Q&A with Michael Walsh

As the year draws to a close, we sat down with Real Estate Institute of Tasmania president Michael Walsh to take the 2022 housing market’s pulse.

Jarrad Bevan: What springs to mind first when reflecting on the Hobart and Tasmanian property markets of 2022? Michael

Walsh: To me, there were a lot of people that thought this year would be a continuation of the unbelievably strong 2021 market. Then the notion of interest rate rises began to be spoken about, talked about and then acted upon. Our first interest rate rise in 10 years, that springs to mind first. For a lot of people, the reaction was like Armageddon was upon us. But we shouldn’t have been too surprised. Yes, it happened sooner than expected but the cash rate was not going to stay at 0.1 per cent forever. It shows how we can get used to certain things, like the cost of fuel. And when fuel goes up by 20c a litre in one week, that’s going to be a hard reality check.

The second thing that comes to mind is the effect that rate rises have had on the market. Our figures clearly show that first-home buyers and investors were the first to react. We have seen an exit of the market by investors, but I believe that will change in time. Rate rises have reduced the borrowing capacity of first-time buyers and their ability to purchase. However, the rest of the market seems to be ticking along well. It is a more level playing field, for sure. It’s interesting, in the prestige end of the marketplace, sales can happen quietly. The ones that are promoted widely, there appears to be plenty of appetite for our multimillion dollar properties.

Economically and business-wise, Tasmania continues to perform well. And people spending that type of money here, that’s an enormous sign of good faith in what we offer.

JB: With the market shifting, and possibly cooling more, has Tasmania moved from a seller’s to a buyer’s market?

MW: Certainly last year was a time to sell. You could put your property on the market, have cars up and down the street and then receive multiple offers that exceed your expectations. That pressure has reduced a lot this year, and if buyers are selective and patient there could well be properties that they can purchase below expectations. If our average days on the market continues to be pushed out, maybe beyond 40 to 50 days, that could be a sign of the move to a buyer’s market. We would need to see a lot of properties for sale to choose from and people dropping their prices — and we haven’t seen that happen. We are not oversupplied.

JB: Tasmania recorded plenty of $3m sales this year, $4m-$5m sales this year, and one for more than $8m at Howrah … When sales of this magnitude happen, do they still surprise?

MW: A sale like that one at Howrah is purely the market speaking. It takes someone walking in the door and seeing that type of high-level value in the property. Is it a big dollar? Hell yeah it is. It always comes back to what a property offers and its location. You could also look at farms selling for $100m or a unique, sprawling property like Quamby

Estate. That’s irreplaceable, incredible real estate. How do you value something that is part of our history, part of the Tasmanian landscape?

JB: Are there issues or problems in the housing market that concern you?

MW: We read about world events causing inflation here in Australia and then the rising interest rates to try and get it under control. Cost of living is also going up. The biggest challenge might be, when will the Reserve

Bank be satisfied that we have stabilised and that the figures have started coming back down again? If it doesn’t happen next year, they may continue to ratchet up interest rates. Hopefully, what they have done already, will have an effect sooner rather than later. Then we can settle into a new form of “normal”. Maybe even look forward to the next interest rate decrease down the track.

Another thing that has been getting some press lately is the story of the people that have fixed-rate loans that will mature next year. They could see their mortgage go from 2.5 per cent to over 5 per cent instantly. That would be on the mind of everyone in that situation right now. It’s an issue that will hit hard for a proportion of homeowners.

JB: What about rental vacancies, affordability, and investors? It seems like these pressure points have not gotten any better this year?

MW: When there aren’t enough residential property investors in our marketplace, that’s a big challenge. I’ve heard from our members that the rental market has not improved at all for tenants. Many property managers across the state have zero properties available. That will continue to bring its problems. It’s not the landlords’ fault. It’s a matter of why would you invest in property if the sums don’t add up? Why would Mum and Dad investors take that risk?

JB: Is the market still driven primarily by local Tassie-based buyers? Do you see that as a positive? Could we do with more people from interstate participating in the Tasmanian market?

MW: It has not gone unnoticed that Tasmania is the No.1 most liveable place in the world. That’s a great headline and a reflection of all that we have here. We are still on the radar of many who don’t live here. Most agents would have experienced a great deal of interstate inquiries in recent years.

However, our figures show 80 to 85 per cent of all transactions being made in Tasmania are by Tasmanians. That’s been the case well through Covid, last year, this year. Even at 1520 per cent, that is still a fair number of mainland buyers coming into our state, and more often they are moving here to live, not just buying to invest.

I think people are conscious of the need to bring money into our state, not to see it leave. The cost of our real estate compared to say Sydney or Melbourne is certainly attractive to those types of buyers, but our cost of living or wages don’t have the same pull.