Investor confidence is peaking in the Apple Isle as low supply drives demand from both buyers and renters
As Hobart racks up accolades in the national property market, it may be looking to claim the spot among Australia’s capital cities.
“It’s now abundantly clear that Hobart is about to hit the lead. And not by a smidge either; it’s about to fly right past,” says Simon Pressley, managing director of Propertology.
“All of the metrics which shape one’s opinion point towards further growth in Hobart – lots of it! If ever there was a chance of a capital city breaking Darwin’s capital city to exceed 20% price growth in a calendar year (22% in 2007), it is Hobart, especially in the municipalities of metro-Hobart, Clarence and Glenorchy.”
However, the available housing supply may not be able to sustain the ever-rising demand.
“Hobart’s biggest challenge is insufficient stock for sale, which is adding even more pressure on prices,” Pressley explains.
Vacancy rates leave no breathing room
Tasmania is in the middle of a housing shortage crisis, which inspires the need for more development and construction projects, especially with the population expected to grow even more over the years to 2050.
“Development and new building opportunities in close proximity to Hobart and Launceston will provide consistent growth and yields in excess of 5% plus, as well as depreciation benefits,” says Josh Hart, director of OneAgency Launceston.
The Tasmanian government could be looking to provide incentives to landlords by implementing rebates on land tax concessions. Yet the very issue of low supply is one of the drivers of interest in Hobart.
“The main success of the current market is the significant housing shortage across the state for tenants, to a point where tenants are camping at the Hobart Showground, and it is not uncommon to have five to eight rental applications on any one property,” Hart says.
“All key indicators are green. In particular, credit to the low vacancy rates in Hobart, which are currently under 1%, whilst the remainder of the state is not far behind at 1.5%.”
This has caused rental rates in Hobart to increase by 2.7% – the most significant rise among the capital cities, according to the Real Estate Institute of Australia’s Real Estate Market Facts report for December 2017.
SUBURB TO WATCH
MOUNT NELSON: Prestige suburb flourishes
The beautiful seaside suburb of Mount Nelson is seeing remarkable levels of demand. Units in particular are performing quite well, with prices increasing by 19.2% in the 12 months to February 2018.
This has pushed the median value to $318,769, which is still affordable in line with Tasmania’s status as the most affordable market in the country. Apartments are on the market for an average of just 46 days before being sold at an average discount of 1.9%. Rental rates also rose by 9.3% over the last 12 months, which the average yield coming in at 5.2%.
Mount Nelson is known for its great views of the River Derwent. Four public secondary colleges have been established here.
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