SINCE 1997
Will Hobart's Hot Run Continue?
2 min read

Will Hobart's Hot Run Continue?

While the past 5 years have continued to deliver outstanding growth to the Hobart market, it appears that this dream run is beginning to slow as investors turn off the tap.

In what has been a surprise to many, Hobart has presented as the strongest property market over the past 5-years, outperforming both Sydney and Melbourne with gains of nearly 36%.

During the past quarter, prices have continued to rise (up 0.1 %) in what is one of the tightest rental markets in the country with low vacancy rates and strong rental yields of 5.2%.

Despite a quieter period in the lead up the May Federal election, the Hobart market has again picked up pace.  The current growth cycle may be reaching its peak, however,  with some experts calling the top of the market.

REIT President Tony Collidge reveals that “there was clearly an improvement in activity within the market place following the Federal election, [but] it is evident that our market is transitioning to a more balanced environment.

“I believe that the strong price and rental growth of yesterday’s market are now behind us and that a much more modest level of momentum in our market will occur, "" said Mr. Collidge.

While rental yields have continued to hold throughout the winter months,  Ripehouse Advisory CEO Jacob Field suggests that, “while this is normally a strong sign given that prices have continued to edge northward, it is more likely that artificial factors at play in the rental market rather than the buying market has more steam left in the tank.

“Growth usually follows yields, but in this case, we have called the top on this regional capital, as national investor interest has slowed and days on market data is showing signs of retraction, "" said the CEO.

With much of Hobart’s recent growth perpetuated by heated interstate and local investment, a mass investor exit during the June quarter will likely have a significant impact, moving forward.

The REIT documents this shift in their June Quarterly Report, “the biggest shock has been the continued withdrawal of investors from our market (down 10.9%). 

“In 2018, 2504 investors purchased rental properties across the State. In the first half of 2019, the number was 979.

“This is very concerning and will only add pressure to an already tense rental market. Mainland purchaser numbers are also down significantly (12.6%) on last year,” said the REIT President.

So while the past 5 years have continued to deliver outstanding growth to the Hobart market, it appears that this dream run is beginning to slow, as investors decide to turn off the tap.

July snapshot - Hobart in numbers

 

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