The Launceston rental market is showing positive signs of recovery with record low vacancy rates and rising market rents. Our office has consistently recorded a vacancy rate under 1% for the September Quarter with an average days on market being 18 days and the average days vacant 10 days. Our office is currently outperforming the overall market reporting on average 36 days on market.
Suburbs high in demand currently; South Launceston, Newstead, Norwood, East Launceston, and Central Launceston.
The demand on 2 bedroom units is still strong with the average rent for a 2 bedroom unit $250 per week. For a more modern villa unit/townhouse with garaging, up to $320 per week.
1 bedroom flats and co-joined units are fetching between $140 and $180 per week.
There is a shortage and therefore a high demand for the average family home between $280 - $330 per week, consisting of 3-4 bedrooms, 1-2 bathrooms and garaging.
Tenants are becoming more particular about what the property offers, they are looking for the following general criteria:
- Good economical heating – Preference is generally a heat pump for heat and cooling
- Ample storage including built in wardrobes
- Garaging & External storage
- Modern fixtures and contents including carpet and window furnishings
- Functional kitchen and bathrooms
- Outdoor entertaining space (paved or decked area)
The Launceston market is still seasonal with demand generally increasing threefold between January and March. We did however experience an unusually active April in 2015 with a record 40 properties let within that month.
Fully furnished properties have taken a beating over the past few years as a result of a slowing economy, high unemployment and government cut backs. The Launceston General Hospital was once a large driver of that particular market however with budget cuts for accommodation and reduced employment, rents fell by up to 30% in many cases.The furnished market has been more stable over the past 6 months and seems to be driven by more people coming into the State for a lifestyle change and lower cost of living.
The private rental market in Mowbray & Newnham areas were impacted by the development of University accommodation, which is funded by the Government Rental Affordability Scheme. As a result, demand for private housing reduced significantly and rents fell by up to 20%, particularly with shared tenancy arrangements.
Overall the Launceston rental market is stable with signs of increased demand. There are some great opportunities for Investors to get into the market or expand their portfolio with property prices low, interest rates low and yields high. Investors can expect returns of up to 7% in many areas of Launceston.
It is well known that Tasmania has experienced low capital returns over the past decade, however we have had the benefit of low interest rates and stability. What I personally enjoy about our local market is the fact that you can diversify your portfolio on a budget. You can hold multiple properties for the cost of one in major capitals such as Sydney and Melbourne, which ultimately reduces your exposure and risk.
Affordability and high yield
Statewide, centrally located suburbs that contain a good range of facilities, larger infrastructure such as shopping centres, educational and health institutions, and public transport tend to be popular with renters and purchasers alike. Unsurprisingly, Herron Todd White suggests that these locations “are viewed as having the best capital growth potential”.
Improved housing and economic conditions put the state in a good position for recovery.In the first half of 2016, Hobart achieved extraordinary results when it became the top-growing capital in Australia.
Hobart’s housing market value increased by 2.59%, becoming the top quarterly growth-gainer. In terms of units, prices shot up by a whopping 6.66%, a percentage that was far above the other capital cities.
Property sales volume is on a steady upward trend in Tasmania’s residential property market, and the economy looks stable.
Suburb to Watch
The suburb of South Launceston houses the minor residential areas of Sandhill and Glen Dhu. It is primarily populated by young, single tenants/couples.
Units here are a good investment for professionals working in the city, given the suburb’s proximity to the Launceston CBD. Properties are affordable, and investors can achieve over 5% rental yield for both houses and units. Although unit prices have dropped slightly, the factors of location and affordability may work together to enhance the suburb’s appeal.
South Launceston is a community-oriented suburb, with the establishment of facilities such as the Little Athletics Centre for the youth. Childcare centres have been set up as well. Glen Dhu Primary School is located here, and there are local shops restaurants and cafe's in the area catering to residents. South Launceston is also close to the Launceston General Hospital which increases demand for both the upper and lower end of the market.
We will certainly put our money on Tasmania for a win.
Disclaimer; This report has predominately been prepared based on internal statistics from @home property management with Information also gathered from the following sources; realestate.com.au, the REI and Eliza Owen, market analyst at OnTheHouse.com.au. This information should be used as a guide only and does not constitute property investment advice.