Hobart’s property market is poised to experience price growth larger than anything witnessed in Sydney, according to Propertyology, a national property market researcher and buyer’s agency.
Price growth in the Tasmanian capital has the potential to push past 20% over the next year, well above the best years produced by both Sydney and Melbourne during the boom years.
“Hobart’s growth cycle today is comparable to where Sydney was in 2014,” said Simon Pressley, head of market research at Propertyology. “All of the metrics which we analyse suggest that, all things being equal, the 15 per cent price growth over the last 12 months will be surpassed next year and that there’s currently no end in sight.”
While Sydney and Melbourne are now in their fifth strong year, Hobart’s growth cycle didn’t begin until 2016. Both the Domain Group and CoreLogic recently confirmed that Hobart’s shift in median house price over the last 12 months is officially higher than every other capital city.
Of the seven city councils that make up Greater Hobart, Clarence, Glenorchy, Hobart City, and Kingborough are the tightest markets.
Strong economic growth is driving demand
Affordability and the significant improvement in Tasmania’s economy are driving housing demand, while supply is very tight.
“Most Australians don’t realise that Hobart’s increase in job volumes over the last 12 months is four times the national average and more than double that of the next best capital city,” Pressley said. “Tasmania is building an international reputation for world-class agriculture, unique tourism experiences, and advanced manufacturing. Hobart is also a university city. The economy is firing up.”
Meanwhile, big international brands like Hyatt, Marriott, Fragrance Group, and others are expected to commence work on several new luxury hotels over the next year or two. There are also plans to extend the Hobart airport runway to accommodate direct flights from Asia. So far, infrastructure upgrades have produced record volumes of visitors, ranging from business delegates to tourists.
Low vacancy rate intensifies rental pressure
Hobart’s vacancy rate of 0.4% is potentially the lowest on record for any capital city, and Pressley believes rental pressure will intensify even further.
While Sydney, Melbourne, and Brisbane are now seeing record volumes of new supply hitting their markets, supply in the Tasmanian capital is constrained by low building approval volume.
“Hobart is the only location in Australia which has the combination of an affordable entry price, an economy which is already strong (and still improving), hardly any impact on investor’s annual cash flow, and a tight supply pipeline for as far as the eye can see,” Pressley said.
“The 15 per cent headline capital growth rate over the last 12 months is dragged down by the lower rates of growth in Hobart’s urban fringe. With rates of supply tighter than anything we’ve seen, it’s quite conceivable that property prices in metropolitan Hobart could exceed 20 per cent next year and beyond.”
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