MyState Tasmanian Economic Update
First published on June 5, 2018
Boom time for Tasmanian housing, tourism and exports
Tasmania has had a strong start to the year, leading the nation in housing and international tourism growth, while staging a sharp export recovery, the latest MyState Tasmanian Economic Update shows.
The economic surge was underpinned by four consecutive quarters of increasing household consumption, which propelled State Final Demand, a broad measure of economic activity, to an all-time high of $8.1bn in the December 2017 quarter.
Tasmania’s merchandise exports increased 36% in the year to March, significantly above the national average of 10%. More than 30% of exports over this period were to China.
Healthcare and social assistance, retail trade and construction, followed by education and training, were the industries that employed the most Tasmanians in the year to February. The number of jobs in healthcare and social assistance increased 13% in the period, with construction jobs increasing 9% and mining jobs increasing 61%.
While Tasmania’s unemployment rate remained above the national average at 6% versus 5.5% nationally, wages in Tasmania grew above the national average at 2.3% in the year to March 2018.
Underpinning the strong start was Tasmania’s leadership of the country in international tourism growth in 2017, hosting 18% more international visitors who collectively stayed 39% more nights and spent just under half a billion dollars (up 32%) during their stays. Tasmania’s overall tourism numbers also experienced strong growth during the year, with visitors increasing 2% to 1.3m and total visitor spending jumping 8% to $2.3bn.
As 2018 has progressed, Hobart continued to lead the nation for increased dwelling values with a 13% jump in the year to April, driven by strong demand and limited supply. This was against a backdrop of mortgage applications falling nationally over the year to March 2018. While mortgage applications declined by 13% in NSW and 9% in Queensland, mortgage applications in Tasmania were flat as the same time last year.
Hobart rental rates also increased strongly in early 2018 with the latest Rental Affordability Index showing Hobart had overtaken Sydney as the least affordable city for renters.
MyState Limited’s Chief Financial Officer David Harradine, said Tasmania’s high property demand was a double-edged sword for residents. “If you are an owner you will probably be pleased that the value of your largest asset is increasing as residents from other states and investors are drawn to Tasmania by strong local economic conditions, lower real estate prices compared to major centres, and the attractive lifestyle on offer. What is unusual is the scale of this demand. While owners have benefited, tenants have had the opposite experience,” he said.
“The MyState Economic Update shows gross house rental yields increased to 5% in the year to March with Hobart’s median weekly house rent now $420, only $10 below Melbourne’s median rent.
“Rental supply is a serious problem that is forcing tenants to live further out from town and city centres. Airbnb is clearly contributing to the shortage, with many properties now being set aside for more lucrative shorter-term stays. Part of the story is a lack of new housing supply.
Of the Tasmanian house purchases financed in the three months to February, only 3.5% were purchased brand new, with 10.2% under construction. The situation will take time to resolve itself, but for the short-term MyState expects demand to remain high,” Mr Harradine said.
“The one bright spot from the jump in demand to live in Tasmania is the contribution it has made to our steadily increasing population growth, which is catching up to but still lags the national average.
“On average 52% of Tasmania’s population growth over the last year has come from overseas migration, 21% has been natural increases and 27% has been from interstate migration,” Mr Harradine said.
Tasmanian Economic Update - May 2018