Buying into the Tasmanian dream

Tony Collidge warns that Hobart’s housing market is in flux and that there are hard decisions to be made

ON Saturday afternoon I step down as president of the Real Estate Institute of Tasmania. I’ve been its president for five years and have seen a lot of exciting things happen for Tasmania.

I am positive on where we have come from. We have left behind an ailing state with a decimated economy, torn apart by a bereft two-party political alliance, drained of confidence, and stung by high unemployment rates. Today we are at the other extreme with new issues to address, hard decisions to be made, and the need for leadership.

The opportunities for Tasmania are endless and any constraints we have are selfimposed. We have a chance to shake off the shackles and create a positive future beyond our wildest dreams. It’s just going to take some work, a lot of planning and sacrifices along the way.

I have spent considerable time trying to gain an intimate understanding of our real estate market and how it works. What I have found is that each of our markets are dependent on its local economic conditions.

When things are going well people feel confident, more jobs are available, demand increases and prices rise. The opposite occurs when the economy declines. What happens in Melbourne or Sydney has little, if any impact on us. We are not overrun by mainlanders or foreign buyers. In fact less than 1 per cent of our residential sales are to foreign buyers and only 7 per cent are mainland investors.

I am concerned about the property shortage we have had over the past three years and the impact it has had on affordability, rents and accessibility. We don’t have enough rental properties to meet demand. Instead, we have Australia’s lowest capital city proportion of rental properties (at 25 per cent of all dwellings). Sydney sits at 60 per cent while Melbourne is almost 50 per cent. Conversely, Hobart has Australia’s highest owneroccupier level at 75 per cent.

Our size inhibits our ability to meet growing housing and accommodation demand beyond the scope previously experienced. We have become victims of our success.

A booming tourism market, flourishing tertiary education environment and growing agricultural and aquaculture industries are catalyst for strong jobs growth, a prospering economy and more people coming to our state.

Our limited rental sector in Hobart cannot cater for 3000 new university students, 3200 new tourists each week in addition to the 38,400 tourist in the state each day.

We struggle to provide homes for a further 2500 people who have moved here each year for the past two years. We have a public housing waiting list exceeding 3200 and within a decade research suggests could grow to more than 6000 homes.

We have a dire shortage of housing stock. We have local councils who aren’t accepting of the need for growth and expect any growth to be on their terms. We have a draconian planning scheme that hinders any hope of overcoming this mess.

In 2019 we have seen a significant decrease in investor numbers, which will place more stress on a tense market. A lack of a vision or planning by councils and government to permit infill construction at a capacity required has meant investors look elsewhere.

Greater Hobart has one of Australia’s lowest population densities at 124 people per square km and we still persist in wanting to expand the foot print of our boundaries, placing a strain on fatigued infrastructure and resources.

Adelaide and Melbourne have a population density of more than 400 per sq km. The Lord Mayor corrected me and advised that Hobart municipality

has a density of 1400 per sq km. However, Adelaide and Melbourne CBD areas exceed 7000 people per sq km.

The ability to address the shortage is exacerbated by the powerlessness of a building industry to supply the numbers. Tradies are working at capacity with no or little relief in sight. There is a decade of solid work looming.

The demand on these resources are overwhelming and eventuating in some of the nation’s most expensive building costs and a plethora of red tape to navigate.

As tourism numbers soared over the past four years we have not had enough hotel, motel or apartment rooms. Locals and investors took the opportunity to offer Airbnb services and this facility has grown significantly.

Statistics suggest Hobart has in excess of 3000 Airbnb properties that cater for thousands of tourists each year, generating in excess of $30 million to our economy and contributing 4000 jobs.

The inner suburbs of Hobart have seen substantial increases in rents over the past three years. These suburbs are the most sought after and are also the most expensive to live in with a median price above $700,000. There are hundreds of buyers and renters looking for city accommodation.

If we could drop 1000 apartments in inner Hobart tomorrow they would be taken up in six months. I feel sorry for people wanting to live there because those with the ability to make it happen are stifling growth in the city (unless it is associated with the University of Tasmania). We have oldies looking to downsize and professional couples looking for a penthouse or tourists looking for apartment accommodation but they won’t find them here.

Given the above, how do we find homes for the homeless and those in need? To provide solutions to address blockages inhibiting our progress I ask, when will the Government:

AMALGAMATE Hobart, Clarence, Glenorchy, Brighton and Kingborough councils to create a structure to address issues for the betterment of all Hobartians.

REMOVE the planning process from councils and set up a planning and infrastructure department to oversee the state

DEVELOP a best practice planning scheme using all sectors (private and public) involved in planning, development and construction to develop such scheme.

PLACE the needs of those requiring public housing ahead of upgrading or building government accommodation.

RAISE the number of MPs in the Lower House to ensure that each portfolio holder has the chance to understand and take responsibility for matters under their control (my industry has had four ministers in five years).

We live in the best place in the world. We need to grow. There are no limitations on what we can achieve. Release the shackles. Create a bright future for us, our children and our children’s children. Tony Collidge is the Real Estate Institute of Tasmania president.

Hobart has Australia’s lowest capital city proportion of rental properties ...