The Tasmanian housing market: update 2020-21 - Jacqueline De Vries, Maria Yanotti, Julia Verdouw, Keith Jacobs and Kathleen Flanagan. Housing and ...
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The Tasmanian housing market: update 2020-21 Jacqueline De Vries, Maria Yanotti, Julia Verdouw, Keith Jacobs and Kathleen Flanagan. Housing and Community Research Unit, University of Tasmania June 2021
Contents Key Findings 1 Introduction 4 1. Market trends 6 Property values 6 Home buyers 10 The rental market 12 Summary 14 2. Incomes and housing costs 15 Rental affordability 16 Purchase affordability 17 Summary 17 3. Demand and supply drivers 18 Changes in demand 18 Components of population change 18 Local variation 20 Projections of future demand 20 Changes in supply 21 Building approvals 21 Building activity: commencement, construction and completions 23 The demand-supply balance 24 Summary 26 4: Short-stay accommodation 27 Listings 28 Property use 30 Summary 32 5. Housing insecurity and homelessness 33 Social housing 33 Homelessness 36 Summary 38 Conclusion 39 Acknowledgements 41 References 41 2 University of Tasmania
Key Findings
• By March 2021, Hobart dwelling values had increased
Tasmania’s housing market continues 12.5 percent in the preceding 12 months, and by
3.3 percent in the previous month alone. Dwelling
to be under extreme pressure. values across the rest of Tasmania had also increased
Despite some localised fluctuations by 15.3 percent and 2.3 percent respectively.
linked to the effects of COVID-19 • New loan commitments to owner-occupiers had
restrictions, house prices and rents increased by 11.5 percent to $307.5 million in the
remain high, while the private rental December quarter of 2020. By February 2021, loan
commitments to owner-occupiers had reached
vacancy rate remains very low. $334.6 million. Loan commitments to investors
had increased by 51.8 percent to $98.5 million in
December quarter of 2020.
• Loan commitments to first home buyers rose
85.2 percent over the 12 months to October 2019 by
October 2020 were at their highest level since their
post-GFC peak in 2009.
• Only 23.0 percent of loans to owner-occupiers are
to construct new dwellings or purchase newly built
dwellings. This is, however, a higher proportion
than previously.
• In March 2021, the median rent in Tasmania was
$400 per week for a three-bedroom house, up
6.7 percent since March 2020. The median rent for
a two-bedroom unit was $360, up 20.0 percent
since March 2020.
• The private rental market vacancy rate was
1.9 percent in March 2021.
• According to the 2020 Rental Affordability Index,
There are significant affordability Greater Hobart remained the least affordable capital
city in Australia relative to income, and the rest of
challenges across the state due to Tasmania is the least affordable region of the other
continuing low wage growth and ‘rest of state’ areas considered.
relatively static income support
payments. The temporary alleviation
from the coronavirus supplement to
selected income support payments
has now ended and many income
support recipients are again living
below the poverty line.
The Tasmanian housing market: update 2020-21 1
• In the year to June 2020, the Tasmanian population
Border closures associated with had increased by 1.1 percent. Much of this growth
was from interstate and international migration,
COVID-19 have disrupted migration which is now restricted due to COVID-19.
to Tasmania, cutting off its main
• The local government areas with the greatest
source of population increase. number of new residents are Clarence, Launceston,
Due to a range of government Hobart and Brighton, but the greatest rate of
policies designed to stimulate population growth is in the Glamorgan/Spring Bay,
Latrobe, Tasman and Sorell local government areas.
the construction industry and the Only the West Coast, Flinders and Glenorchy local
broader economy in the wake of government areas saw population decreases, but
these were small.
COVID-19, new construction levels
are relatively high, and it is likely that • The number of building approvals increased by
65.1 percent between November and December
there will be a short-term absolute
2020. Commencement numbers accordingly also
over-supply of new housing relative increased in the December quarter of 2020.
to new demand. Whether this will
• In the December quarter of 2020, the number of
translate into increased affordability dwelling completions was 6.8 percent higher than
is not clear, because it depends on in the previous quarter and 26.1 percent higher than
the same period in 2019.
where the new houses are being built
and what kind of properties they are. • Current projections suggest that the balance
between demand and supply will fluctuate over the
next three years, but external factors, especially in
relation to migration, make future trends difficult to
predict with certainty.
• There is little sign that the Short Stay
The short-stay accommodation Accommodation Act 2020 had any meaningful
impact on the level of short-stay accommodation
sector was significantly affected by activity in Tasmania.
the virtual closure of the tourism
• The number of listings on the largest short-stay
industry during parts of 2020. There accommodation platform, Airbnb, fell around 20
are now signs that the sector is percent in Launceston and Hobart following the
becoming active once more. Despite closure of Tasmania’s borders in March 2020, but
remained relatively stable on the East Coast.
anecdotal evidence that some short-
stay properties returned to the private • Numbers of listings have now started to increase
again, including listings where there are indicators of
rental market during the pandemic, commercial or investor activity.
it is unclear how many did so or
• Yield for Airbnb hosts has returned to pre-pandemic
whether this trend will persist. levels, and the numbers and timing of reviews
suggest that many properties are once again being
leased out regularly.
2 University of Tasmania
• As of December 2020, there were 3,813 applications
Need for social housing remains on the Tasmanian Housing Register, which was 9.6
percent higher than the previous year.
high, as does need for assistance
from Specialist Homelessness • Timely access to social housing remains limited:
in December 2020 only 72 new households were
Services. This indicates that despite accommodated in social housing and the average
new government investment in the waiting time for priority applicants was 53.9 weeks.
social housing and crisis housing • The Tasmanian government has committed to
systems, demand still exceeds the providing 3,500 new homes in total over the next
available supply. four years. This figure does not incorporate sales or
demolition of other social housing properties so the
net gain to the system is likely to be less than this.
• The rate of homelessness in Tasmania at the time
of the 2016 Census was 31.8 homeless people per
10,000 of population, which was less than the
Australian average of 49.8. In March 2021, 2,653
Tasmanian households were receiving support
from Specialist Homelessness Services.
• There is a high level of unmet need for longer-term
housing among Specialist Homelessness Services
clients. In 2019-20, of the 76.6 percent of clients
identified as needing long term housing assistance,
only 7.8 percent had this need met directly,
51.5 percent were referred elsewhere (with an
unknown outcome) and 40.7 percent received
neither long-term housing assistance nor referral.
The Tasmanian housing market: update 2020-21 3
Introduction
There continues to be an acute shortage of affordable
housing in areas of high demand. Government measures
to address this shortage have only had a limited impact.
This report is the latest in a series ‘Affordable housing’ can refer to
prepared by the University of a type of housing product that is
Tasmania to inform public debate available to eligible households
on the Tasmanian housing crisis. at below-market rents (e.g.
The evidence in this report shows properties under the National
that although there was a small Rental Affordability Scheme or
fall in house prices and rents NRAS). However, in this report,
during the early stages of the we are using the term generically
COVID-19 pandemic, in recent and descriptively, to refer to
months both have started to rise housing which low to moderate
again, fuelled by low interest rates, income earners can afford without
increased demand for housing, the compromising their expenditure
cessation of some temporary policy on other essential costs like food,
interventions and the introduction energy and transport.
of housing-related economic
stimulus programs. These increases In Australia, responsibility for
in house prices and rents have housing policy is shared across all
exacerbated the long-standing three levels of government. To be
housing problems in Tasmania, effective, national, state, and local
which remain entrenched due to governments need to coordinate
a long-term failure to adequately their housing-related activities, and
invest in social housing and growing this does not always occur. As a
demand for affordable housing. result, there are multiple points of
tension and contradiction within
the Australian housing system.
In this report, ‘social housing’ refers to public
and community housing. This is housing
owned and managed by government and/
or the community sector and rented out
to eligible households at income-linked
rents. Due to limited supply, households are
usually unable to enter social housing unless
they are assessed as being in greatest need.
4 University of Tasmania
Commonwealth government rental properties that they cannot to new supply, eligibility for this
taxation policy, including in relation afford without unreasonably program is not means tested
to negative gearing and capital compromising their standard and the investment is likely to be
gains tax exemptions, encourages of living. The Tasmanian state capitalised into increased prices
the provision of new housing government could not deliver with little long-term impact on
supply but also contributes to 14,200 new dwellings without affordability.
speculative investment and substantial funding support from
consequent house price inflation the Commonwealth and significant This paper presents data and
(Eccleston et al. 2018a). These in private investment in affordable independent analysis on different
turn create significant housing housing. As this is not forthcoming, aspects of the Tasmanian housing
market pressures at the state Tasmanian government efforts market. It is written to inform
level, yet it is difficult for state are necessarily more limited than and provoke public debate over
governments to fully resolve they need to be to fully address housing policy. Obviously, the
these because they lack the the problem. The Tasmanian effects of the COVID-19 pandemic
Commonwealth’s revenue- government has committed to loom large in the data, but this
raising power. building 3,500 social housing is not a report about COVID-19.
dwellings over the next four years, Rather, it traces significant
For example, the unmet need as well as constructing additional continuities in Tasmania’s housing
in Tasmania’s social housing supported accommodation for market story from before the onset
system has been estimated at target groups (Tasmanian Liberals of COVID-19 and, importantly, as we
14,200 dwellings over the 20 years 2021). However, this welcome integrate COVID-19 into a new way
from 2016 (Lawson et al. 2019). investment is accompanied by of life.
This number is large because so other policies, such as a substantial
many low-income households increase to the First Home Owners
in Tasmania are living in private Grant Boost; although restricted
The Tasmanian housing market: update 2020-21 5
1. Market trends
Given the limited supply of question of competing preferences markets were even less effected.
social housing, most Tasmanians or a series of problematic and In Tasmania over the 12 months
must meet their needs for lifelong compromises depends to April 2021, dwelling values
accommodation in the private largely on household income increased 15.3 percent in regional
market. Finding the right housing and where this income situates areas and 12.5 percent in Hobart
requires weighing considerations a potential purchaser or renter in (see Figure 1). These increases
1. Market trends
including cost (affordability)
and appropriateness, which
relation to the property market. tended to exceed the average for
all regions and all capital cities.
can encompass accessibility
for Given
peoplethe limited
with supplyorof social housing, most Tasmanians must meet their needs for
disabilities Property values
accommodation
other health needs, in the private
proximity to market. Finding the right housing requires weighing
The most marked influence on
considerations
family, including
friends, schools, workcost
and (affordability) and appropriateness, which can encompass
essential services, Tasmanian house prices in the
accessibility forthe size of
people thedisabilities
with or other
last 18 months health
was needs, proximity to family, friends,
the COVID-19
property relative to the size of
schools, work and essential services,pandemic. the size ofPurchase
the property relative
the household, and the cost of prices and to the size of the
household, and the cost
living in the property day to day of living in the property
rents fell in day
most to day
major(heating
cities and cooling,
commuting, and so on).
(heating and cooling, commuting, The extent toduring
which 2020.
these However, this
considerations has
are either a question of
not lasted, and prices and rents
and competing
so on). Thepreferences
extent to whichor a series of problematic and lifelong compromises depends
these considerations are income
either a and where are once again rising. Regional
largely on household this income situates a potential purchaser or
renter in relation to the property market.
Property
Figure values
1: Dwelling value change, capital cities and rest of state, March 2021
Figure
Source: 1: Dwelling
Unpublished value change,
data, CoreLogic. capital cities and rest of state, March 2021
Past month Past 3 months Past 12 months
Sydney 3.7 6.7 5.4
Melbourne 2.4 4.9 0.7
Brisbane 2.4 4.8 6.8
Adelaide 1.5 3.2 8.6
Perth 1.8 5 6
Hobart 3.3 7.6 12.5
Darwin 2.3 5.4 14.2
Canberra 2.8 6 12.1
Regional NSW 2.8 6.6 13.6
Regional Vic. 2.6 7 10.4
Regional QLD 2.3 5.8 10.8
Regional SA 1.4 5.9 13
Regional WA 1.7 4.8 -0.1
Regional Tas 2.3 6.7 15.3
Regional NT 1.1 2.2 3
Combined capitals 2.8 5.6 4.8
Combined regionals 2.5 6.3 11.4
Australia 2.8 5.8 6.2
Percentage change
Percentage (%) %
change Percentagechange
Percentage change % Percentage
Percentage change
change %(%)
(%)
Source: Unpublished data, CoreLogic.
6 University of Tasmania
8
One measure of change to and houses because these are unit prices. In Hobart, prices have
property values is the Residential different products and therefore been volatile, with sharp falls at
Property Price Index, which is operate as different markets. the beginning and end of 2020
an aggregate index compiled to Differences between markets and a steep increase from the
measure the price change in all are also seen when a capital beginning of 2021. In regional
residential dwellings within the city market is compared to the Tasmania, however, unit prices
eight Greater Capital City Statistical market in the rest of the state. have decreased steadily from a
Areas. The Greater Hobart The differences across these substantial high point at the start
Residential Property Price Index sub-markets can be seen in of 2020.
rose 6.1 percent to 172.5 in the Figure 3, which depict the
March quarter of 2021, a rise of seasonally adjusted hedonic home The increase in house and unit
10.2 percent since the same value index for houses and units prices across most of Tasmania is
quarter the previous year (see in Tasmania, broken down into reflected in the fact that median
Figure 2). figures for Greater Hobart and for prices for houses in Hobart are
the rest of the state. This index is now well above the price point of
The index shows a steady increase designed to reflect not just raw half a million. Prices in Hobart did
from March 2009 to 2016, and then prices but dwelling characteristics, drop slightly in the June quarter
a steeper incline from March 2017. such as location, housing type or 2020, but they are now rising
The last major economic disruption number of bedrooms, that affect again (see Figure 4). In March 2021,
in Australia occurred due the those prices. the median house price in Hobart
Global Financial Crisis (GFC). To was $623,750, which represents a
enable this comparison, where Although there have been some 5.7 percent increase in that quarter.
data is available the scale on many fluctuations, house prices in Hobart Prices are lower in Launceston
of the graphs in this report has have generally increased across and the North-West Coast, but
been extended back to include the 2020 and into 2021. Growth in they too are trending upwards.
GFC and its aftermath. regional markets has followed Launceston prices increased by
the same pattern but has been 4.5 percent to $420,000 in the
When analysing movements in consistently higher than in Hobart. March 2021 quarter, while north-
price, economists separate units A different pattern is evident with west prices increased by
Figure 2: Residential Property Price Index (no.), Hobart, March 2009-2021
Source: ABS 2021h.
The Tasmanian housing market: update 2020-21 7
Figure 3: Hedonic home value index, houses and units, Tasmania, 2014-2021
Source: Authors, calculated from unpublished data, CoreLogic.
Figure 4: Median house prices, Hobart, Launceston and North-West, March 2011 to March 2021
Source: Authors, unpublished data, Real Estate Institute of Tasmania.
8 University of Tasmania12.1 percent to $379,000 in the In Hobart and Launceston and Burnie. This local level variation
same period. Burnie local government areas, indicates that housing sub-markets
house prices increased 14.0 percent are shaped by a wide range of
At a local government area level, and 16.9 percent respectively. In macro and micro factors. In small
in the two years to February 2021 the same two-year period, unit markets, price movements need to
there were double digit house price prices rose in all municipalities be interpreted carefully as a small
increases in all municipalities but for which there is available data number of sales can have a large
Flinders and King Island, but these apart from the Northern Midlands, effect on the overall trend.
range from a 13.7 percent increase but again, the size of the increase
in Burnie to a 47.6 percent increase varied widely, from 4.0 percent on
in George Town (see Table 1). the West Coast to 35.4 percent in
Table 1: Median house and unit prices (monthly average), February 2021, and percentage changes since February 2019,
Local Government areas
Note: Figures for smaller municipalities should be used with caution due to the smaller size of their markets.
Source: Authors, unpublished data, CoreLogic.
Houses Units
LGA Median price in Change since Median price in Change since
February 2021 February 2019 February 2021 February 2019
Break O’Day $365,000 + 30.4% $275,000 + 18.3%
Brighton $400,000 + 29.0% $328,000 + 19.3%
Burnie $290,000 + 13.7% $260,000 + 35.4%
Central Coast $375,000 + 25.0% $281,750 + 8.4%
Central Highlands $187,500 + 23.4% - -
Circular Head $260,000 + 20.9% $226,000 + 25.6%
Clarence $580,000 + 18.4% $427,500 + 6.9%
Derwent Valley $355,000 + 34.0% $320,875 + 36.5%
Devonport $335,000 + 21.8% $264,000 + 11.4%
Dorset $330,000 + 32.0% - -
Flinders $312,000 − 10.9% - -
George Town $302,500 + 47.6% $265,000 + 26.2%
Glamorgan/Spring Bay $442,500 + 22.9% $295,000 + 27.6%
Glenorchy $453,000 + 16.2% $355,000 + 18.5%
Hobart $792,375 + 14.0% $600,000 + 20.0%
Huon Valley $476,000 + 25.3% $340,000 + 10.6%
Kentish $392,500 + 31.7% - -
King Island $252,500 0.0% - -
Kingborough $641,500 + 14.6% $435,000 + 11.5%
Latrobe $430,000 + 22.0% $320,000 + 15.4%
Launceston $380,000 + 16.9% $307,000 + 5.9%
Meander Valley $400,000 + 14.6% $302,500 + 10.8%
Northern Midlands $375,000 + 23.0% $275,000 − 1.4%
Sorell $477,500 + 27.8% $363,500 + 19.2%
Southern Midlands $356,000 + 16.7% - -
Tasman $372,500 + 27.6% - -
Waratah/Wynyard $330,000 + 20.0% $267,500 + 20.2%
West Coast $120,000 + 44.6% $77,500 + 4.0%
West Tamar $430,000 + 20.2% $340,000 + 13.3%
The Tasmanian housing market: update 2020-21 9Home buyers • The Tasmanian government • Together with low interest
also offered a HomeBuilder rates, these programs offer
There are currently strong Grant of $20,000 for new substantial upfront incentives
incentives to purchase housing in housing, available for contracts to build or renovate housing
Tasmania’s housing market. Interest signed between 4 June 2020 in Tasmania. The value of new,
rates are at historic lows and are and 31 March 2021. owner-occupier home loans
expected to remain at these levels in December 2020 (excluding
for a further three years at least. • Tasmania’s existing First Home refinancing) was at record
In addition, both the Australian Owners Grant of $20,000 is also highs across all the states and
and Tasmanian governments have available to first home buyers territories except the Northern
put in place policies that provide of new homes, and in the Territory. In Tasmania, owner-
lump-sum payments to new recent state election campaign, occupier loan values rose
home buyers. the government committed 11.5 percent to $307.5 million in
to increasing this to $30,000 the December 2020 quarter,
• The Australian Government’s through the First Home Owners which is 47.8 percent higher
HomeBuilder Grant offers Grant Boost. The additional than in December 2019, and
$25,000 to eligible owner- payment will be available then reached a new high of
occupiers building a new home between 31 March 2021 and $334.6 million in February 2021;
or substantially renovating an 30 June 2022. values dropped slightly to $310.0
existing one, provided contracts million in March 2021 (see
were signed between 4 June • In some circumstances,
Figure 5). The value of investor
2020 and 31 December 2020. applicants can be eligible
home loan commitments rose
It was subsequently extended, for both a Tasmanian First
51.8 percent to $98.5 million in
at the lower rate of $15,000, for Home Owner Grant and the
the December 2020 quarter—
contracts signed between Commonwealth HomeBuilder
which was 45.5 percent higher
1 January 2021 and 31 March grant for the same property.
than December 2019—and
2021. The programs have relatively
increased again in March 2021
generous means-tests.
to $100.5 million.
Figure 5: New loan commitments, owner occupiers and investors (excl. refinancing), seasonally adjusted,
Tasmania, March 2003 to March 2021
Source: ABS 2021g.
10 University of TasmaniaIncentives like the HomeBuilder 36.2 percent on the previous their primary function is as sources
grants and the First Home Owner month and an increase of of wider economic stimulus due
Grant are directed to new supply. 85.2 percent since October 2019 to the large multiplier effect of
Loan commitments for the (see Figure 6). Reflecting the investment in the construction
construction of new dwellings pattern across the rest of Australia, industry. In 2019-20, the Tasmanian
accounted for 18.8 percent of this is the highest level since the Government made 690 grants to
total commitments, with a further peak in 2009, when the then first home buyers, but by the end
4.2 percent for the purchase of federal government’s response of May 2021 the number of grants
newly erected dwellings. This to the GFC included a temporary had already reached 822 (State
is a high proportion relative to tripling of the First Home Owners Revenue Office of Tasmania 2021).
historic trends, although there is Grant. First home owner buyer
fluctuation: the proportion of loans loan commitments remained high In the first six months of 2020,
that are for new construction has in the first quarter of 2021 with a 138 guarantees were issued in
increased by 189.4 percent since further 774 loan commitments. Tasmania (of 6814 across Australia)
March 2020 (from 66 dwellings to through the First Home Loan
191), but the March 2021 figure is Economists have frequently Deposit Scheme, an Australian
13.2 percent lower than it was in criticised the inflationary effect of Government program enabling
the previous month. First Home Owner Grants on house eligible first home buyers to
prices. As noted above, however, purchase a property free of lenders’
According to the National governments used increases to mortgage insurance with as
Housing and Finance Investment First Home Owners Grants in little as 5 percent deposit (NHFIC
Corporation, first home buyers now the wake of the GFC as a source 2020a). Until July 2021 the program
account for more than 40 percent of economic stimulus. This has could only be used to purchase
of total new housing commitments occurred again in 2020: programs properties valued up to $400,000,
(NHFIC 2020b). In Tasmania, there like Home Builder and the boosted which presents a significant limit
were 350 owner occupier loans to First Home Owners Grant in on location and quality in the
first home buyers in October 2020, Tasmania may be presented as current Tasmanian market.
which was an increase of housing assistance programs, but
Figure 6: Number of new loan commitments to first home buyers (owner-occupiers), seasonally adjusted,
Tasmania, March 2005 to March 2021
Source: ABS 2021g.
The Tasmanian housing market: update 2020-21 11The rental market 23 April 2020 and 31 January 2021
landlords were prohibited from
The strong growth in house prices increasing the rents of sitting
has intensified the affordability tenants, and prohibitions on
problems of Tasmanian renters. eviction would have limited tenant
Hobart’s rental market remains mobility and thus the number of
one of the tightest in the country, new leases. As these restrictions
with rents above pre-pandemic lifted, rents for both houses and
levels. Renters’ living costs are units have been increasing across
increasing, driven by housing the state (see Figure 7). At the local
costs and the low vacancy rate. level, however, there is variation.
In March 2021 the median rent House rents have fallen slightly in
for Tasmania was $400 per week the Hobart local government area,
for a three-bedroom house and risen slightly in the Launceston
$360 for a two-bedroom unit local government area, and
(see Figure 7). This represents a remained flat in the Burnie local
6.7 percent increase in median government area (see Figures 8-9).
rent for three-bedroom houses For units, rents have been steady
and a 20 percent rise for two- in Hobart and have increased in
bedroom units respectively since Launceston and Burnie.
March 2020.
Movement in rents was
constrained during 2020: between
Figure 7: Median rents, weekly, houses and units, Tasmania, July 2017 to March 2021
Source: Authors, unpublished data, Real Estate Institute of Tasmania.
12 University of TasmaniaFigure 8: Median rents, monthly average, houses, Hobart, Launceston and Burnie local government areas,
January 2016 to February 2021
Source: Authors, unpublished data, CoreLogic.
Figure 9: Median rents, monthly average, units, Hobart, Launceston and Burnie local government areas,
January 2016 to February 2021
Source: Authors, unpublished data, CoreLogic.
The Tasmanian housing market: update 2020-21 13Alongside affordability pressures Summary
are issues with availability.
Tasmania’s rental market has Tasmania’s housing market was
been marked by long periods of affected throughout 2020 by the
very low vacancy rates: between economic consequences of the
2004 and 2010, vacancy rates COVID-19 pandemic, but also
hovered around 2 per cent, and by the measures introduced in
a similarly low vacancy rate has response to those consequences,
again persisted since the end of including stimulus measures
2017 (see Figure 10). A vacancy targeting the construction sector.
rate of 3 percent is commonly The effect is that house prices have
considered the point at which continued to increase. First home
the rental market is in equilibrium buyers have been able to enter
between demand and supply; a the market due to the available
vacancy rate of 2 percent therefore grants and incentives, but investors
means demand for rental housing have also benefited. The situation
is unlikely to be met and many in the private rental market is less
prospective tenants will be unable clear, with rents increasing in some
to secure accommodation. The locations and decreasing in others.
decline in the vacancy rate seems This may reflect the moratoriums
to be driven by a shortage of on evictions and rent increases
actual properties—the Anglicare in place during 2020. As these
Australia network’s series of restrictions are lifted, there are
‘snapshot’ surveys has tracked a signs of increasing affordability
steady decline in rental availability, pressure in the market linked to a
with the number of properties declining vacancy rate.
advertised for rent falling 73
percent since 2013 (Claxton 2021: 4).
Figure 10: Private rental market vacancy rate (quarterly), Tasmania, 2004 to 2020
Source: Authors, unpublished data, Real Estate Institute of Tasmania.
14 University of Tasmania2. Incomes and housing costs
The previous section outlined the income of households wholly
the sustained increases in the reliant on the income support
cost of housing in Tasmania, system against the Henderson
both in purchase prices and in Poverty Line, which is calculated to
rents. Increased costs present represent the disposable income
affordability challenges when they needed to support the basic needs
are not matched by increased of a family of two adults and two
capacity to pay. children (Melbourne Institute:
Applied Economic and Social
Research 2020). Equivalence scales
‘Housing affordability is defined by the relationship are used to produce equivalent
between housing expenditure, such as mortgage poverty lines for other household
types. According to the Institute’s
payments or rent, and household incomes. Having December 2019 report, only
housing that is affordable means households can two household types reliant on
access an adequate standard of housing without income support were receiving
incomes above the poverty line:
unduly compromising other needs’ married pensioner couples, single
(NHFIC 2020b: 47). pensioners, and single parents
with one child (the calculation
assumes these single parents
Wage income in Australia has are living on Parenting Payment,
remained stagnant for some years which means their child would be
with no increase to purchasing aged under eight—single parents
power. According to the 2019-20 with a child above this age would
Survey of Income and Housing, be on the much lower JobSeeker
national average ($2,348) and payment). In some cases, the gap
median ($1,841) weekly household between payment and poverty line
income remained unchanged is substantial: a couple reliant on
in the June 2020 quarter from JobSeeker (then called Newstart
the March 2020 quarter and Allowance) was receiving
represented only a minimal 79.5 percent of a poverty line
increase from June 2018 ($2,314 income ($577.60 per week
average and $1,752 median) (ABS compared to a poverty line of
2020a). At the time of writing, data $726.27, while a single person
was not yet available for Tasmania on JobSeeker was receiving just
specifically, but Tasmanian 65.0 percent of the poverty line
incomes have historically been ($352.90 compared to $542.92).
below the national average. This
as an important consideration: it Statutory and other incomes
is not only rent that varies across did shift during 2020 due to
location but also income, which government interventions
means ‘affordability’ has a strong in response to the COVID-19
geographical component. pandemic. JobKeeper, an
Australian Government payment
A high proportion of the made available to workers via
Tasmanian population has eligible employers (defined
historically relied on the Australian primarily by their amount of
social security system for their revenue loss due to the pandemic),
primary source of income. Pension and the coronavirus supplement
increases have been limited in to selected income support
recent years as these are linked payments, including JobSeeker
to wage increases. Allowances Payment, Youth Allowance,
have increased even less as these Parenting Payment and Austudy,
payments are linked to inflation. would have represented a decline
The Melbourne Institute tracks in income for some households
The Tasmanian housing market: update 2020-21 15and an increase for others. Rental affordability was attributed to the effects of
Anecdotally, this adjustment in the pandemic and the broader
income did influence people’s One measure of rental affordability situation in Hobart was ‘dominated
housing choices, especially where that accounts for local household by a more persistent trend of
households had an increase in incomes is the rental affordability declining affordability’ (SGS
income and used it to, albeit index (RAI), which is based on Economics and Planning 2020:
temporarily, improve their housing modelling by SGS Economics. 40). The authors also cautioned
circumstances (Verdouw et The RAI uses a score of 100 to that an overall improvement in
al. 2021). However, JobKeeper indicate the boundary between affordability masks the fact that
payments tapered from affordability and unaffordability: very low-income households
28 September 2020, ultimately scores of 100 or less indicate a may still face extreme to severe
ceasing on 28 March 2021. The household is paying more than affordability problems.
coronavirus supplement has also 30 percent of income in rent,
been withdrawn and income which is a measure of ‘housing Relative to the other ‘rest of
support has largely returned to stress’ or unaffordable housing. state’ areas in Australia, regional
pre-pandemic levels, with the Greater Hobart currently scores 96 Tasmania is the most unaffordable
recent $50 per fortnight increase against the RAI (see Figure 11). of the states included in the
in JobSeeker Payment and research (New South Wales,
comparable payments effectively The 2020 RAI report, drawing on Queensland, South Australia,
negligible given the level of those data from mid-2020, identified Victoria and Western Australia).
payments relative to the poverty Greater Hobart as the least Affordability increased slightly
line (Melbourne Institute: Applied affordable Australian capital in the first half of 2020, again
Economic and Social Research city—it was the only capital city probably due to the impact of
2020). in which households on the local JobKeeper and the coronavirus
average income and renting in the income support supplement, but
private market would be living in the underlying trend is towards
housing stress (SGS Economics greater unaffordability (see
and Planning 2020: 54). Although Figure 11).
this represented a slight increase
in affordability relative to the As an alternative measure of
previous year, this improvement affordability, research undertaken
for the National Housing Finance
Figure 11: Rental Affordability Index, quarterly, Tasmania, 2012 to 2020
Source: SGS Economics and Planning 2020.
16 University of Tasmaniaand Investment Corporation found are historically low, the cost of Summary
that nationally, as of June 2020, servicing a mortgage has been
the bottom quintile of renters (by equal to or even below the average Affordability is determined not
income) could afford less than cost of paying rent (NHFIC 2020b: just by house prices or rents, but
10 percent of rental stock and the 60). The deposit gap may also have by income. Incomes from wages
second lowest income quintile closed somewhat: the Australian have been static for some time
could afford just 20 percent (NHFIC National Accounts show that the which means that, as rents have
2020b: 55). Affordability was household saving ratio increased increased, affordability in the
defined according to the housing nationally to 22 percent in the private rental market has declined.
stress benchmark of 30 percent or June quarter of 2020, up from Home purchase is somewhat more
less of income spent on rent by a 7.9 percent in March, and it still affordable than it has been due to
household in one of the bottom remained relatively higher, at low interest rates and increased
two income quintiles. In Hobart, 11.6 percent, in March 2021 household savings, but the price of
less than 10 percent of homes were (ABS 2021d). most Tasmanian houses remains
considered affordable according to two high for most income earners.
this definition (NHFIC 2021b). NHFIC now considers a quarter The lowest income earners in the
of available dwellings nationally community tend to be those on
Rents in social housing are to be affordable to prospective income support payments. Many of
income-linked, with most tenants first home buyers in the bottom these individuals and households
paying around 25 percent of their two income quintiles (NHFIC are living well below the poverty
income in rent (plus any applicable 2020b: 62). The picture for Hobart line, with significant consequences
Commonwealth Rent Assistance is slightly different, however, with for their ability to obtain any kind
for those in community housing). only 10-20 percent of properties of housing.
This means that according to affordable to the bottom
the ‘housing stress’ measure of 60 percent of income earners
affordability, social housing tenants (NHFIC 2021).
do not have affordability problems.
However, while social housing
provides an important protection
to tenants by ensuring such
rents, the extremely low level at
which Australian income support
payments are set means that
many social housing tenants may
nonetheless be living in poverty,
particularly those who have
complex health and other support
needs which impose additional
costs.
Purchase affordability
There is a lack of current data on
the affordability of home purchase
specifically in Tasmania. Nationally,
the affordability of home purchase,
measured by the ratio of mortgage
repayments to incomes, improved
for some groups in the population
during 2020. As noted in section 1
of this update, house prices have
continued to rise, which means
that borrowers may have been
taking on higher levels of debt
overall, but because interest rates
The Tasmanian housing market: update 2020-21 173. Demand and supply drivers
In formal terms, demand for housing refers to households’ housing needs and
preferences, and the number of dwellings required to meet these needs or
preferences. Thus, although demand refers to the basic need for shelter, it can also
incorporate a preference for particular types of housing or levels of amenity.
The long-term drivers of housing demand include changes in the population due
to births, deaths or migration; the overall age structure, and therefore life-stages,
of the population; and broader social and economic change.
Housing supply refers to the number of houses available. It is the net result of new
additions to the housing market arising from the construction of new dwellings and
losses to the housing market through demolition. The supply of residential housing
may not always match the number of households in a community, as some
households may use more than one house (e.g. because they live in one property,
but use a second as a holiday home or shack).
Changes in demand the Nation’s Housing 2020 report,
it was estimated that around half
The COVID-19 pandemic has the working population was still
affected the make-up of housing working from home, a pattern
demand in Tasmania, but it is that has persisted into 2021 amid
not yet clear what the long-term ongoing lockdowns. The report
impact might be. The ongoing noted that demand appeared to
shortfall in affordable housing be shifting away from inner-city
supply has been a confounding dwellings to regional centres,
factor. For example, migration although it was not yet clear
increases housing demand more whether this trend would persist
rapidly than natural population (NHFIC 2020b: 6). Even if the
increase (more births than deaths) shift is only temporary, it could
or new household formation, yet still increase housing demand in
although the demand for housing Tasmania in the short and medium
through migration, especially term, including through greater
international student migration, interstate migration to Tasmania.
almost halted during 2020 due to
COVID-19 travel restrictions, unmet
demand for affordable housing in Components of
Tasmania has remained high.
population change
The COVID-19 pandemic has There were an estimated 540,600
also shifted housing preferences people residing in Tasmania
towards free standing dwellings at the end of June 2020 (ABS
that contain extra spaces suitable 2020b). The population had been
for work or study from home and growing steadily in the four years
outdoor areas for fresh air, exercise to March 2020 but following the
and gardening. Less urbanised closure of Australian borders—and
areas have become more desirable Tasmanian borders—it is likely
due to the ability to work remotely this growth has been checked,
and avoid crowded commutes although this was not yet apparent
(see Verdouw et al. 2021). At the in the data available at the time
time NHFIC prepared its State of of writing. What was available
18 University of Tasmaniashowed an annual growth for as a component of population replacement rate of 2.1. This TFR is
the year ending June 2020 of 1.1 growth—from a peak of 50 percent consistent with the rate used in the
percent. The impact of the border of population growth in 2012, it now ‘low’ series of population projection
closures is likely to be significant only contributes 21.9 percent as of assumptions which assume the
because population growth in June 2020. rate will continue to fall, to 1.76
Tasmania, as in the rest of Australia, per woman by 2028 (ABS 2020b).
is primarily driven by net overseas Although Tasmania’s borders are Overall, the difference between
migration, or NOM; NOM has now generally open to interstate births and deaths in Tasmania is
contributed to nearly 60 percent migrants, Australia’s borders beginning to narrow; structural
of population growth over the last are likely to remain closed to ageing of the population and lower
few years. This is followed by net international arrivals, including life expectancy in Tasmania relative
interstate migration (NIM) and international students, for some to Australia means there is likely
natural increase arising from births time to come. This will obviously to be continued increase in the
outnumbering deaths. have an impact on population number of deaths relative to births.
change over the coming years. It This puts Tasmania on trajectory of
Population change in Tasmania has is highly unlikely that substantial natural population decline, which
fluctuated since the previous global population growth will occur due to in turn makes the state more reliant
economic shock of the 2008 GFC natural increase: in 2019, Tasmania on migration for population growth
(see Figure 12), reflecting changes in recorded a total fertility rate (TFR) and therefore more sensitive to
economic conditions which shape of 1.79 births per woman, which changes in migration levels.
employment markets. Natural is less than the rate of 1.85 in 2018
increase is a declining influence and well below the population
Figure 12: Components of population change, and population growth rate, Tasmania,
year ending June 2008 to 2020
Source: ABS 2020b.
The Tasmanian housing market: update 2020-21 19Local variation Table 2: Regional population change, number and growth rate, Tasmanian
local government areas, year ending June 2020
Changes in population at a
Source: ABS 2020c.
statewide level are distributed
differently at the local level, with
some areas experiencing rapid Population change Population growth
growth while others may see a LGA
(no. of people) rate (percentage)
decline in the resident population.
In the year to 30 June 2020, Break O’Day + 59 + 0.9
the local government areas
in Tasmania with the greatest Brighton + 449 + 2.5
number of new residents were
Burnie + 152 + 0.8
Clarence (which increased its
population by 916 people or Central Coast + 220 + 1.0
1.6 percent of population),
Launceston (779 people or Central Highlands + 36 + 1.7
1.1 percent), Hobart (531 people
Circular Head + 73 + 0.9
or 1.0 percent), and Brighton (449
people or 2.5 percent) (see Table 2). Clarence + 916 + 1.6
However, the highest growth rates
occurred in the more regional local Derwent Valley + 95 + 0.9
government areas of Glamorgan-
Devonport + 114 + 0.4
Spring Bay (3.2 percent), Latrobe
(2.8 percent), Tasman (2.7 percent) Dorset + 51 + 0.8
and Sorell (2.7 percent). In only
three local government areas did Flinders −6 − 0.6
the population decline between
George Town + 149 + 2.1
June 2019 and June 2020: the West
Coast (a decrease of 43 people or Glamorgan/Spring Bay + 147 + 3.2
-1.0 percent), Flinders (14 or -
0.6 percent) and Glenorchy (16 or Glenorchy − 16 0.0
0.0 percent).
Hobart + 531 + 1.0
Huon Valley + 402 + 2.3
Projections of future
Kentish + 78 + 1.2
demand
King Island +2 + 0.1
In 2019, the Tasmanian
Department of Treasury and Kingborough + 313 + 0.8
Finance’s ‘middle’ series of
population projections estimated Latrobe + 323 + 2.8
that Tasmania’s population would
Launceston + 779 + 1.1
grow at a rate of 0.2 percent per
year, reaching about 569,000 by Meander Valley + 193 + 1.0
2042 (Department of Treasury and
Finance 2019: 19). As part of this Northern Midlands + 161 + 1.2
overall growth, the population
Sorell + 427 + 2.7
would increase in 14 of the state’s
local government areas and would Southern Midlands + 111 + 1.8
and decline in the other 15. The
Hobart local government area Tasman + 65 + 2.7
would see the greatest number
of new residents, due to higher Waratah-Wynyard + 73 + 0.5
NOM made up primarily of West Coast − 43 − 1.0
younger people, and Brighton was
predicted to see the fastest growth, West Tamar + 351 + 1.5
20 University of Tasmaniawith a percentage increase of growing interstate migration being (ABS 2021c). In-fill development has
1.18 percent per annum driven by lifestyle factors combined been relatively limited and much
(Department of Treasury and with growing acceptance of of the growth in private housing
Finance: 2019: 10). However, the remote working arrangements. supply occurs on the urban fringe.
changes COVID-19 has caused to During the post-war period, as did
NOM and continued uncertainty Overall, Tasmania’s future other states, Tasmania constructed
about interstate travel and population has become much broadacre social housing
consequently to NIM mean the more uncertain due to the developments, but these were
assumptions that underpin these changes brought by the pandemic. smaller in scale than those on the
projections may no longer be valid. Although international migration mainland, and Tasmania’s extensive
remains constrained, there may rent-to-purchase scheme and later
The Australian Government’s be an increase in migration sales programs have meant that
population projections from 2020 from interstate. This will have even the most concentrated areas
were less conservative than the implications for housing demand of social housing are in fact mixed
Tasmanian government’s, even and the supply response needed communities of home owners,
with adjustments to assumptions to meet it. private renters, and social renters
due to COVID-19. Its ‘middle’ case (Flanagan 2019).
shows Tasmania’s population
reaching 569,000 by 2028-29. Changes in supply
This was based on assumptions
With the cessation of large-scale Building approvals
consistent with those in the
2020-21 Budget: that further government construction of public As noted in Section 1, the Australian
localised outbreaks of COVID-19 housing in the 1980s, meaningful and Tasmanian governments have
would be largely contained, that growth in new housing supply in used various programs of grants
state border restrictions would Tasmania has depended largely to stimulate economic growth
be lifted by the end of 2020 and on activity in the private sector. via the housing market. These
that the restrictions on gatherings This, along with the relatively small programs include the boosted
and on international travel would size of the Tasmanian market, First Home Owners Grant and the
continue until a population-wide has had implications for the type state and national HomeBuilder
vaccination program was fully of stock that is added to overall programs. There is evidence that
implemented by the end of 2021 supply. According to the last these types of programs have
(Centre for Population 2020). At Census, Tasmania has a higher triggered an upsurge in building
the time of writing in mid-2021, proportion of detached housing approvals across Australia,
some of these assumptions appear than the national average, and a including in Tasmania, where
overly optimistic, although there is correspondingly lower proportion building approvals numbers
mounting anecdotal evidence of of semi-detached housing and flats increased by 65.1 percent to 464
Figure 13: Monthly building approvals, seasonally adjusted, Tasmania, March 2006 to March 2021
Source: ABS 2021f.
The Tasmanian housing market: update 2020-21 21Figure 14: Total number of building approvals and number of approvals not yet commenced (quarterly, original
time series), Tasmania, December 2005 to December 2020
Source: Authors, collated from ABS 2021e, 2021f.
Figure 15: Number of dwellings commenced and number of dwellings under construction
(quarterly, original time series), Tasmania, December 2005 to December 2020
Note: The ABS defines a building commencement as the first performance of physical building activity on a site, in the form of materials fixed in place
and/or labour expended. Commencement includes site preparation but excludes delivery of building materials, the drawing of plans and specifications
and the construction of non-building infrastructure such as roads (ABS April 2021).
Source: ABS 2021e.
22 University of Tasmaniaapprovals between November and (ABS 2019). Previous University of Figure 14). This shows the potential
December 2020, a 95.0 percent Tasmania housing market updates lag between building approvals
increase since December 2019 (see noted a growing time lag between and building starts. Some of
Figure 13). Approval numbers were approvals and commencements the dwellings that have been
lower in January 2021 but were in Tasmania, possibly due to a lack approved but which have not yet
again in the mid-400s in February of access to skilled labour, finance commenced may never be built.
and March. or project management expertise
(Eccleston et al. 2018c; Jacobs et Despite these 546 dwellings not
According to NHFIC, the time lag al. 2019). This underscores that yet commenced, the growth
between building approval and there is no guarantee that building in overall approvals meant that
completion is on average approvals will necessarily lead to commencement numbers did
12 months for a detached or commencements. increase in the December quarter
medium density dwelling and two of 2020. In that quarter there were
years for an apartment. In practice, 891 commencements, which was
the lag varies depending on the Building activity: an increase of 11 percent year on
type of building being constructed, year as well as an increase from
prevailing planning and market
commencement, the previous quarter (see
conditions and access to materials construction and Figure 15). These commencements,
and labour (NHFIC 2020: 34). completions and the number of dwelling units
Historically (between 2014 and that have proceeded beyond
2019), the average time between ABS statistics for the December commencement and are now
approval and commencement quarter of 2020 show there considered under construction,
for houses in Tasmania was were 1,013 building approvals indicate the number of dwellings
2.6 months and the average in Tasmania. There were also coming on line. For the December
time between commencement approvals for 546 dwellings sitting quarter of 2020 there were 2,367
and completion was 7.0 months ‘on the books’ and classified as dwelling units under construction,
‘not yet commenced’ (see
Figure 16: Number of dwellings completed (quarterly, original time series), Tasmania, December 2005 to
December 2020
Source: ABS 2021e.
The Tasmanian housing market: update 2020-21 23which was a slight decline from the are classified as public or private, imply that all new construction is
previous quarter (-1.6 percent) and the latter figure may not be in the right form or the right place
a slight increase from the previous equivalent to new social housing to match demand. There are also
year (1.3 percent). The previous supply). The total represents an reports of concerns within the
major peak in construction, in increase of 6.8 percent from the industry about critical shortages
March 2010, coincides with the previous quarter and 26.1 percent in construction materials which
GFC stimulus package which from the previous year (see could push up costs and put at risk
included measures targeted at the Figure 16). timely completion of new housing
construction industry. supply (Coulter 2021), as well as
The increased building and an ongoing shortage of building
The number of dwelling construction activity is most likely labour (Mawby 2021).
completions is also tracking connected to the economic
upward. In the December quarter stimulus measures introduced
of 2020, 875 dwelling units by the Commonwealth and The demand-supply
completed, comprised of 823 State Governments. There is new
private sector dwellings and 51 housing supply being built and
balance
public sector dwellings (due to this includes some social housing. The balance between supply
complexities in the way dwellings However, this does not necessarily and demand is formed by the
Figure 17: Actual and projected annual changes in supply, demand and supply-demand balance,
Greater Hobart, 2019-2025
Note: ‘Supply-demand balance’ refers to the difference in new demand and new supply. A negative balance implies there is not enough new supply to
meet new demand and a positive balance implies that there is too much new supply relative to new demand.
Source: NHFIC 2020b: 76.
24 University of Tasmaniarelationship between the amount undersupply of housing of around for already formed households)
of underlying demand in the 200,000 dwellings in Australia with economic adjustments that
market and the net supply of (NHFIC 2020b: 5). According to incorporate factors such as in
housing. Although the ratio NHFIC, which now has carriage unemployment rates, income and
between demand and supply can of monitoring the national supply cost of housing.
be quantified for a given point of and demand for housing,
in time, the relationship itself is over the following decade NHFIC’s modelling for 2020 found
dynamic. In a well-functioning construction levels increased at Greater Hobart to have a small
market, a significant level of unmet a rate that broadly kept supply under supply of housing but
demand would be expected to and demand in balance. NHFIC projected a moderate over-supply
stimulate a supply response, but has supplemented the National of 800 dwellings to develop by
the many factors at play in housing Housing Supply Council’s model 2021 as new demand fell and
markets mean they do not always of underlying housing demand there was a net increase in new
function well. (which is based on new household dwellings (see Figure 17). This was
formation derived from population expected to remain in balance
In 2010, the former National growth and age structure rather until 2024 when demand was
Housing Supply Council than changes in housing demand expected to increase to the point
estimated there was a cumulative of another undersupply unless
Figure 18: Actual and projected annual changes in supply, demand and supply-demand balance,
rest of Tasmania, 2019-2025
Note: ‘Supply-demand balance’ refers to the difference in new demand and new supply. A negative balance implies there is not enough new supply to
meet new demand and a positive balance implies that there is too much new supply relative to new demand.
Source: NHFIC 2020b: 76.
The Tasmanian housing market: update 2020-21 25a construction program was 2020, demand for apartments
maintained. This pattern was has fallen due to restrictions
consistent with NHFIC’s projections on migration, including from
for Australia as a whole. international students. There is now
an oversupply of apartments in
For the rest of Tasmania, NHFIC’s major cities such as Melbourne or
projection for 2021 was a fall in Sydney, which is expected to lead
new household formation, and to lower rents for those dwellings.
therefore a fall in demand, leading However, this has not happened in
to an over-supply of 700 new Hobart, where rents have remained
dwellings. In 2022 this balance high. As noted above, historically
would shift to an undersupply of the Tasmanian market has been
500 dwellings, before returning dominated by detached housing
to a small oversupply in 2024 (see and this is expected to continue
Figure 18). with demand for freestanding
homes growing. The market
The accuracy of these projections
for detached housing, as well
depends on a range of factors.
as regional markets with spare
The housing market is currently
capacity in the building industry,
more dynamic and hence less
are also more likely to benefit from
predictable than ever. COVID-19
the various stimulus programs.
has altered the economic outlook
and is driving unanticipated
changes in intrastate, interstate
and international migration.
Summary
Subsequent policies that seek to The balance between housing
actively influence construction, demand and housing supply is
such as the various stimulus always dynamic, but with the
programs, were not incorporated changes brought by COVID-19,
into NHFIC’s model. including restrictions on migration,
affecting demand, and economic
The models are also broad. An stimulus measures targeted at
over-supply of 700 homes, for construction, affecting supply, it
example, may be less significant is now inherently unpredictable.
once those 700 homes are Although there are signs that the
distributed across the entirety stimulus measures are leading
of the ‘rest of Tasmania’. Certain to increased activity within the
communities may experience building sector, there are no
an under-supply even though in guarantees that the resulting new
aggregate the entire state is in supply will be of the type or at
over-supply and vice versa. Nor do the price point needed to resolve
raw supply numbers incorporate Tasmania’s affordability challenges
the amenity or price of newly built in the short-to-medium term.
dwellings, which means shortages
of certain types of housing, such
as affordable housing or housing
which meets universal design
principles, may persist despite an
oversupply in other segments of
the market.
For example, the supply of new
apartments coming onto the
market peaked in 2017 and was
already in decline prior to the
pandemic, particularly in capital
cities (NHFIC 2020b: 24). Since
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