The city is maintaining its run near the top of the property market as its economy continues to strengthen
Hobart is likely to sustain its growth well into 2019, supported by the steady economic developments in this city.
“The Tasmanian economy has traditionally relied on government and agricultural employment. But that’s now changed, and there’s a really strong tourism and education element to Hobart that’s really growing the economy,” says Nerida Conisbee, chief economist at REA Group.
While Hobart will continue to be the centre of activity in the Apple Isle, things are steadily picking up in other corners of the state.
“Everywhere in Tasmania seems to be seeing growth at the moment. We know places like Bellerive are seeing lots of demand, and Launceston has been doing pretty well. Beyond Hobart, you can get a lot of stunning properties with water views for quite affordable rates,” Conisbee reports.
Tight vacancy rates
Tourism has made a remarkable difference to Hobart, but it could be a mixed blessing as investors seek to cash in through short-term accommodation rental. This in turn has caused the rental market to slow down due to a shortage of long-term rentals and falling vacancy rates.
“Prices will continue to grow because we continue to see very strong buyer activity. But we have seen a bit of a pullback in rental demand, so the Tasmanian market probably won’t continue to grow at double digits over the next couple of years,” Conisbee says.
REIA president Adrian Kelly notes that there is no easy fix to this issue as long as additional supply does not enter the market, since the local government is not keen to crack down on the short-term accommodation market that supports tourism to some extent.
“In some ways, we have become a victim of our own success – the short-term accommodation market has meant that a lot of properties are no longer available for long-term rental, so our vacancy rate in Hobart City as of January 2019 is sitting at about 0.6%–1%,” he says.
“If you look at both rental and housing, we’re probably about 5,000 homes short of where we need to be.”
Nonetheless, the government has made strides towards constructing affordable housing, with blocks of land being released for this purpose on the fringes of suburbs.
SUBURB TO WATCH
NORTH HOBART: Rental rates moving up
Things are getting pricey in North Hobart as continuing hikes to property values have put the median for houses and units at $703,347 and $543,210, respectively. Units saw especially strong growth in the year to December 2018: values soared by nearly 20%.
The positive performance of units was maintained in the rental market, as the average weekly rent hit $450 after a sharp increase in rates of 13.9% in the 12 months to October 2018. This took the rental rate for units closer to that of houses, which is now $490 per week after a 5.4% rate boost.
North Hobart residents enjoy a vibrant lifestyle as they’re within easy reach of great food, shops and even a retro-style theatre.
Rent: Rental rates got a signifi cant boost in the year to October 2018
Amenities: North Hobart is well stocked with quality restaurants, shops and entertainment
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