Tips for Investing in Tasmania’s Property Potential

With some of the cleanest air in the world, spectacular mountains, lakes, coastal scenery, vast well-protected forests, and such a rich history, it shouldn’t really come as a surprise that Tasmania is recording its strongest property growth in twenty years. With city-dwellers searching for greener pastures in droves, the call of the Apple Isle is hard to resist. But the question is, does it stack up for investors?

What is driving Tasmania’s potential?

Try not to get swept up in the promise of over 2,000 kilometres of walking tracks and eighteen national parks and keep your focus firmly on finances. Tasmanian property remains affordable compared to previous investor favourites like Sydney and Melbourne, and its current growth mode isn’t predicted to slow any time soon. So, what makes it such a great place to invest?

• Low vacancy rates – with rental vacancy rates ranging from 1.3% in Launceston and 2.1% in the north-west coast, rental income is steady and consistent.

• Potential for strong returns – with rents on the rise, high rental demand, predicted long-term capital growth, and relatively low costs to enter the property market, investors can enjoy strong returns. Recent reports from the Real Estate Institute of Tasmania show the median house price sitting at $510,000 with median rents of $415.

• Significant local government investments in infrastructure – The Tasmanian State Government has greenlit several projects such as the City Deal in Launceston and the Hobart City Deal, both aimed to increase liveability, drive innovation, facilitate revitalisation and build on transport infrastructure. These commitments increase the appeal of Tasmania and further drive demand.

• Long term appeal – Tasmania is Australia’s leading renewable energy state and one of the first jurisdictions in the world to reach 100% renewable energy generation. Tasmania has also been crowned one of the top five places in the world to seek shelter during a global collapse of society, positioning it as a desirable long-term safe haven.

Where are Tasmania’s sweet spots?

With Hobart the thriving capital of Tasmania, locations close to the city centre like West Hobart, Sandy Bay, and South Hobart are always going to be a solid investment. Slightly further afield, but still within proximity to the city, suburbs like Glenorchy, Moonah, and Lindisfarne are also in demand. Outside of Hobart though, where can you find the best value? According to Canstar’s Rising Stars Australian Property Market Report, these are the 5 best suburbs in Regional Tasmania to invest in:

1. Mowbray – located in Tasmania’s second-largest city Launceston, Mowbray, with a median price of $315,000 is still affordable and experiencing exceptional growth.
2. Newnham – also in the high-growth city of Launceston, Newham has a median price of $350,000 and is experiencing increased sales activity, low rental vacancies, and rent increases.
3. Old Beach – 27km north of Hobart and 10km south of central Brighton, this suburb sits alongside the River Derwent and lures buyers with the promise of an affordable lifestyle. With ultra-low vacancies and rising rents, its investment potential is strong.
4. Park Grove – the regional centre of Burnie is in growth mode as huge government investment in infrastructure surrounding the port increases the city’s appeal. As the most expensive suburb in the area – with a median house price just below $400,000 – Park Grove is experiencing increasing sales activity, growing prices, and robust rental demand.
5. St Helens – renowned for its excellent fishing, epic surfing, fresh oysters, and proximity to the pristine Bay of Fires, St Helens is an idyllic coastal town that is attracting big city dwellers looking for a change in pace – and at a record pace. Situated in Tasmania’s north-eastern Break O’Day, St Helen’s has seen an uplift in median house prices of more than 10% in the last quarter alone.

Ready, set, invest?

Before signing on the dotted line, it’s important to do your homework. This includes getting your finances in order, understanding what capital you have available to invest, and learning the intricacies of the local market. Here’s where to start:

• Explore equity in your existing home – in short, equity is the difference between the market value of your home and the balance of your mortgage. If you’re in the fortunate position to have built up equity (by paying down your mortgage, through capital gains, or a bit of both), your lender can advise you how much usable equity you have available to invest. While you’ll need to speak to your lender to get a bank valuation on your property, your local First National Real Estate office can provide an indicative market valuation to get the ball rolling.
• Understand the local legal intricacies of sale and purchase – if you’ve purchased a property before, you might think you’re familiar with the process from a legal perspective, however, different states have different intricacies that you need to be aware of. Things like due diligence, vendor statements, and the type of sale (i.e., private treaty versus auction) can all differ, so it pays to get a property professional involved and make sure you’re well versed.
• Get across tenant expectations – as with the above property and legal quirks, there can also be different expectations and requirements from landlords. For example, in Tasmania, a rental property must have a fixed heater in the main living area in addition to adequate ventilation, window coverings, and cooking facilities. Understanding these requirements upfront will ensure you choose a property that ticks all the boxes or go into it with an idea of the costs required to bring it up to the required rental standard.
• Identify your goals and stick with them – while it can be easy to get swept up in the charm of an early 1800s Hobart homestead, if you’re looking for a low-maintenance rental, this is unlikely to be it. However, if the long-term gain is your primary focus, the charm of a historic home will likely appreciate over time.

If it’s your first time investing, this Guide for First Time Investors is packed with plenty of practical tips, and First National Real Estate is always on hand to share our local knowledge and expertise.

Please note the information provided here is general in nature and should not constitute legal, financial, or professional advice.

DISCLAIMER

The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions. Click here for full Terms of Use.