The Apple Isle remains popular with investors, but developers may be overestimating its appeal to tenants
Tasmania continues to attract both investors and first home buyers as it is still one of Australia’s most inexpensive property markets. In particular, Hobart is a big draw because of its current strong economy.
“Tasmania is hot at the moment in the eyes of the country, highlighted by the strong capital growth and rent returns on offer,” says Josh Hart, director at One Agency Launceston.
With quality accommodation being scarce in both Hobart and Launceston, this could be a great opportunity for investors to buy property to rent out to holiday-makers and take advantage of the booming tourism industry.
“You just need to look online on Airbnb or Stayz to appreciate the great returns and nightly stay rates,” Hart points out.
“Short-term visitors often like to stay within walking distance of some stand-out attractions, or in a place hidden away off the beaten track.”
The Property Council of Australia agrees that investment in accommodation should be a major priority for the state government in order to help facilitate economic growth and support the tourism and education industries.
Economy bolsters occupier confidence
Employment opportunities in Hobart increased by 8% in the year to August 2017, says Simon Pressley, managing director of Propertyology. In the six months to August, Hobart also recorded the greatest increase in median property values of all the capital cities, according to CoreLogic.
The annual growth rate in Hobart has not reached such heights since 2004, says Tim Lawless, director of research at CoreLogic.
“The sheer affordability of housing is likely one of the key drivers for Hobart’s values appreciation,” he comments.
Nonetheless, Hobart’s level of popularity has not spread to other regions in the state, thus Tasmania could be in danger of oversupply.
“Typically, this region is the last to benefit from the wave generated by a price boom; however, investors should be alert to a potential oversupply of rental properties in some areas,” warns Charles Tarbey, chairman and owner of Century 21 Australasia.
“This could cause downward pressure on rental income. Investors should not be put off by this but should ensure they are well backed and prepared financially for a lower rental income.”
SUBURB TO WATCH
PERTH: Historic suburb has modern-day appeal
The suburb of Perth has been benefiting from its excellent location as the first major town between Launceston and Hobart.
Apartments seem to be the property of choice for buyers here, with a 10% increase in prices continuing the positive growth trend of the past five years. House values have also risen by 5%; nonetheless, median prices don’t even hit the $300,000 mark.
Perth’s points of interest are its historical buildings, many of which have been preserved. It is also well located on the Midland Highway, less than 20km from Launceston. As the town serves as a major junction between the main cities, with many visitors and travellers passing through it, there are plenty of dining options.
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