in mass media sources) and are now competing against each other en mass (generating the growth that others were able to position themselves before - hint the start of the year).
- There has been strong growth in investment grade suburbs since the beginning of the year as this heat has been building.
- Hobart has long periods of market stagnation and the peak of the market comes very quickly after market growth cycles due to high levels of O/O turnover.

Assessing value and purchasing well is now very difficult. You can step out on a ledge and pay above comparables in a market upswing if you wish, but I would prefer to position myself just before this upswing.

As we covered earlier this year, only 15% of transactions in Hobart are attributed to Investors in growth upswings (compared to 60% in the recent Sydney surge). Even if this doubles (to 30% as it may be now, but probably not) - you can see the bulk of market demand is comprised from local Owner Occupiers. These guys are extremely sensitive to price and will dissipate very quickly.

Many have also been comparing inner city suburbs in Hobart to Sydney in terms of boom like conditions. I would absolutely agree that this is the case, but this has also been the case since I would argue this time last year!

The following charts have been extracted from our research reports for WEST HOBART:



These general chart directions are very similar to many in Sydney in recent times - and with yields at a low point in its cycle, a function on stable rental demand and increases in property sale prices - investor opportunity is very limited in these markets.

Hobart is extremely sensitive to transport and amenity given its small population. There are small pockets of opportunity, in investment grade suburbs, without market heat as above left - but invest at your peril as as quickly as the market heat has developed, it can quickly dissipate. Especially given that there are no major MACRO/GOV. backed employment opportunities to keep the owner occupier core around a little longer like other comparable cities (Geelong, Sunshine Coast, Cairns etc etc).

Just my 2c

 

Hi Ripehouse

yes the market here in Hobart is certainly heating up. However I would like to say in response to "as quickly as the market heat has developed, it can quickly dissipate" the last boom here went for 6 years. It started in 2002 and went to 2008
cheers
Bozley

 

One of the main drivers (IMHO ) will mainland retiree's and imigration . They're not responding to a government or business initiative . Working on Sydney's northern beaches , on a regular basis I meet someone who has retired there , is planing on retiring there or knows someone in those positions

Cliff

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Hi Cliff
yes agents I speak to here talk about having a lot of interest from people moving from 'the mainland'. Climate is often given as a reason. We spent 2 years in North Narrabeen recently and although it was a beautiful area it was lovely to get back to Hobart's cool weather and soft light. We are also semi retired now and living on the river. We couldn't afford this lifestyle in Sydney!

 

...and this could create jobs. Services and tourism jobs to support the boomer-retirees enjoying their down time in the apple isle.

Tourism in a state with a population the size of Tas could be huge. Both domestic boomers and international (Largely Chinese). The opportunity here is that (politely) tourism and tourism based jobs are often pretty low-skilled, meaning these jobs are most accessible to the everyday folk in Tas who perhaps dont have the tertiary education levels required fpr many other jobs/sectors (particularly in syd/mel).

Not all Hospo/Tourism jobs are low-skilled of course, but many are. Basic bar, security, gaming jobs for instance only require short courses to train. The rest is 'on the job'. this ought to help get unemployment numbers down. Even skilled jobs such as translators and high-end hotel management etc., are still quite accessible based on vocational education (not necessarily university-level) being required.

 

Viticulture and wine making will continue to grow in Tasmania.

Amelia’s wine | The Wine Show: episode twelve – climate change

 

Yes C-mac tourism is huge here. We have two airbnbs and they are very busy. We have a year average of just over 80% occupancy

 

Bozley

Do you manage those yourself ?

Cliff

 

Funny mention on the wines... I must dig out the article i read that cites the details but... as California and Chile struggle with climate change causing their (already, quite limited) variety and wine quality to diminish, they are resorting to drastic measures such as increasing the alcohol content (i.e. to 14s, 14.5s, and even 15s/15.5s percentages..) to offset poorer taste as a result of shorter grape-growing months. shorter-ripening grapes tend to produce higher alcohol-quantity wines and as such often worser quality tastr and shelf life..

The article mentions Tasmania as a massive climactic growth area thanks to climate change helping to produce more lower-alcphol wines (which tend to taste much better) the prediction for the future in this article was suggesting that as lower-alcohol wines become harder to produce, they get rarer, more valuable and more sought-after. Tasmania could do well, out of it wine due to their climate. looks like California and Chile will struggle to compete with other markets.

 

Hi Cliff
yes I manage the bookings and do almost all the cleaning myself (the trick there is to use hired linen - its cheap and saves a lot of washing and ironing)