Houses rule the buoyant Hobart market as buyer and tenant demand extend farther out of the city
Hobart’s strong streak surges on, and while growth remains centred in the capital, demand is starting to spread out.
“There has been significant growth in the inner-city suburbs within a five-minute drive radius of Hobart. There’s growth of 10–15% annually, says Rob Zubin, principal at My Property Hunter.
“It’s definitely rippling out into areas up to 20–25 minutes from Hobart, purely because of pricing and economics and the high demand, and also the low vacancy rates. For all properties, we’ve got a less than 1% vacancy rate.”
Zubin certainly sees Hobart’s positive performance extending through to the next couple of years, a she believes the area is in the growth phase of the property cycle. Limited dwelling stock has helped keep occupancies tight and demand high.
“People are struggling to get rental properties, and as a result yields are improving and rents are increasing,” Zubin adds.
Nonetheless, new estates within 20–25 minutes of the city are being established in Hobart and Launceston, aimed at first-time buyers looking to enter the market. With properties remaining quite affordable in Tasmania and returns being favourable, there is a lot of opportunity for investors here.
The government is also continuing to capitalise on Hobart’s fame as a tourist destination by implementing several infrastructure projects to provide additional temporary accommodation and enhance the appearance of the inner city.
Perils of a small market
While Zubin is confident that Hobart’s near future will be bright due to active infrastructure construction and adequate investment in the area, he’s not so sure about its long-term prospects.
“At the moment, we have a very strong cycle, but one thing I can guarantee is that at some point in time we’re going to have a low cycle, and I don’t know when that’s going to be,” he states.
Metropole Property Strategists’ CEO Michael Yardney supports this view.
“The Hobart property market was the best-performing market over the last year, but keep in mind it is a very small market and it doesn’t take much to influence it,” he says.
Yardney points out that dwelling values in Hobart rose by less than 30% in the past decade, and the capital accounts for just 1% of annual population growth in the country.
“The local economy is picking up, helped by the redevelopment of the Royal Hobart Hospital and upgrades to universities, hotels and retail precincts. While some commentators are suggesting it’s a good place to invest, I don’t agree, as there are few long-term growth drivers,” he concludes.
SUBURB TO WATCH
KINGS MEADOWS: Launceston suburb gets a slight boost
Regarded as the biggest commercial hub in Launceston outside of the city itself, Kings Meadows may be feeling the effects of Tasmania’s growth spurt.
Both houses and units have maintained positive, if gentle, growth over the past five years. This, along with the very low prices, means it could be a good option for buyers struggling to find properties in Hobart. Rental yields are also very high, at over 6%.
The commercial scene here would certainly be a draw for residents – Kings Meadows houses the shopping centre Meadow Mews Plaza. Kings Meadows High School is situated here as well. Moreover, the Launceston CBD itself is only a 10km drive away via Hobart Road.
