June quarter data shows a chink of light for Tasmanian property market
Media tends to chart property markets by movements in median house prices.
But the data from research firms is often full of anomalies and most writers don’t understand the workings and limitations of median prices, so the resulting information is usually worthless to consumers.
Much more useful to buyers and sellers is charting movements in sales volumes. This has real value because changes in the number of home sales inform likely future movements in prices.
Many Queensland markets have done little value-wise this year, notably in Brisbane and south-east Queensland, but momentum for rising prices is building.
Figures from the Real Estate Institute of Queensland indicate significant increases in the number of sales, firstly in the March quarter compared to the December 2012 quarter and then again in the June 2013 quarter.
The number of house sales in Queensland rose 17% in the June quarter, while apartment sales grew 28% and the number of sales of residential allotments increased 24%.
Those are significant changes and are likely forerunners to price rises.
For similar reasons there is hope emerging for property markets in Tasmania.
The latest data for the June quarter shows quite significant rises in the number of sales for both houses and units.
It’s been difficult to find anything positive to write about Tasmania recently. It ranks last or second last on most economic indicators, with population growth withering at almost zero, and property markets have been going backwards.
But the June quarter report from the Real Estate Institute of Tasmania gives rise to hope for better things. The most encouraging factor is the increases in sales volumes in many markets around the state.
The 518 house sales in Hobart in the three months ending June represented an 18% quarterly rise and a 37% annual rise. Launceston recorded a 34% quarterly rise and a 12% annual rise. Overall, across Tasmania, the number of house sales was up 19% in annual terms.
The data for apartments is even more bullish. The annual rise in the number of unit sales is 51% for Hobart and 28% statewide.
The number of house sales in Hobart is the highest in three years.
None of this has yet translated into significant price increases but that is the normal pattern. Sales volumes change first and prices react perhaps six-nine months later.
As with median prices, the data on sales volumes can be misleading if the sample is small. But concentrating on locations with large numbers of sales provides meaningful information.
The Glenorchy municipality in Hobart’s north had 140 house sales in the June quarter, an annual rise of 87%. But the median house price is still only 1.7% higher than a year ago.
Kingborough, on the southern outskirts of Hobart, had 94 house sales in the quarter, an annual rise of 32%, but the median house price is still 2.7% below a year ago.
One thing driving buyers back into the markets of Tasmania is the improvement in affordability.
Thanks to lower prices and falling interest rates, the June period was the seventh consecutive quarter of improving affordability.
The REIT says the proportion of income required to meet loan repayments is at its lowest since late 2009.
Terry Ryder is the founder of hotspotting.com.au and you can contact him at ryder@hotspotting.com.au or twitter.com/hotspotting.
