20pc rise tipped for Hobart homes
Property prices in Hobart could rise by 20 per cent in the coming 12 months, according to Property Logic researchers.
This would follow a 14.3 per cent rise in 2017 and would exceed even the boom years for Sydney and Melbourne during the past decade.
Property websites Domain and CoreLogic reported that Hobart’s 14.3 per cent surge in its median house price over 12 months had exceeded every other capital city.
An unprecedented total of $4 billion sales were signed off in Tasmania in 2017.
And seven of Australia's 10 most in-demand suburbs are in Hobart, according to research by realestate.com.au.
South Hobart tops the national ranking, with Mount Stuart at number three, Battery Point at five, and Bellerive, Mornington, Hobart and North Hobart also in the top 10.
The median dwelling price in the city is now $396,000 according to CoreLogic, making it significantly more affordable than Sydney (average $906,000) or Melbourne ($710,000).
However, the Tasmanian boom is not just about bargain hunting. The top end of the State's market has raced past 110 sales of a million dollars or more, edging in nine months above a two-year-old record of 109 for 12 months.
The full year's tally is expected to comfortably exceed 140.
Money magazine's Simon Pressley wrote: "We feel that Hobart’s growth cycle today is comparable to where Sydney was in 2014.
"All of the metrics that we analyse suggest that there’s currently no end in sight.
"Affordability and the significant improvement in Tasmania’s economy are driving housing demand, while supply is incredibly tight."
Mr Pressley described Hobart's property market conditions as "like a flock of seagulls fighting over a chip".
After correctly anticipating the resurgence of Tasmania’s economy, Property Logic commenced actively investing in Hobart real estate in 2014.
Prices were attractive and the city's lifestyle and "MONAisation" were beginning to be appreciated nationally.
Property Logic's timing was proven good: the number of properties listed for sale has halved since it started its move.
Money enthused: "Most Australians don’t realise that Hobart’s increase in job volumes over the past 12 months is four times the national average and more than double that of the next best capital city.
"Tasmania is building an international reputation for unique tourism experiences, world-class agriculture and advanced manufacturing. Hobart is also a university city.
"From new luxury hotels to an airport expansion, a major hospital upgrade and a new university, the pipeline of infrastructure and major job-creating projects is diverse and extensive."
Hobart now boasts Australia’s highest rental yields and interstate investors have been taking advantage of the fact that the cost of holding a property in the Tasmanian capital is effectively nothing.
According to SQM Research, Hobart’s vacancy rate of 0.4 per cent is the lowest it has recorded in any capital city since it began keeping records in 2005.
"Rents will increase even further. Our analysis of building approvals shows that Hobart’s pipeline for new housing is very low," Money said.
"Hobart is the only location in Australia that has the combination of an affordable entry price, an economy that is already strong (and still improving), hardly any impact on investor’s annual cash flow and a tight supply pipeline for as far as the eye can see."
The President of the Real Estate Institute of Tasmania, Tony Collidge, said the local market was "streets ahead" of other Australian cities.
He said scant supply and strong demand had created "a perfect storm".
Mr Collidge told The Mercury: "Prices are only going to go one way: they will continue to go up.
"Over the next two or three years, I think Hobart prices will increase significantly if something doesn't happen to change our present trajectory."
CoreLogic researcher Cameron Kusher said the market's strength was based on affordability and was being lifted by interstate migration.
"Businesses are now a lot more open to people working remotely and a lot of people from Melbourne own properties in Tasmania and probably want to retire there," Mr Kusher said.
QBE’s Australian Housing Outlook Report, released in October, tipped a more modest rise than Property Logic with an average 10.8 per cent annual gain between now and 2020.
Only Canberra houses (16.3 per cent) were expected to increase by more than Hobart houses.
The QBE report singled out Hobart as the clear leader for apartment values, with its forecast growth of 8.7 per cent, well ahead of second-placed Adelaide with 3.2 per cent.
The Chief Executive of QBE Lenders’ Mortgage Insurance, Phil White, said Hobart usually accounted for 40 to 50 per cent of Tasmania’s population growth, but during the past five years this had escalated to 70 per cent
“With the challenges in Sydney and Melbourne’s markets, Hobart is a smart lifestyle choice for people who are happy to move interstate,” Mr White said.
Boom times for Hobart landlords, obviously mean tougher conditions for would-be tenants who have found it harder to find a rental property in 2017 than at any other time in more than a decade.
Only Sydney is tougher for renters than Hobart, according to National Shelter’s two-yearly Rental Affordability Index.
Hobart rents have increased by 14 per cent over 12 months, according to National Shelter, while Launceston has seen a 9 per cent rise.
The Managing Director of SQM Research, Louis Christopher, said Hobart renters could expect on-going, tight rental conditions and higher rents in 2018.
“In Hobart, the rental situation remains very difficult,” he said. “There were just 102 properties available for rent in September, giving rise to the record low vacancy rate.
SQM recorded a 7.5 per cent rise in asking rents for Hobart houses and 8.1 per cent for units over a year.
The Treasurer, Peter Gutwein, said: "Strong property prices reflect the State’s strong economy and demonstrates that Tasmania is becoming an increasingly popular place to live and raise a family."
He said the Government’s Affordable Housing Strategy was set to treble the amount of affordable housing by 2025.
"We are well on the way to achieving this, having already delivered more than 440 homes to low-income households as part of our Affordable Housing Action Plan," Mr Gutwein said.
In November, the Government announced a $9 million joint development with the Hobart City Council to create 25 low-cost residential units in the CBD.
Local architects Cumulus Studio will develop a concept design for a State-owned Goulburn Street site featuring one-bedroom and two-bedroom units, along with car parking for residents.
By the end of September, 447 new households had been helped to access housing as part of the Affordable Housing Action Plan.
Tasmania has the highest rate of home ownership in the nation.
Footnote: Tasmania’s population is growing at the fastest rate since early 2011 and net interstate migration is at the highest level in seven years. "People are returning to Tasmania because there are more jobs than ever before, the economy is growing, our lifestyle is second-to-none and they see tremendous opportunities," the Premier, Will Hodgman, said.
Image courtesy of realestate.com
5 December 2017, Edition 190