While property prices are still on the up in Hobart, experts predict a cool-down ahead in terms of growth
According to CoreLogic data, property prices in Hobart have increased in the most recent quarter. However, Eliza Owen, market analyst at OnTheHouse.com.au, says analysis of the market shows that overall it is trending towards slowing growth.
Compared with last year, the demand for residential construction is over 20% lower. Thus, Tasmania has reported a drop in the number of building approvals.
“Being an island state with a smaller population has many advantages, but with regard to population growth, our less porous state borders, comparative to other states, means slower population growth and subsequent housing demand,” reports Herron Todd White in the Month in Review report for August 2016.
At present, the main driver of the market has been second home buyers and those who are upgrading in terms of either home size or location.
“Any effect of the state government’s increase in the first home builder’s boost announced in the May budget would be yet to be felt,” Herron Todd White explains.
Low prices drive market
Tasmania’s most sought-after properties are not necessarily close to the city, but are those that demonstrate keen affordability.
For instance, the suburb of Kingston is situated at the southern fringe of Hobart, but it has seen rapid growth and the establishment of many amenities, given its position between the city and the popular destination Huon Valley. The median price for units here is under $300,000, which is quite affordable compared to apartments in the city.
To those looking for well-located dwellings, the neighbourhood of Newstead is definitely an attractive option. This suburb is just five minutes from Launceston and units go for under $200,000, which is considerably more affordable than the average Tasmanian apartment.
Meanwhile, Howrah’s major selling points are its proximity to Hobart and its location near the Derwent River. Investors can get a high average yield of 5% on properties here. Devonport, which sits near the shoreline, is over 100km from Launceston but is regarded as the largest population centre in northwestern Tasmania. Here, a good-sized house can be purchased for approximately $350,000, with a significant average rental yield of 6%.
Industry shifts to new employment hubs
The Department of Employment in Tasmania has predicted that by 2020 the state’s employment rate will increase by 5.1%. While the mining and forestry sectors have been declining, Tasmania’s bid to have a “clean, green image” has meant that the state’s economy has been leaning on the tourism and food production industries to serve as effective replacements. These sectors are expected to generate the most jobs in the future.
The tourism industry in particular has been supporting the local economy, and the state government is set to invest heavily in this sector. Projects include the upgrade of Hobart International Airport, runway extensions, and the establishment of the Academy of Creative Industries and Performing Arts in Hobart. Investments are also expected to go beyond the city because regional areas have been shown to drive state growth as well.
Among these initiatives, there is the option to invest in mixed-use developments that include residential units instead of standalone hotels as accommodation.
“Tourism is like fashion, and right now Tasmania is fashionable, so the challenge for the industry is to ensure we stay that way – that we stay ahead of the curve and not be complacent,” says Anne Hardy, the director of the Tourism Research and Education Network at the University of Tasmania.
On the whole, Hobart remains a steady, balanced market whose status hasn’t changed drastically in a short time.
SUBURB TO WATCH
Devonport: Northwest centre continues to grow
At the mouth of the Mersey River, Devonport is a thriving suburb in an important regional city in northwest Tasmania. Properties here are quite inexpensive, despite being part of the Devonport CBD.
Although the house market experienced a slight decline over the previous year, the unit market continues to persevere, reporting 1.6% growth. The vacancy rate also fell by -0.6% to a low 1.3%, indicating that demand is still strong.
Devonport’s popularity is unsurprising given its location and affordability, but its liveliness is also a contributing factor. It has several stores, a supermarket, a mall, a cinema and dining establishments.
The Devonport Entertainment and Convention Centre hosts theatrical productions, and galleries and museums showcase the best of local culture. Medical needs can be addressed at the nearby Mersey Community Hospital in Latrobe, and there are a range of schools.
Travel is convenient as Devonport Airport is close by, and there is a river ferry service, as well as buses and trains.
