Deanne Lamprey, Principal, First National Real Estate Burnie and Tasmanian Chair expects the Tasmanian property market to consolidate in 2011, as waning consumer confidence due to job losses, mainly in the North West of Tasmania, and plentiful housing stocks, begin to stabilise house price growth.
“There is strong potential for growth in land prices, but this is dependent on the number of land releases in the state,” Mr Lamprey said in First National’s 2011 Property Market Outlook released this week.
“There is a steady supply at present, but building approvals are down as a result of an undersupply of builders locally.
“There is also negative publicity on “head works” charged by the three water/sewerage authorities in Tasmania, which, if left unresolved, will definitely stifle development projects.”
According to Ms Lamprey, vacancy rates may increase marginally by up to 1 per cent and weekly rentals upwards between 5 and 10 per cent as uncertainty of job prospects in some areas impact on confidence in purchasing, potentially placing an upward pressure on the rental market.
Movements in weekly rentals will be between 5 and 10 per cent in the main.
Any population growth for Tasmania, which has seen virtually none in the last few years, would impact the state’s property market significantly. The benefit of waving stamp duty or introducing concessions for the over 65’s age group could prove significant.
“To this end, the government should encourage tourism and more enterprise in regional areas in a bid to encourage population growth and employment opportunities,” Ms Lamprey said.
“The water/sewerage authorities need to rethink their obscene ‘head work’ charges that developers are absorbing – freeing them up to develop as they would like.”
Ms Lamprey believes banks should be doing more to help keep the property market healthy and robust in 2011 and should consider abolishing mortgage exit fees and being more flexible with their loan products.
“Consumers would be the winners, as the major banks would need to be seen as more competitive with rates and may think twice about lifting rates above the RBA. However, there is the risk banks may try and be more creative with other consumer fees,” Ms Lamprey said.
“They should also look at educating their customers about why they implement higher rate rises than the RBA and mortgage insurers need to be more flexible in lending requirements.”
Ms Lamprey anticipates three additional interest rate increases which will have a negative impact on affordability as buyers’ borrowing capacity is reduced and may eat into what little equity some homeowners have – especially those who purchased in the ‘boom times’.
“Combine this with pressure on employment and we may still see a shift in values and turnover,” Ms Lamprey said.
“Recent interest rate increases have already impacted on the property market, contributing to more of the higher priced properties coming into the market as families are looking to reduce their mortgage debts.”
Ms Lamprey said Tasmania’s ongoing affordability will continue to prove too attractive for investors to ignore, however they may remain cautious due to future interest rate rises.
“They will however be fully aware that Tasmania is currently in the declining state of the real estate cycle,” Ms Lamprey said.
Ms Lamprey believes widely anticipated electricity price hikes are expected to increase the number of buyers looking for energy efficient features as well as change the types of features they look for, especially in relation to heating and lighting.
Ms Lamprey said the government needs to do more to alleviate the lack of supply such as releasing more land, allowing more medium density developments, improving planning and approvals processes and controls, and introducing a national planning authority.
“They should also consider reducing stamp duty and introducing stamp duty incentives for retirees, as well as rework stamp duty scales,” Ms Lamprey said.
“These scales have remained the same for years in spite of the sharp increases in property prices over the last decade.”
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