You may have seen the latest mortgage stats that show home loans and repayments are lowest in Tassie at the moment, overtaking the NT for the first time in a while. If you’re thinking about investing in property in Tasmania, we’ll run through some of the hottest areas in the island state.
Investing in Tasmania
Historically, Tasmania has been a bit of a no-go zone for property investors. The main reason is people say there’s not a lot of growth in Tasmania. What we’re going to be talking about today is why that’s wrong, and actually we’re going to point out five markets that are set to boom in Tasmania in recent times.
What we’re looking at is 10-year historical growth, the fastest-growing markets in Tasmania currently, and where money’s being spent with infrastructure.
Property investment filters used to identify Tasmania growth markets
The filters I selected to identify these markets – and again, you need to apply your own filters based on the outcome you want – are inventory of less than two months’ worth of supply. Ideally, for ultra-tight markets, I want less than one month’s worth of supply.
For these purposes:
- Inventory less than two months’ worth of supply
- Days on market less than 60
- Vacancy rates less than 3%
- Less than 6% public housing
- Eliminated markets with insufficient confidence within the data
- Growth pattern deviation in the short term less than zero
- Moderate volatility
- Yields greater than 3%
- Less than 2% building approval increase
Any markets above $1 million weren’t included in this episode, but even at the higher end of the markets, it’s still very affordable in comparison to some of the other capitals.
Affordable Tasmania property markets to watch
These aren’t actually our top markets, but they’re included keep an eye on for different price points. All of these markets are great for different reasons, whether you’re looking at owner-occupier or investors.
A lot of what we’re talking about is micro-level research with affordability, supply and demand, and all that sort of stuff. But people also need to look at population trends, infrastructure spending, and demographics within each particular location, which makes affordability relative as well.
There’s also a lot of migration. If you look at migration trends moving into Tasmania, a lot of the population growth moving forward for the next decade is domestic migration from people moving from the mainland down into Tassie. Especially with remote working and different things.
Launceston
If you’re looking at the lower end of the spectrum, for $580,000 there’s a market called Longford in Launceston. That’s one worth keeping an eye on. It’s at the more affordable end of the spectrum, but the biggest concern for that Longford area is there is a significant amount of building approvals in that location.
Another area to look at in the north is $753,000 for West Launceston
Hobart
Next one is Midway Point at a $680,000 typical price. It’s just outside of Hobart. Sorell is basically a $700,000 typical price point, also just outside Hobart. And $924,000 for West Hobart.
Tasmania’s property growth over 10 years
The 10-year best performers. This is outstanding growth. We’ve seen strong markets in Perth, Brisbane, the Sunshine Coast, and even Sydney only do 100–150% over the last 10 years. Some of these markets have done more than 200%.
A lot of these markets are actually really centralized housing commission areas, so obviously you’ve got to avoid a lot of those. But even Sisters Beach, at an $830,000 price point, has grown by 223% over 10 years. Sometimes this happens in traditional commission areas that gentrify.
Then they take off. You’ve seen it in Brisbane, Newstead, and even Windale in Newcastle.
You can focus on growth, but you need to know what risks are associated with an area. Are you trying to get a gentrified market? Are you willing to accept potential damage to your property or higher turnover?
A lot of these highly centralized housing commission areas also have ultra-low vacancy rates.
Tasmania suburbs showing strong short-term growth
Worst performers over the past quarter – and this is important to show what’s actually happening within these markets right now – include West Hobart, Battery Point and Mount Stuart. Slow growth, but they’re not accelerating like a lot of these top performers are.
All of these markets are around that sub-$600,000 price point. There are a lot of $400,000 markets in there. It’s those ultra-affordable markets that are rapidly accelerating at the moment.
But just because they’re growing fast right now doesn’t mean they’re going to be the top performers over the next decade.
Top Tasmania property markets for long-term growth
Top three for me in these markets – and nobody can apply a top three across the board to every individual. Are you buying a house? Buying near a school catchment? Buying to invest? Buying for three years’ growth or 10-year growth?
When we’re looking at the macro and micro factors in terms of affordability, supply and demand, and the actual dwellings people are buying, one market is South Launceston. The price point is $610,000. Ultra-affordable market.
The downside is it’s already up 11% over the past 12 months, which is higher than average growth. We’re still going to see significant growth in South Launceston. The ideal entry point would have been 12 months ago so you could capture that first 11%, but it’s still a good market moving forward over the next decade.
If you’re going to look into this market, look at population growth relative to dwellings being built there from a supply-and-demand perspective.
Final thoughts on Tasmania property investment
People look at Tassie and think you don’t get growth, but it’s a misunderstood market. Compared to other markets, people think it’s just a small town, but there are actually a lot of people there.
I’ve been down there a couple of times, and it’s quite a nice area. If the data looks good now, you can enter some of these markets for less than $650,000. If you own a home, you’ve probably got enough equity to use as a deposit, so you may not need cash.
Final thoughts on Tasmania property investment
People look at Tassie and think you don’t get growth, but it’s a misunderstood market. Compared to other markets, people think it’s just a small town, but there are actually a lot of people there.
I’ve been down there a couple of times, and it’s quite a nice area.
If anyone wants specific information on actual markets for their circumstances, there are links in the description below where they can book a call.
If anyone’s looking for financing, Brad’s across these markets as well and can provide mortgage advice and borrowing capacity support.
These are markets where you need to take action now. Don’t wait. If the data looks good now, you can enter some of these markets for less than $650,000.
If you own a home, you’ve probably got enough equity to use as a deposit, so you may not need cash.
We can work out your borrowing capacity, Aaron can find you something, and then you set and forget.