TAS Excerpt from the 2017 March Market report

01 Mar 2017

Hobart City: An investor’s dream?
Investors have more reason than ever to direct their interest towards Hobart, which is not just the most affordable capital city but has the highest gross rental yields in Australia.

CoreLogic indicates that, as of the most recent reporting quarter, the average yield for houses was 5.3%, while that of units was 5.6% – a 0.3% increase from the previous year.

Although dwelling prices as a whole slipped during this period, 12-month growth was at 5%. Moreover, properties are selling more quickly than they were in 2015, indicating the significant upswing Hobart experienced throughout 2016.

This popularity could be attributed in part to the fall in stock on the market, as the number of new listings went down by a whopping 12.8%. This is resulting in strong competition for choice properties.

This positivity extends to the sale of properties outside the metro, with the region of Circular Head reporting a 91.6% increase in sales value over 2016 – the highest in the nation.

“The increase in value has been more driven by an increase in values of properties,” says Cameron Kusher, CoreLogic’s head of research.

Economic growth drives success
The lower Australian dollar has also been a blessing for Hobart as it fosters competition among Tasmania’s trade-heavy industries, including tourism, education, agriculture and manufacturing.

“Tasmania is enjoying its best period in years, with the low Australian dollar boosting tourism and agriculture, while strong public and business investment is pushing up growth,” explains Richard Robinson, senior economist at BIS Shrapnel.

“Tasmania’s economy has shown a solid improvement over 2015. This follows six years of very weak growth since the GFC, with the state’s economy hit hard by the high dollar, which had an impact on the state’s key tourism, agricultural and manufacturing sectors. The momentum of 2015 is expected to be carried through 2016/2017.”

Robinson predicts that the primary drivers of growth in 2017 will be significant development in non residential construction and engineering, due to government spending and increased export growth. This could increase job opportunities and spur population increases through migration, especially given how affordable Hobart’s properties are compared to those in its more well-known sister cities on the mainland.

Focus on jobs to stem downturn
Despite Tasmania’s strong performance over the past couple of years, economic progress is expected to slow heading into 2018, with the culmination of building projects and a national downturn predicted in the housing market.

Over the next two years, for instance, apartment building levels are forecast to drop by more than 40%. The National Outlook report published by the Housing Industry Association (HIA) indicates that new stock, especially of units, will continue to fall, although residential activity should remain healthy due to an uptick in renovation activity during this period.

“This record level of building has made a major contribution to Australia’s economic growth over the last few years and eased the undersupply of housing for both owner-occupiers and renters that had built up over the previous 10 years,” explains Warwick Temby, acting chief economist at the HIA.

“Multi-unit building, especially apartments in the eastern states, has driven much of the growth in this cycle and is forecast to lead the slowdown in new activity over the next couple of years.”

In response, the Property Council of Australia presented an argument for Launceston’s City Deal in order to generate long-term employment opportunities.

“There is a lot happening in Tasmania and that is fantastic, but we must be planning for the long term rather than simply expecting that this current growth will continue forever,” states Brian Wightman, executive director of the Property Council.

“The focus must be jobs and laying a foundation for long-term growth.”


Riverside: Strong house market in Launceston neighbour

Located 4km northwest of the Launceston CBD, Riverside is home to a significant proportion of city residents because of its location, affordability and range of properties, from brick and weatherboard style to art deco.

While the unit market recorded a slight decline over the past 12 months, the house market performed better, with growth of 4.1%. The increase in demand is confi rmed by the drop in the average vacancy rate from 1.16% in 2015 to an even-lower 1.08% as of November 2016.

The suburb reflects Hobart’s status as a good investment – properties in Riverside can generate returns of over 5%, and its amenities include a shopping centre, several schools, sporting facilities and restaurants. Bus services are available as well. 

Top Suburbs : west rockhampton , coolbellup , thebarton , marrickville , kariong


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