Costs of living, job security and consumer confidence key challenges for Tasmania's property market

The Tasmanian property market is set to deteriorate in the coming six months, due to continuing job losses contributing to rising unemployment levels, low confidence in the state economy and high numbers of properties on the market, according to the First National Real Estate 2012 Property Market Outlook Mid-Year Update. 

The Update, released this week, is based on a survey of the 400+ member network, and provides an insight on what member agents expect the market to do, drawing on their experience at the grass roots level. 

The state of Tasmania’s economy is dependent upon global and national domestic economies, and prudent spending and strong leadership is required but is currently lacking. 

Tasmania’s economy and the state of the property market are intertwined, and the state needs to progress incentives that will grow the state and increase its revenue, and that shouldn’t be from charging more for stamp duty. 

The key challenges for the Tasmanian property market are increased costs of living, job security and consumer confidence, particularly as it is affected by the current large cuts to the state budget. 

The continued cuts in state spending are fuelling consumer concerns and eroding confidence.

The market needs incentives for first-home buyers, which are further suffering as a result of banks tightening their lending policies, making them save longer for a larger deposits and stamp duty concessions being abolished last year. 

According to the Update, Tasmania’s west coast, north-west coast, areas of Hobart and East Launceston will be the best performing regions in the state, while hotspots will be locations exposed to the mining industry development. 

The Update says the strongest growth will come from the upgrader sector, as buyers capitalise on prime market conditions of improved affordability and low interest rates. 

Property prices should trend downwards, due to the ongoing consumer nervousness and lack of confidence in economic conditions. 

The rental market in Tasmania is expected to remain in its current state, with ongoing steady supply meeting consistent demand. 

Interest rates are expected to reduce further, however it is not expected this will impact too greatly on the state’s property market, as any gains will be offset by rising living costs such as increasing electricity bills. 

The expected hikes in electricity, rates and water/sewerage rates will put financially strapped mortgage holders under further pressure, generating an increasing in mortgage defaults for the state.

What the market needs is for stamp duty to be abolished, which would greatly assist in sustaining the state’s property market over the coming six months. 

According to the Update, the Tasmanian commercial property market is expected to weaken, with decreases in property and rental prices. 

Low consumer, business and market confidence will drive decreases across the board. 

The market will also be affected by poor retail figures and increasing outgoings, putting businesses under financial pressure and forcing them to close down or relocate to more affordable precincts. 

However, the rural property market in Tasmania is expected to hold up for the remainder of the year, with the lifestyle segment representing the greatest growth sector on Tasmania’s north coast.

Deanne Lamprey is the chairwoman of First National Real Estate Tasmania.