Low property prices and high yields encourage buyers to the island state
Among the Australian capitals, Hobart recorded the highest growth over the May quarter, according to CoreLogic.
Hobart’s affordability is certainly its trump card. According to Eliza Owen, market analyst for OnTheHouse.com.au, this capital is a top performer in the Australian property market because both investors and owner-occupiers are looking at dwellings located in more inexpensive regional areas.
These findings tie in with the Affordability Report released by the Housing Affordability Index, which stated that regional markets had improved in affordability compared to capital cities.
The report also indicated that Hobart was one of only three capital cities to show an increase in affordability (2.2%) during the June 2016 quarter; hence, buyers don’t lose out regardless of whether they buy in the metro or the countryside.
Affordability favours Hobart home buyers
For older buyers considering property investments, the Hobart unit market offers affordable buys that generate strong returns, with the average yield being 5.5% as of May 2016. This has helped contribute to the property market’s growth.
An example of such an area is Somerset, where the median unit price clocks in at just over $200,000. This places the suburb among the top five performers in Tasmania in terms of 12-month growth.
In the housing market, the suburb of Beauty Point had the honour of being the top grower in the state. It is situated approximately 45km northwest of Launceston, and houses are remarkably affordable at a median price of just $215,500. The rental yield hovers at a high 6%, definitely giving investors value for money.
The highest levels of sales activity are on the northwestern coast of Tasmania, which has long been favoured by holidaymakers. However, those who seek long-term gain should look at the central suburbs within population centres.
For instance, Clarendon Vale, which is just 10km from Hobart, is a highly affordable suburb that has recorded over 25% growth in the past 12 months and a staggering 7% average rental return. This suburb has reported 8% growth over the past five years, suggesting that it can stand the test of time.
Buyers looking for their second home have their pick of dwellings within the $500,000 price range if they want to trade up in terms of location, size or age, Herron Todd White notes. There is some investor activity within the state, although owner-occupiers are regarded as the most active in the property market.
In addition, the available property stock in some areas has dropped and boosted capital gains. Cameron Kusher, head of research at CoreLogic, indicates that Hobart’s recorded number of total listings has not increased compared to previous years.
Hobart government pledges economic stability
As the state’s property market gains ground, the local government aims to support it economically.
There continue to be strong efforts to push for international education, particularly through the University of Tasmania, as outlined by Matthew Groom, the Minister for State Growth.
“We recognise international education is a significant pillar of Tasmania’s economy,” he says.
“The sector helps to further Tasmania’s engagement with our key export markets and helps to upskill our local workforce, and the government has shown its commitment to further growth, with $300,000 in the state budget to develop an International Education Strategy.”
SUBURB TO WATCH
Somerset: Beachside suburb makes waves
West of Burnie, Somerset is among the suburbs with top growth potential in Tasmania. This coastal residential area is small, but its remarkable affordability and proximity to the City of Burnie attracts buyers.
Somerset’s unit market has been particularly active, and investors can get significant returns of 5.7%. The vacancy rate is a low 0.9%, indicating that rentals are easily filled.
Somerset is home to public and private primary schools. Residents can unwind in any of the local sports facilities, which include a soccer field, a recreation centre and surf lifesaving club. The beach runs along the entire Somerset coastline. The North West Regional Hospital is situated nearby in Burnie, along with an arts centre, a university, and major retail stores.
Commuters can drive to Burnie in just over 15 minutes on the Bass Highway. Bus services to Ulverstone are also available from the nearby town of Wynyard, which is home to the Burnie Airport.
