Hobart is still a positive market, but the findings of the 2019 Property Investor Sentiment Survey conducted by Your Investment Property, Property Update and Onthehouse reveal that not a lot of investors are putting their long-term faith in the Apple Isle.
Despite its remarkable run at the top until the latter half of 2019, few people invested in Hobart. Moreover, for many investors, Adelaide topped Hobart as the best market to invest in for capital growth over the next five years. Hobart’s skyrocketing property prices over the past few years has also had an effect on its affordability, which could be driving a slowdown in the market.
“A nominal recovery in housing values implies homeowners are becoming wealthier, which may also help to support household spending. However, the flipside is that housing affordability is set to deteriorate even further as dwelling values outpace growth in household incomes, signalling a setback for those saving for a deposit,” says CoreLogic head of research Tim Lawless.
Nonetheless, Hobart still boasts some formidable stats compared to other capital cities. CoreLogic’s Home Value Index for December 2019 showed that regional Tasmania’s property market was the highest-growing regional market through the 2019 calendar year, recording a 6.1% increase in dwelling prices. Yet this pocket, which includes Launceston and northeast Tasmania, remains very affordable, especially for buyers from outside the state.
“Buyers are attracted to affordable prices coupled with job opportunities and lifestyle factors; smaller capitals, as well as key regional centres and lifestyle markets, could see an improvement in conditions,” Lawless says.
Hobart’s housing values are at a record high and the city remains the tightest capital city rental market, which has caused rental rates to shoot up by 6% over 2019 – driven by low levels of residential construction leading to limited supply on the rental market. Launceston has also caught some of the spillover, with rents rising significantly.
Renters have found themselves extremely challenged in this market, but there has been an initiative to improve conditions in their favour.
“Construction is starting to pick up, and building approvals are higher than they were a couple of years ago. The outcome is more construction, which would help with rental price rises,” says Domain economist Trent Wiltshire.
SUBURB TO WATCH
BLACKMANS BAY:
With property prices in Hobart creeping up over the past few years, affordability is dropping, including in Blackmans Bay, where house prices have hit a median of $618,451 and units are at $408,230.
Prices have soared in both markets, with growth rates over the five years to December 2019 peaking at around 50%. Units also offer a reasonable average yield of 5.6%. Rental rates rose by nearly 10% in the year to October 2019.
This fair-sized suburb attracts a large number of owner-occupiers, and there are several educational institutions in the area, including Blackmans Bay Primary School and Illawarra Primary School.
Growth: Both houses and units have recorded remarkable growth over the past five years
Schools: Blackmans Bay Primary School and Illawarra Primary School are established here
