Tasmania's new AFL team may kick along Hobart's underperforming property market

House prices have fallen for four consecutive quarters, producing the longest stretch of continuous decline and the steepest annual decline in the Hobart’s history.

Tasmania’s own AFL team is about to become a reality but it’s the property market that’s getting kicked at the moment.  

House prices are now 9.9 per cent below the March 2022 peak, down by about $75,000 and back to 2021 pricing.

While there are there are no suburbs in Hobart where median house prices are below pre-pandemic levels, its days as the darling of interstate and local speculative property investors are seemingly behind it for now.

Apartments have been the exception, with unit prices modestly higher than where they were a year ago and only 0.3 per cent below their price peak.

Interstate investors who made Hobart the best-performing property market in the country in 2017-18 and later fled to Hobart during the pandemic have now largely deserted the Apple Isle.

Business Development Manager at PRD Real Estate, Amber Riley, said the market was akin to a ghost town.

“In the past two or three months, the number of enquiries on our properties has become ghostly, which in turn has driven prices down,” Ms Riley lamented.

“I feel like at the moment there is no in between - I haven’t seen a market like this in the past seven or so years.

“Perhaps this is due to the amount of property that was purchased during Covid,” she said, suggesting a subsequent downturn had been inevitable to some degree.”

The lack of interstate investors was a defining factor, she said.

“We haven’t had a heap of interstate investors of late.

“The majority of buyers are local investors and we have also had properties come off the sale market into the leasing market.

“Investors seem to know there’s no further growth with the Tasmanian market, so they are investing elsewhere.”

Hobart’s vacancy rate, with most suburbs hovering around 2 per cent, is also the only one outside of Canberra among the capital cities to have a rental vacancy rate that isn’t wallowing at record lows of zero to 1 per cent.

While it’s great news for renters, in a national market where rents are soaring, it’s another strike against Hobart for property investors.

Despite the Hobart market transitioning from enjoying the fastest price growth to being the least well-performing of the capital city property markets, according to CoreLogic and PropTrack data, local real estate professionals deny the city is a boom-and-bust market.

Tania Chung, Principal, McGrath Hobart, said it was due to the circumstances of Covid that drove property prices up so quickly.

“Hobart is a supply-demand market, not boom-bust and tends to be fairly consistent with the mainland. 

“Our market’s major influences are essentially the same as those that affect the mainland market.”

Ms Chung did, however, point out some differences.

“Short term accommodation is the highest density per capita in any capital city, which contributed to the increase in property prices and fuelled the rental crisis.

“When the business sector on the mainland changed its view around employees working remotely, the influx of people relocating to Hobart from mainland and overseas put pressure on the property market.”

Tasmanian AFL team a property lure

A 23,000-seat, fixed-roof stadium to be built a Hobart's Macquarie Point this week secured its final funding from the federal government.

AFL boss Gillon McLachlan, Acting Prime Minister Richard Marles and other sport dignitaries flew into Hobart on Wednesday (3 May) for the announcement of Tasmania’s own Aussie rules team.

Mark Weaver, Property consultant with Harcourts Hobart, said the real estate market would be kicking goals in coming years.

“We are very excited about the announcement of the new stadium and expect this to drive strong growth within the Hobart CBD and waterfront precincts over the next few years.

“Property within walking distance of the stadium, city and waterfront will become an attractive proposition for short stay investors and sports fans alike. 

“We also expect suburbs within 20 minutes of the city, with medians around or under the $500,000 mark to also continue to grow strongly, such as Chigwell, Rokeby, Midway Point, Clarendon Vale, Risdon Vale and others.”

Hobart’s real estate hotspots

In the short term, Mr Weaver said that if interest rates were paused the local market would stabilise.

“Unlike the rest of Australia, Hobart currently has very healthy stock levels.”

He admitted interstate investors had fallen away.

“The data will show that our interstate buyers have been declining over the course of the past 12 months to a more normal 8-10 per cent of total buyers, however, anecdotally we are now seeing mainland investors return to the market as our easing sale prices combine with escalating rents to create some strong investment yields.”

Asked to identify Hobart’s best potential capital growth suburbs, Ms Riley said houses in the city’s northern suburbs represented the best investment potential.

Ms Chung identified suburbs in the ring around 10-15 kilometres from the CBD as the pick of the market.

“These areas will continue to grow at a higher rate than greater Hobart, especially the Eastern Shore, Blackmans Bay and Kingston,” she said.