The Apple Isle is in a boom period, but questions abound regarding how long its popularity will last
Hobart continues to be one of Australia’s top-performing property markets. As construction activity remains light, vacancies continue to tighten.
“Three consecutive years of fewer listings, combined with significantly heightened buyer activity, means that buying property in Hobart now is akin to a flock of seagulls fighting over a chip,” says Simon Pressley, managing director of Propertyology.
“The volume of properties for sale in July [2017] was a whopping 23% lower than 12 months earlier. It’s now incredibly difficult to find that right property.”
In addition to the limited development, affordability remains one of the main reasons the Hobart market is in such demand.
“We’re seeing quite a few entrepreneurial-type people moving there to get affordable housing,” says Nerida Conisbee, chief economist at REA Group.
“It’s quite different from the rest of Australia in that there are not many new apartments and not much house and land development.
It’s doing pretty well from tourism at the moment, so I think that’s a bit of a driver.”
Growth is centred around Hobart, indicating that the capital city is driving the state’s boom.
“It does tend to be those inner-city locations that are doing best. Although some of the rural areas are doing OK, they’re primarily all located around Hobart,” Conisbee explains.
Investors should tread lightly
A considerable chunk of the demand for Hobart property comes from overseas investors in China. However, Conisbee warns investors to be careful despite Tassie’s positive performance.
“It is a small market, and the entire population is roughly the size of the Gold Coast. So it’s not a big population. It’s not a growth economy,” Conisbee says.
Philippe Brach, CEO of Multifocus Properties & Finance, adds that Tasmania’s lack of industrial drivers prevents it from experiencing significant growth and activity over the long term. The fact that Tasmania is an island poses a problem as well, as it is disconnected from the rest of the country.
“There’s no pressure on property prices, there’s no major centre of industry. Apart from tourism, there’s not much of an economy down there. It’s not an area that’s the industrial engine of the country. It’s not for an investment property if you’re looking for growth and activity to happen,” he says.
Nonetheless, there are still growth prospects in Tasmania as Launceston’s stock rises to catch up with Hobart’s. Yields in this area are remarkably high, at 6%, which attracts interstate buyers.
These initiatives point to Launceston having much appeal for buyers in the near future. Over in Burnie, there are also plans to develop West Park as a technology and business hub.
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LONGFORD: Affordable opportunities in agricultural hub
Rooted in history, this northern midlands suburb is home to a number of 19th century buildings that are included on the Tasmanian Heritage Register. It also offers affordable opportunities for potential investors.
Despite an increase over the past few years, the average unit still costs just $243,000, while a house only demands slightly more at $257,000. Landlords can expect to charge rent of around $270 per week for a house, while units bring in $250.
The indicative gross rental yield suggests an investment would be lucrative, with rates sitting at 5% for houses and an even stronger 5.6% for units.
