5 Reasons Why The Hobart Property Market Will Continue To Grow
Some commentators are questioning the paradigm and are suggesting that the Hobart Property market is not in for growth in the next years, after having been the shining light for property investment in Australia for the last 3 years. Others are forecasting continued growth for at least the next 2 years. Looking at some of the reports is quite enlightening.
It seems that the majority vote is going for a 2-4% increase.
Let's investigate this a bit more. Here are the top five reasons why the Hobart market will continue to grow:
1. Extremely low Rental vacancy rate
The vacancy rate around Hobart according to SQM is currently about 0.6%. There is still very much pent up demand in the market. Applications for properties are very strong and rental yield is still on the rise.
2. Positive population growth
Tasmanian population growth has been the strongest in about a decade, albeit only 1.11% as per the last Census. The strongest concentration of growth in the State has occurred in the southern region of Hobart.
3. Supply constraints
The building industry is at its peak utilization for years and lead times are continually blowing out. The increased building approvals are doing their fair share to tighten the supply chain, even more, hence it is not expected that a supply-demand balance will be achieved until 2-3 years time.
4. Infrastructure and other investments
The tourism industry has boomed, increasing the demand for short-term rentals like AirBnB further reducing rental stock out of the market.
The ten years, $1,430 million(""M"") Hobart City Deal including major infrastructure spending programmes will put additional jobs into Hobart, for:
- An international gateway for the Hobart International Airport, $82.3M
- The hub for jobs - Utilizing Macquarie Point as a major scientific, tourism and cultural hub, with Federal Government spending more than $450M for the upgrade of Australia's Antarctic research station network
- Road, bus and bridge infrastructure works to the tune of $576M
5. The Outlook:
- Moody's says growth will be -1.6% for 2020 and -0.7% for 2021 Houses in Hobart.
- Grit Property suggests 5% growth over the next year and 8% by mid-2021.
- Domain suggests 2-4% for 2020 due to the tourism boom and positive population growth.
- Propertyology head of research Simon Pressley said, “Some of the biggest projects that are in Hobart’s pipeline include a recently committed City Deal — a major federal and state government project — further expansion of the airport, a few new luxury hotels, some serious investment in infrastructure by University of Tasmania, and an exciting vision for Macquarie Point.” Such he is expecting that ""there’s a good chance of it gathering a second wind.”
- The Urban Developer quotes, ""For the year ending March 2019, Tasmania was ranked first for growth in state demand, second for wage growth and third for growth in retail trade. Hobart is also the leading city for growth in job advertisements, a leading indicator for near-term economic growth and a helpful metric for property price growth.""
- Domain's Property Forecast from June 2019 also suggests 2-4% price growth in 2020.
- So, it would seem that good times are ahead for Hobart for a further 2-4% growth, though only time will tell.