Buyers may find Hobart affordable, but tenants are struggling with rising rents in the face of the city’s capital growth
Hobart currently boasts the strongest property market conditions in the country.
“Conditions across the Australian housing market are increasingly diverse, but Hobart and regional Tasmania continue to be the standouts for capital gain, with values up 1.7% across both regions over the past three months to November 2018,” says CoreLogic head of research Tim Lawless in CoreLogic’s Hedonic Home Value Index for December 2018.
In fact, CoreLogic data indicate that Hobart’s property prices rose by nearly 10% overall in the 12 months to November. Some pockets of regional Tasmania experienced double-digit growth in that period.
Certainly a big contributor to this upward trajectory is the University of Tasmania (UTAS) campus development in Inveresk, a minor suburb in Invermay, Launceston.
“It is the single-largest infrastructure project in Launceston’s history,” says Henry Fields, property research and acquisitions coordinator at Research Property Real Estate.
“UTAS will always have a leg-up over other Australian universities in catering to the growing environmental/sustainability industry given the state’s ecotourism/ untouched landscape.”
Tenants impacted as demand pushes rents up
While the Apple Isle’s lifestyle appeal will continue to spur demand, the same popularity is unfortunately beginning to whittle down the state’s affordability as Hobart takes on more residents than it has room for.
This has been particularly evident in Hobart’s extremely tight rental market, where there is a clear lack of supply to meet existing demand. This has been exacerbated by the rising appeal of short-term accommodation like Airbnb rentals. The Rental Affordability Index – a biannual report released by National Shelter, Community Sector Banking, SGS Economics and Planning and the Brotherhood of St Laurence – highlights this issue in its November 2018 edition, noting that Hobart has become the least affordable capital city rental market in Australia.
“Tasmania’s capital city is in a housing gridlock. Rental affordability in Hobart dived even lower during winter, and working families are now facing rental stress, with the average-income household now paying 30% of income on rent. This means these households are unable to save sufficiently for a deposit on a mortgage,” says SGS Economics and Planning partner Ellen Witte.
“Short-term rental accommodation needs to be curbed until the rental affordability situation improves.”
SUBURB TO WATCH
MIDWAY POINT: Growth stretches to the outskirts
The suburb of Midway Point may be on the fringe of Hobart, but its strong growth over the five years to December 2018 indicates that the remarkable performance of the capital city market is spilling over into other parts of the state.
Houses and units reported significant price increases of 51.7% and 27.5%, respectively, over this period; nonetheless, property prices remain low at under $400,000. The demand from buyers is evident in the extremely short time dwellings spend on the market – in fact, units are on sale for less than 20 days before being snapped up at an average discount of just 1.2%. The rental market is favourable for investors as well, with yields of around 5%.
Time on market: In Midway Point, houses and units spend just 24 and 18 days on the market, respectively
Discount: Both houses and units are achieving low discounts of under 5% on sale
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