Demand shoots up in affordable Hobart
Hobart continues to perform admirably after a considerable rise in property prices in 2016.
According to CoreLogic’s head of research, Tim Lawless, Hobart is fourth among the nation’s capitals in terms of fastest average selling time, indicating how demand has risen in this capital. This could be attributed to the limited number of listings on the market.
“Lower stock levels are likely to be one factor contributing to the upwards pressure on dwelling values,” Lawless says.
“Vendors are still very much in the driver’s seat in these markets, and buyers have little in the way of leverage to negotiate, or time to consider their purchase decision.”
Hobart’s high yields are also sure to get the attention of investors looking to get into this rising market. It is one of only two capitals in which returns have increased over the past 12 months, with rental rates growing at a higher rate than unit prices.
Despite its growth, the Hobart property market remains one of the most affordable across Australia, prompting it to be labelled by many in the industry as a rising star.
“The beginning of the year has seen a great deal of publicity encouraging people to buy in Tasmania, particularly in Hobart,” says Charles Tarbey, chairman and owner of Century 21 Australasia. “A large push from buyers for properties at affordable prices, such as house and land packages, has a tendency to attract a lot of investment. Some of the regional areas such as Launceston and Devonport have strong local economies and may hold good prospects.”
Experts advise caution
Despite the rosy picture of Hobart, Tarbey recommends that investors approach the market with caution.
“A substantial enough increase in rental properties may potentially lead to a higher vacancy factor, which can be a danger zone for investors who are not cautious,” he warns.
Michael Yardney, founder and director of Metropole Property Strategists, supports this statement.
“I would be wary about buying Hobart property as the price differential between Hobart and the mainland capitals has always been significant,” Yardney says.
“Even though economic growth and tourism has picked up recently, with minimal population growth there are few long-term growth drivers in this isolated property market. Without a big economic shift to boost employment and sentiment there is little to suggest things will change in the long term.”
Shopping centres boost house market
Undoubtedly, the availability of amenities such as shopping centres can add significantly to a suburb’s power, especially in regional areas.
“Shopping centres are now increasingly places for people to socialise and be entertained,”
says REA Group chief economist Nerida Conisbeee.
“Houses near large shopping centres in regional areas have already begun to see growth, particularly those about to undergo expansion.”
Eliza Owen, market analyst for OnTheHouse.com.au, also notes that Hobart presents adequate benefits to spur interstate migration, such as the strong agriculture industry and tourist appeal, both domestically and internationally.
“It is important to keep in mind that Tasmania still has geographical challenges with freight costs and labour force limitations. However, interstate migration to the area may increase due to the aforementioned growth factors, which would also bring new skills and services to the area,” Owens says.
Moreover, with the rise of values in the city, the growth may spread to Launceston, the second-largest city in Tasmania. This city has various amenities, including universities, shopping hubs and heritage sites. Dwelling prices in Launceston have been increasing throughout 2016, which bodes well for its potential in 2017.
Macquarie Point in Hobart is also set for a major redevelopment based on plans presented by the Museum of Old and New Art, according to the January 2017 edition of the Cordell State Market Watch.
SUBURB TO WATCH
Youngtown: Launceston neighbour offers great returns
Located about 10 minutes from Launceston, the suburb of Youngtown has been experiencing fairly consistent growth in recent years.
The suburb offers affordable houses at a median price of under $300,000 which also generate high yields of nearly 6%. In line with the rising popularity of the Launceston area, Youngtown recorded a slight increase in apartment values over the past 12 months. Meanwhile, the average vacancy rate has been very low at 0.77%, affirming that demand in this suburb is strong.
Youngtown is rich in amenities, including a primary school and a sporting oval. It is also home to heritage sites such as Franklin House and St James Anglican Church. Due to Youngtown’s proximity to the Launceston CBD, which is reachable by car and bus, residents also have access to the shopping and entertainment facilities there, as well as to Launceston General Hospital.