With property prices increasing by 12.7% over the 12 months to October 2017, according to CoreLogic, Hobart has held its position as one of the top capital cities in the country.
“Hobart is benefiting from renewed housing demand in the form of interstate migration, particularly Sydneysiders and Melbournites who appear to be utilising their enhanced wealth positions to buy very well in Hobart, where housing prices are substantially lower than those in Australia’s largest cities,” says Tim Lawless, head of research at CoreLogic.
While the majority of the Apple Isle’s growth has been concentrated in Hobart, the countryside is also picking up, albeit at a slow pace. Over the year ending October 2017, regional Tasmania recorded a 5.4% increase in prices.
“The property boom which is currently underway in Hobart is in no small way attributed to the remarkable transformation of Tasmania’s economy,” says Simon Pressley, managing director of Propertyology.
He cites regional centres such as Burnie and Devonport as areas with considerable potential.
Migration inflows drive demand
As a whole, Tasmania is not a particularly strong market, but Hobart’s ability to draw attention from interstate buyers has boosted its population growth significantly.
“If you look at the data for Tasmania [and] start splitting it out between Hobart and the rest of the state, it’s a bit like looking at Melbourne/Sydney versus the rest of Australia for the last few years,” says Angie Zigomanis, senior manager for residential property at BIS Oxford Economics.
“Most of the migration/ population growth that goes into Tasmania is going into Hobart, and some of the population from the rest of Tasmania is going into Hobart. That’s fairly solid population growth from the Hobart/Tasmania perspective.”
In terms of demographics, older adults make up a good proportion of the population. Quite a few of these residents are returnees who left Tasmania in their 20s and 30s and are now coming home.
“It’s not necessarily retirees, but it’s probably people who are starting to downsize and downshift. So you might find a bit of reversal from people who are coming from Sydney and Melbourne back to Tasmania,” Zigomanis explains.
With Hobart’s economy going strong due to tourism and education, the number of jobs created could continue to sustain demand. Tasmania has also been keeping supply levels low, which translates to tight vacancy rates, especially in the city.
SUBURB TO WATCH
BURNIE:
Burnie could represent an investor’s dream, with remarkably low dwelling values despite a five-year period of steady growth.
The median house price just exceeds $250,000, and the median unit value is under $200,000, making this market a steal for affluent buyers. Rental returns are through the roof, at 5.7% and 6.6% for houses and units respectively.
Burnie is a major service hub in northwest Tasmania, being the site of the state’s largest export port. The agriculture, forestry and tourism industries prop up the suburb, making it a “low-risk investment with solid long-term potential”, says Simon Pressley, managing director of Propertyology.
