Confronted by the worst recession in 90 years, Tasmanians ... buy houses.
Tasmanian home lending is surging during the coronavirus crash, despite the economic uncertainty and job losses.
The Australian Bureau of Statistics estimated the state had 980 new housing finance commitments involving owner-occupiers in August in original terms.
That was the highest monthly total in more than a year and an increase of 193 compared with July.
The 980 commitments included:
- 100 for construction of dwellings (the most since July 2019);
- 37 to buy new dwellings;
- 564 to buy established dwellings (the most since May 2019);
- 237 to buy residential land; and
- 42 for alterations, additions or repairs.
The ABS estimated home lending also increased strongly nationally in August in seasonally adjusted terms, with owner-occupier loan commitments up by 13.6 per cent and investor commitments by 9.3 per cent.
Economist Saul Eslake said he was surprised by how resilient property prices had been in Tasmania and nationally, in spite of the coronavirus-driven lack of migrants from overseas, who, he said, typically accounted for a large share of the growth in underlying demand for housing.
In Tasmania's case, he said interstate migration had also been an important contributor to the strength in the market "since the flow of people across Bass Strait turned around about four years ago".
He said he suspected prices had held up because the market had been "a bit artificial", with low turnover "because people who might have been forced to sell, for example, because they'd lost their jobs, either haven't lost their jobs because JobKeeper has kept their wages up or because they've been able to access the mortgage repayment holiday/deferral".
"Thus, my hunch is that when the mortgage repayment holidays end, and/or when JobKeeper ends, there will be some increase in forced sales and, if overseas migrants are still out of the market, that is likely to mean downward pressure on prices, especially in Melbourne, which has been very dependent on overseas and interstate migration.
" ... there might be less interstate migration to Victoria when the borders open because of the damage which Victoria's incompetent management of the virus may have done to its appeal as a destination."
Mr Eslake said Tasmania might experience less of the pressure because more homes were owned outright due to its older-than-average population.
"Much may depend on whether Tasmania is seen as a more attractive place to move to because we've handled the virus pretty well, apart from that bad luck experience at the North West Regional Hospital early on in the piece," he said.
He said it was hard to say at this stage if Tasmania would get a bigger flow of people arriving once they were allowed to and/or fewer Tasmanians wanting to leave.
"International students usually rent rather than buy, so I don't think their absence will have much impact on property prices," he said.
"Rather, it may relieve the pressure we had been seeing on rents, especially in Hobart."
Housing Industry Association executive director Tasmania Stuart Collins said short-term stimulus from government HomeBuilder grants was emerging in the ABS data.
"This is particularly evident in the issuing of loans for the construction of new homes and in lending to first home buyers," Mr Collins said.
"Nationally, the number of loans for the construction of a new dwelling increased by 22.9 per cent in August 2020 to its highest level in over a decade.
"This result has been helped by Tasmania, with the number of loans to owner-occupiers in August for the purchase or construction of new dwellings increasing by 48.9 per cent, the best of any state or territory.
"There has been a substantial improvement in sentiment and confidence in the housing market."