While national property prices were plummeting at their steepest decline since the global financial crisis earlier this year, Australia’s island state was defying the odds. Tasmania has experienced significant capital growth in recent years, with Prime Minister Scott Morrison dubbing it the ‘turnaround state’.
Hobart in particular has gone from strength to strength, only recently starting to cool off after years of exponential growth. Low supply of dwellings, low median price, tight vacancy rate and an upswing in tourism have all contributed to the city’s property boom.
Hobart property values
Hobart dwelling values continued to rise over the last month, with the latest CoreLogic data showing a 0.5 per cent increase in values during August, the third successive month of capital gain for the city. Hobart also topped CoreLogic’s list of top ten performers, recording a 3.1 per cent annual increase. Canberra placed second with 1.2 per cent.
Over the past five years Hobart’s dwelling values have skyrocketed by 35.9 per cent, more than 10 per cent higher than Melbourne and 15 per cent higher than Sydney.
According to the Australian Bureau of Statistics (ABS), Hobart property prices have been rising at an average rate of 4.6 per cent a year — the fastest of all Australian capitals. Despite solid growth, the median price of property ($465,535) remains relatively affordable in comparison to other capital cities like Sydney ($790,072) and Melbourne ($626,703).
While the city has experienced enormous growth, the latest CoreLogic figures indicate prices are beginning to stabilise and it’s likely the property market will lose its momentum over the next twelve months.
Hobart property listings
Hobart had 298 new listings in August, a 12.4 per cent decline in comparison to the same period last year. However, overall there were 1,060 properties listed for sale, a 6.9 per cent increase over the past twelve months. The median time on the market for houses was 39 days, while units recorded a median of 42 days.
Hobart vacancy and rental rates
Hobart has the hottest renal market in the country and has experienced a 5.5 per cent increase in rental conditions over the past twelve months. The asking rental price for Hobart is $443.50, 9 per cent higher than the same time last year and 29.8 per cent higher than three years ago. Along with this, the city’s residential vacancy rate is currently just 0.5 per cent.
Hobart property market trends
The number of tourists visiting Tasmania has continued to grow, with 1.32 million visitors travelling to the state over the twelve months to March 2019, according to Tourism Tasmania. With steady visitation growth, Hobart is seeing a trend of investors converting private rental properties into short-stay accommodation.
A recent University of Tasmania report recorded a 288 per cent increase in entire properties being listed on short-stay accommodation websites in the city from July 2016 to 2018. Given the city’s tight vacancy rate and rental conditions, reducing existing rental stock could further acerbate Hobart’s household rental stress.
In July, the Master Builders Association said regulatory and cultural change to embrace higher-density housing was vital to Tasmania’s future.