Property prices inch higher in Hobart as growth stays on an upward trajectory and million-dollar sales increase
Hobart is still arguably the most affordable capital city in Australia, but the tide is starting to shift.
In the 2018 calendar year, less than half of all sales in Hobart were of properties priced at under $400,000 – a considerable dip compared to five years previously, when that price point made up 68.8% of sales, according to CoreLogic’s March Property Pulse report. In fact, the proportion of million-dollar property sales increased to 3.8% from 1.4% in 2013.
This upswing has continued into 2019, with Hobart being the only capital city to show a rise in property values over the February quarter. However, the rental market has weakened slightly in terms of gross rental yield, which dropped from 5.2% in February 2018 to 5.0% in 2019.
CoreLogic notes that property values are going up at a faster annual rate than rents, but rental rates are becoming less affordable for tenants as a result of tight supply.
“While on the topic of rising rents, spare a thought for tenants in Hobart who are dealing with a sustained vacancy [rate] of less than 1.0%. Rents in Hobart have increased by more than 10% over the last 24 months,” says OpenCorp director Matthew Lewison.
“This is a great example of an often-forgotten part of the property cycle – when cash flow improves for investors.” With more people being priced out of the rental market, first home buyers are expected to up their activity to capitalise on low interest rates, which will in turn drive values up further.
Moving into the countryside
As Hobart’s property market becomes more difficult to get into, many buyers are looking to the regional pockets of the Apple Isle.
CoreLogic data indicate that these are among the top-performing regional areas in the country, in part because the housing market is more affordable in Tasmania. Over 70% of sales in 2018 were of properties priced under $400,000; however, sales of properties worth over $600,000 now comprise 5.1% of transactions, when this percentage was just 2.2% in 2013. If prices maintain this growth trend, we could certainly see Tasmania slowing down and stabilising in terms of price hikes.
SUBURB TO WATCH
LATROBE: Significant growth in unit rentals
A popular heritage site near the river, Latrobe’s old-world charm is part of its incredible appeal to buyers.
Its rustic feel isn’t the only draw, however – the prices are quite attractive as well. The median house value is under $300,000 despite double-digit growth over the five years to February 2019; meanwhile, the median price of units is just $218,660 following a 10% rise in values.
The rental rates of units skyrocketed in the year to December 2018, going up 12.5% to hit an average of $270 a week. The market also offers a strong average yield of 5.2%.
Rent: The average weekly rental rate for units went up by more than 10%
Affordability: The median value of both houses and units is under $300,000
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