‘Look south’: Expert names Tassie as 2023’s investment hotspot

“[Most] major cities and markets have had their property prices drop on average by 5.3 per cent nationally, with Sydney and Melbourne dropping 12.1 per cent and 8.1 per cent, respectively, according to CoreLogic,” she explained. 

With this, she advised property investors to look beyond the usual suspects when it comes to capital growth and singled out Tasmania as a “worthy investing spot” in 2023. 

She said that while the state was not spared from downturn, with Hobart recording a 6.9 per cent drop during the period, some areas within the city were cutting a resilient figure in 2022. 

“[Some] of the Tassie growth suburbs that have performed exceptionally well in 2022 have only seen small adjustments of 1.1 per cent, as in Brighton, for example,” Ms O’Donohue remarked.  

The expert, who has over three decades of experience in the real estate industry, said that places that recorded minimal declines during the period are holding their value and are likely to continue their growth path as we move through the new year and are, therefore, worth stepping into before we see prices climb again. 

Up until a few years ago, Ms O’Donohue commented that Tasmania held a “unique” position as the lowest entry-point and property market to invest in. 

However, this has long changed, with the expert pointing out that “Tassie has actually become the top regional economy up until July last year”. 

She explained that a combination of factors, including a high influx from investors and tree-changers alike, coupled with buyer and tenant demand, has driven considerable growth and bolstered property prices in the area. 

But despite strong growth across its cities and regional areas, Ms O’Donohue explained that Tassie remains an affordable investing location and named several areas that are positioned for strong capital growth based on available data. 

“Some of the locations to research and consider if you are looking to invest on the island are Devonport, Invermay, and New Norfolk — all of which are still well below the $500,000 median house prices mark, with strong annual growth and low vacancy rates.

“Brighton is also a good location, and while median prices are already sitting at $575,000, it has seen annual growth of 36 per cent in 2022, or Youngtown, which recorded a growth rate of over 30 per cent, with median house prices sitting at $540,000,” she stated. 

Other hotspots the expert recommended to watch are Lutana, where the median rental returns are now at $537 and over 30 per cent growth in the last 12 months, and Glenorchy, which saw a 21 per cent growth last year, taking its median price to $607,000.

Berriedale also earned a spot in the expert’s recommendation list due to the area recording 101 per cent growth over the past five years, which brought its median price to $650,000. She also cited the suburb’s strong rental returns, which are now clocking in at an average of $500 per week. 

Other markets that were named as Tassie hotspots included Mornington, which saw 55 per cent over the past three years, and Warrane, which recorded a 39 per cent growth over the last year, settling at $650 000 median prices and an average of only 18.6 days on market. 

For investors who are on the lookout for their next asset, Ms O’Donohue highlighted that the key to any and all investing is, of course, picking the right micro-location. 

“That is, close proximity to shopping, schools, cafes and restaurants, community infrastructure, and of course transport and employment centres, which makes for strong rental demand and likewise — capital growth,” she explained. 

Ms O’Donohue gave additional factors that investors should consider when making their next investment buy. 

“I always research infrastructure and whether any major civil works are planned for the future that will impact some areas more beneficially than others. And, when it comes to the house itself, appeal points and features that can elevate rent or offer scope for minor renovations and improvements to maximise rental return are always good to look for,” she stated. 

The expert acknowledged that rising interest rates — brought on by the Reserve Bank of Australia’s monetary policy tightening kicked off in May to ward off surging inflation — have triggered the market downturn.

But she said that the rate rise cycle could be nearing its high point if the latest US inflation drop is any indication. 

For context, the Reserve Bank’s US counterpart, the Federal Reserve, has also set off its monetary policy tightening in 2022 to contain the cost-of-living crisis in the country and doled out its seventh rate increase by December. 

As the US inflation rate slid to 6.5 per cent in the last month of 2022 — most experts now believe that this is an encouraging sign that the inflation crisis may be easing and that Australia is also charting the same path out of a high inflationary environment. 

On that note, she underlined the importance of buying right, which she pointed to as “fundamental for the scope for growth on your investment property”.

“I believe people are largely looking for lifestyle — so that is what you will want to capture or add to an investment property. It makes for good returns and additional growth over time,” she said.

In addition to buying right, Ms O’Donohue also emphasised the importance of buying at the right time. 

“Obviously, there is a lot of movement in these Tassie locations, and looking at the growth rates and the relatively small adjustments downward, indicate a definite potential for further growth there. Investing in these southern locations may well prove to be the way to go; however, timing is of great importance,” she concluded.