THE rapid increase in property prices in Launceston could cause rents to rise in the city’s more disadvantaged suburbs, according to City of Launceston.
In the 12 months to April 2018 property prices in Invermay increased by 30 per cent, while Launceston recorded the greatest property price increase in regional Australia at 11 per cent.
Increases were also noted in Rocherlea, Ravenswood, Mayfield and Waverley, suburbs that have socio-economic ratings of around 800, which places them in the most disadvantaged categories in Australia.
The average weekly household income in these areas is $623, with 38 per cent facing rental stress.
In a submission to an inquiry analysing regional inequality in Australia, City of Launceston general manager Michael Stretton said rising house prices would “most probably” lead to an uplift in rental charges.
“These changes to property values are most probably related to the City deal and from investors seeking higher returns on residential investment than are available on the mainland and other pressures on housing across the state,” he wrote.
“There is currently an increasing requirement for affordable housing in Launceston.
“The issue is that the rental return required to justify the construction cost of new housing puts it out of the reach of the disadvantaged sector in the community.
“In the absence of an incentive to construct affordable accommodation, the returns are not compelling for investors.”
The council cites Invermay as an example of growing affordability issues, citing sales from early 2018. While prices in the area have averaged around $220,000 for five years, over the course of two months dozens of sales averaged around $280,000.
One in four of the 3749 households in lower socio-economic areas of Launceston are renting, while in Rocherlea and Ravenswood the figure is closer to 50 per cent.
Intergenerational disadvantage in these areas was also identified as an issue that needed addressing.
The City of Launceston urged the federal government to find ways to encourage investment in affordable housing for the disadvantaged in regional communities, including infrastructure funding to local government to “support private development of affordable housing”.
“This could include a capital fund to drive affordable housing and incentives for institutional investment in affordable rental housing,” the submission reads.
Last year, six sections of land totalling 38 hectares were identified in Launceston as areas that could be rezoned for affordable housing, among 139 hectares across Tasmania.