Following a surprisingly strong 2015, Hobart’s market is enjoying some real estate conditions worthy of recognition in the first quarter of 2016
Hobart’s vacancy rates tightened by 0.4% from February 2015 to February 2016, SQM Research data shows, and it now takes top place for lowest capital city vacancy rates at 0.9%. In dwelling terms, that equates to just 239 vacant properties.
In an SQM Research March report, analysts concluded that “Hobart continues to record the most affordable rental accommodation with rents for houses at just $337 a week, while units on average rent for $286 a week”, a factor that’s underpinning its low vacancy levels.
But while rents may be cheap, they’re growing. Further SQM Research data shows weekly asking house rents are up 6.1% since the first quarter of 2015, and units rents have increased by 2.1% since the end of 2015.
Tightening vacancy rates will likely impact on rents further, says SQM Research managing director Louis Christopher. “Melbourne, Hobart and Canberra are all recording downward trends in vacancies now and this is resulting in upward pressure in rents for these three cities.”
These figures are reflected in Hobart’s rental yield growth, which is the second-highest capital city yield, at 4.1% growth for houses and 2.4% for units year-on-year to February 2016.
Hobart’s median dwelling prices have come a long way since 2011, when Tasmania’s capital was handed the undesirable award for worst-performing state in Australia.
CoreLogic RP Data’s market research report in February showed a $335,000 median for houses, which equates to a 6.1% rise in values over 12 months, and a median of $245,500 for units, or a
7.5% increase.
Looking ahead, opinions vary on Tasmania’s economic standing. Property growth is expected to be stable but modest, says a report by BIS Shrapnel. “Tasmania lacks strong industry drivers to generate strong employment growth,” the report states, adding that if excess stock remains on the market, price growth is “expected to be modest and likely underpinned by low interest rates”.
An opposing viewpoint came from the Deloitte Access Economics Business Outlook, which described Tasmania’s economy as “well and truly on the rise” – a sentiment echoed by Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey, who said Tasmania’s major industries were gaining new life following the effects of Australia’s post-mining-boom slump.
The exceptions, he says, are the northern and north-eastern economies, which have been hard hit by the forestry industry downturn.
Josh Hart, director of One Agency Launceston, confirms that sentiment surrounding the property climate is positive. “[Hobart] is now known as a stable, safe and sought-after location due to its value for money compared to its counterparts,” says Hart, who agrees that Tasmania has turned a corner after its tough post-GFC years.
A potential boost to the state’s investor activity could come in the form of the Building Bill 2016, which will streamline the building and approval process. “[This will] encourage further residential and commercial development, reduce delays and increase additional costs,” says Hart. “We can only see this as a positive step that will encourage investors.”
Apart from its low median and solid yields, Hobart has a lot more to offer. Certain localities are finding well-priced properties are moving after the first open home, says Hart, who is also seeing strong competition in inner-city suburbs.
“With the Myer building now completed in the Hobart CBD, the University of Tasmania’s new accommodation and cultural and performance precinct, plus other commercial buildings progressing strongly, properties within close proximity to the CBD will be in demand throughout 2016,” Hart predicts.
CoreLogic RP Data statistics point to units in North Hobart and Battery Point as high-growth, gaining 25% and 23% in the year to February 2016 respectively. In Hobart CBD and Mount Stuart, houses have taken the lead with 23% gains.
Just 6km north of Hobart, the suburb of Moonah is undergoing significant transformation that is creating renewed confidence as it transforms from working-class suburb to trendy café and dining hub with a very attractive entry point. “When compared to North Hobart where a minimum entry point is $450,000 for a three-bed, one-bath home, a similar property can be purchased in Moonah for $300,000,” says Hart.
Launceston offers affordability, says Hart, location (a 45-minute flight from Melbourne) and highly regarded schools. And northwest of Launceston, Bernie has seen 11% growth over the past 12 months, according to CoreLogic RP Data, while major regional centre Devonport offers rental yields of 6% for its $240,000 median.
SUBURB TO WATCH
North Hobart: Houses snapped up in 3 weeks
As far as inner-city houses go, North Hobart is home to the most affordable you’ll find in Australia – and houses are on and off the market with lightning speed.
CoreLogic RP Data shows the average listing is 21 days, making North Hobart the fastest-moving market in Tasmania, followed by Mount Stuart with a 33-day average. Its period-style homes and quaint cottages are in high demand, a fact evidenced by growth of 9.3% in the past year.
One of the major social hubs of Hobart, with a main strip thriving with restaurants, cafes, pubs and boutique stores, North Hobart is touted as a suburb where everything you need is a walk away. Good rental yields of 4.7%, and predictions that inner-city suburbs will offer long-term growth, make it easy to see why North Hobart is selling so fast.
