Buyers driven out of Hobart by rising prices are bringing growth momentum to the regional markets
Hobart’s unchallenged run continues with strong performance in both the buyer and rental markets.
“Suburbs within Hobart’s inner 8km ring have a genuine chance of producing 20% price growth in the 2018 calendar year,” says Simon Pressley, managing director of Propertylogy.
“The northwest regional city of Burnie is one to watch. Property sales volumes are already 26% higher than two years ago, and the number of days it takes to sell are falling sharply. Construction of a new university will commence in early 2019, plus there are a few other major job announcements. Export volumes out of the Port of Burnie continue to break records.”
CoreLogic notes that Hobart’s potential for capital growth shows no signs of waning as property prices increased by 12.7% in the 12 months to May 2018.
While the city still records one of the lowest average weekly rental rates ($418), price growth has put pressure on the rental market. Hobart reported the highest rental growth rate among the capital cities in the 12 months to June 2018.
As a result, rental returns have surpassed that of Adelaide and are approaching Brisbane levels.
Metropole Property Strategists CEO Michael Yardney believes Hobart could become the top performer in the national property market; however, he is not as certain that this small market can sustain its growth.
“[It’s] driven by investors chasing the ‘next hotspot’. But keep in mind [Hobart] is a very small market, so we learn from the past that this year’s hotspot can easily become next year’s ‘not spot’,” Yardney says.
“Hobart is a small place and it doesn’t take much to influence its property market – in both directions. Despite the current fast rate of growth, dwelling values in the Apple Isle have barely kept up with inflation over the last decade, and with few long-term growth drivers, I would avoid investing in Hobart.”
The Tassie capital seems played out for buyers who are looking for affordability, but other areas like Launceston and Burnie are picking up momentum. According to Herron Todd White’s Month in Review report for July 2018, the middle- and outer-ring suburbs offer the most promise. With these areas only just beginning to rise, there is a lot of potential left to capitalise on.
SUBURB TO WATCH
DYNNYRNE: Units on the up
A premium suburb, Dynnyrne has been attracting the attention of the wealthy. It offers amazing views of the Derwent River, which have kept house prices quite high, at over $700,000.
However, units provide an opening for buyers to get in – the median price is under $400,000 despite 7.1% growth over the year to June 2018. While the apartment market is not reaching the heights of the house market, it is quickly catching up in terms of demand – rental rates for units soared by 15.3% to $415 per week, and landlords can reap returns of almost 6%.
The suburb also attracts students due to its proximity to the University of Tasmania, just about a kilometre away.
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