Investors have fled the property market, will they return?
Investor incentives like land tax rebates or stamp duty concessions might encourage them back to the market. Picture: SUPPLIED
INVESTOR activity has been fading in the Tasmanian property market for years.
On the back of new Real Estate Institute of Tasmania data, decreasing investor activity was described as being “of real concern” with 2020 the third consecutive year of investors putting their money elsewhere.
Last year investor numbers were down 10.2 per cent to 1739 sales and a drop off of 43 per cent over the past three years, according to the REIT.
PRD Hobart director Tony Collidge said with regard to investors, rents were not keeping pace with home price increases, which resulted in rental yields dropping.
“About half of our investors come from interstate,” he said.
“There are many other places that now offer investors better returns than they can get from Tasmania.
“Perth (WA) is starting to recover and some of the larger regional areas that suffered significant price falls have become more attractive post-COVID; they are growing again, providing strong investment returns.”
PRD’s Tony Collidge and REIT CEO Mark Berry at Parliament House, Hobart.
Tony said the government could offer investors incentives like land tax rebates and stamp duty concessions to encourage them back to the market.
However, he said Tasmania’s rental crisis was largely the “result of our size” and not being able to cope with the significant change the state has had over the past five years.
“Not having enough public housing is also a factor,” he said.
“The private sector has been relied upon to pick up the slack.
“The failure of the municipal councils to be proactive to growth instead of trying to hinder it has
been as instrumental as the government’s failure to provide public housing.
“Short stay accommodation is another issue; we have too many for our size.”
Propertyology Head of Research Simon Pressley said at the end of the day rental supply in any property market was entirely determined by the activity of everyday Aussie property investors.
“Without them there is no increase to rental supply and rental prices will skyrocket,” he said.
“Hobart vacancy rates have been below 2 per cent since September 2013 — less than 1 per cent for all of the past five years — and today sit at 0.6 per cent.
Propertyology head of research Simon Pressley.
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“In a city with 244,000 people, Australia’s 11th largest city, there were only 175 dwellings advertised for rent at the beginning of this year.
“With a supply shortage as extreme as that, throw in demand driven by record-low interest rates and 41 major projects to underpin economic growth, even blind Freddy can see that could only mean property market growth.”
Simon said the recent market booms in Sydney and Hobart had not been driven by the same factors.
“Both produced a growth cycle that saw asset values rise strongly, but Sydney was driven by high investor activity and Hobart through owner-occupiers responding to high local confidence,” he said.
Propertyology has forecast double-digit growth for the southernmost capital city this year.
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