Tasmania has its first million-dollar suburb, while rental rates in Hobart are soaring beyond those in other capital cities
Hobart remains arguably Australia’s most affordable capital, but the high growth levels recorded during its boom period may be starting to catch up with it.
CoreLogic’s Quarterly Rental Report for January 2019 notes that the increase in rental rates over the last few years has begun to push rents in Hobart up above those in Adelaide and Perth. In fact, Hobart’s rents are now slightly higher than Brisbane’s. Over the same period, rental yields have not improved.
The rising rents could be tied in part to the low supply in Hobart, which keeps the rental market very tight and gives landlords a little more leverage when it comes to rates. Short-term rentals are continuing to flourish as well, and this has had an impact on the long-term rental market.
“We know that there are quite a few people moving into the Hobart market to buy Airbnb-type homes. It does make sense in a market like Hobart that’s so low cost,” says Nerida Conisbee, chief economist at REA Group.
“However, you do need to be careful, as there has been quite a bit of discussion around Airbnb and what the government has done to review people that use it.”
While Hobart will always be at the heart of Tasmania’s property movements, Conisbee notes that there has been positivity in other areas, like Launceston.
First million-dollar suburb
Adrian Kelly, president of the Real Estate Institute of Australia, believes that Tasmania will begin to ease up in terms of growth soon.
“The next year will be a more settled year in Tasmania – when we first encountered this rising market 18 months ago, it was just ferocious,” he says.
“Now, it feels a lot more settled, but still very strong.”
This, Kelly says, is different from saying that the market will cool completely.
“Experts are saying that the market might come off the boil, but I’m not seeing that at this point in time. It’s certainly not slowing down, but it’s settling.”
In the meantime, Hobart continues to ride the wave of growth by welcoming its first premium suburb – Battery Point. The median house value in this suburb passed the $1m mark in January 2019.
SUBURB TO WATCH
HADSPEN: Strong growth trend across market
A satellite suburb of Launceston, Hadspen was established back in 1844 and once had a reputation for being haunted. However, there is certainly nothing scary about the kind of the growth the suburb is experiencing at present!
Maintaining a long-term trend, house prices in Hadspen saw double-digit growth in the year to January 2019. Even with this increase, however, the median value remains low, at under $350,000. Growth was a little slower in the unit market, but a price hike of 7.9% has pushed the median value beyond $200,000. This market also offers a healthy average yield of 6.4%.
Yield: Hadspen units can generate an average rental return of over 6%
Growth The house market has been recording double-digit growth since 2014
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