Hobary continues its impressive streak
Hobart remains the overall most affordable capital city in Australia, despite recording strong growth results in 2016.
Cameron Kusher, research analyst at CoreLogic, notes that during the January 2017 quarter, Hobart’s property prices increased the most among the capitals, with a nearly 6% rise. Part of this growth has been the result of having low stock in the city. Indeed, the amount of new supply on the market is significantly lower than in 2016.
“Given that the amount of stock listed for sale is likely to rise, it will be interesting to see how quickly it lifts and how it compares to stock levels from a year ago which were considered to be quite low,” Kusher comments.
Due to the inspired demand, properties are flying off the market, taking far less time to sell in 2016 than in 2015. Discount levels were also dropping throughout 2016. This will benefit vendors of houses in particular, with prices for detached dwellings soaring by 8%.
Prices for units rose by only 6.3% in comparison, but this market is well compensated through a considerable boost in rental yields to an average of roughly 6%. By contrast, house yields slipped slightly to 5%.
Overall, Kusher predicts that the strong growth trend will be maintained throughout 2017, especially if the city continues to have the tightest vacancy rates in Australia.
Economic factors boost demand
Hobart’s excellent performance is due in large part to the city’s thriving commercial scene, which is generating a number of employment opportunities and supporting the local economy.
“Property and construction is driving a boom period in Hobart’s economy,” says Brian Wightman, Tasmanian executive director of the Property Council of Australia.
“Increased demand for office space is a welcome sign and presents further opportunity to embark on reforms which will deliver a generation of continuous economic growth.”
In fact, the tourism industry is a cornerstone not just of the economy, but of the property market, according to Herron Todd White in their February 2017 Month in Review report.
The effectiveness of this sector has prompted an increase in investor activity, where buyers are purchasing homes for use as accommodation during short-term holidays because these types of dwellings generate higher yields than long-term rentals.
The effects of the economic boom can be observed in how the level of interstate migration to Hobart has risen recently.
“Buyer’s agents have reported an increased interest in the property market throughout the greater Hobart region and have observed first-hand growth of 8–10% from January to December 2016,” Herron Todd White reports.
“Should the increased interstate migration and booming tourism levels continue at this rate, we believe this will serve to create stronger growth throughout not only 2017 but also for the next few years.”
Even though Hobart’s auction clearance rate remained the lowest of the capitals in mid-February 2017, the auction market could still receive a boost.
“The year 2017 may be the year we see an increase in properties going to auction due to many properties having multiple offers only a few days after being listed,” HTW indicates.
“Taking properties to auction may increase the sales price achieved as it will allow further time for interested parties to discuss their options, rather than rushing in with an offer in fear of missing out had the property not been offered for auction.”
The regions of greater Hobart and Launceston have been tapped as strong performers because they have ample growth potential. These areas are also home to well-located suburbs like Moonah, Glenorchy and Berriedale, which are approximately 15km from Hobart while providing many amenities including shopping districts, schools, medical centres and convenient public transport stops.
Even though growth recorded is not as strong as in other Tassie regions, outer suburbs, such as Kingston, also recorded recent growth, as per the Real Estate Institute of Tasmania. These suburbs are typically more affordable as well.
SUBURB TO WATCH
Kingston: Urbanisation enlivens suburb on the outskirts
As a result of its urbanisation, Kingston is one of the fastest-growing regions in the state.
Growth levels for houses over the past 10 years peaked at nearly $400,000, and prices increased by over 6% in the previous year. Although units performed more weakly than houses did, the former is on the rise, with consistent if gentle price hikes in recent years. Yields are high, which could draw investors to places near Hobart.
Many Kingston locals are employed in the Hobart CBD since the city is less than 20 minutes away, while being pleasantly situated near the water. There are several shopping centres in the area, adding to its liveliness. There are various schools in Kingston as well.