No End In Sight For Hobart's Property Price Uplift
Hobart property prices continue to be the envy of investors nationwide, once again experiencing a big jump in median values.
Over the course of the month, property values increased by 2.3% according to the latest data from CoreLogic. As it stands, house prices jumped to $509,177, with units sitting at a median value of $384,999.
Over the past five years, Hobart continues to outperform the rest of Australia, with the median dwelling value climbing by 43.1%.
An incredibly tight rental market and strong economic conditions have been two of the major drivers behind this strength. As it sits, the vacancy rate is the tightest in the country at 0.5%, which has seen median rents jump to $470 per week for houses and $395 for units.
Adrian Kelly, President of the REIA believes that it is not only Hobart property prices that are booming, but rather the entire state.
“I’ve never seen so much positivity in Tasmania. And that’s not just in real estate but business as well.”
“In many ways, Tasmania and Hobart have become a victim of their own success. In Hobart at the moment, we’ve now got a rental vacancy rate that’s so low it might as well be zero. There are so many people that are trying to rent properties, from an investor point of view, it’s a good place to be.”
“The median rent in Hobart is around $460 per week, so when you look at that versus value, that’s not a bad yield. Which is getting up to the 4.5-5% range.”
Mr. Kelly believes suggests there are a number of factors underpinning the recent price surge across the state. He believes that tourism and the likes of MONA have played a big part in attracting people to Tasmania, along with its clean, green image. In addition, there are a number of mining and construction projects underway, bringing jobs and people to the state for work, which is a real change from only a few years back.
“The whole economy has exploded and that’s flowed through to real estate. It’s a classic case of supply and demand and that’s what pushed prices up. We do have a bit of a supply problem at the moment, with sales volumes being down by around 200-300 sales, quarter-on-quarter. But that is solely because there is no old stock sitting on the market.”
“A lot of people aren’t selling at the moment, because they know they’ll have a hard time finding something to buy at the other end. The days of ‘subject to sale’ are non-existent in Hobart these days.”
Mr. Kelly also feels that the data isn’t telling the full story and buyer demand continues to be exceptionally strong.
“If you look at the figures they’ll tell you that the average days on market is something like 35 or 40 days. But the reality is that it’s probably only 5 or 6 because the days on market figure will include the days until the finance clause has been fulfilled.”
“But any half-decent home in Hobart at the moment will have 30-40 groups of people through it and it’s now the new normal that we’ll see 5 or 6 contracts written on the property on the same day.”
“It’s a complete turnaround from what we had a few years ago. And the only thing that can really slow it down is the building of more homes. And that’s really what’s been driving it. Over the last few decades we simply haven’t been building enough homes and the REIT are estimating that we are probably around 5000-6000 houses short across the state. And you can’t fix that sort of problem overnight.”
Managing Director of Devine Property, Mark Devine has overseen a strong year in commercial property, in Hobart and is expecting more of the same in 2020.
“We’ve had a very active year from the commercial side of things and everyone is pretty happy at the moment.”
“I think we’ve always been viewed as an affordable market with a bit of an affinity to the Melbourne market. So in part, as the major metropolitan markets have gotten hot, people have started to look for value in regional areas.”
“But clearly the economy is performing really well. It’s the most active economy in the country at the moment in terms of building, construction and business confidence levels so all of those factors make it a good place to invest.”
“From an agent's point of view, ourselves and competitors would all have had really strong years on the commercial side of things.”
With the strong economic conditions, Mr. Devine feels that while there is still some supply in the commercial space there is plenty of strong buyer interest as well.
“With all the activity this year, there has no doubt been a number of people looking to cash in on their investments. But at this stage, there are still plenty of buyers who are keen to invest. So that competition is probably helping fuel the price growth.”