Has Hobart caught your attention lately? With charming architecture, a deliciously cool climate, and an improving economy, there are many reasons to choose Hobart when looking for an investment property.
The Hobart property market has been reeling in investors over the past three years. To date, the Apple Isle’s capital has survived the “market crash”, which is mainly focused on Sydney and Melbourne, and has continued to experience the fastest growing property prices across all the Australian state capitals while still maintaining the most affordable median house price, driving interstate migration.
Thanks largely to a lower Australian dollar, Tasmania has also been experiencing a booming tourism sector and a boost to the agriculture sector while quietly becoming a global competitor for niche high value market exports.
Read on to find out what leading specialist forecasters believe is going to happen to house prices in the Hobart market in the year ahead. But first let’s take a look at what 2018 looked like for Hobart.
What did the property market in Hobart look like in 2018?
2018 marked the onset of the property market blues for Australia, with the current downturn propelled by:
- Tighter availability of credit, specifically the cap on interest-only loans (however, APRA have announced they will lift these restrictions in the new year)
- An oversupply of units in anticipation of a population surge
- APRA cracking down on mortgage borrowing
- Rising interest rates
- House prices softening
Hobart remained unphased by the downturn in 2018 and continued to have significant growth and a strong rental market and population.
According to QBE’s Australian Housing Outlook 2018-2021, Hobart’s median house price was $481,800 at June 2018. This is a 10.6% increase on the same time last year. The strongest price growth was in Brighton with a 17.3% increase and the weakest growth was recorded in Hobart City with a rise of 6.3% over 2017/18. The data suggests that demand is based on affordability.
"The data suggests that demand is based on affordability"
The Hobart rental market stayed strong. Vacancy rates remained a slim 0.7 per cent for the June 2018 quarter, the same as the year previous.
Louis Christopher's Housing Boom and Bust report has the Hobart market up 9.7% in the 12 months to October 2018.
Hobart property market forecast 2019
SQM Research and QBE experts agree that despite peaking, the Hobart property outlook for 2019 will be another year of solid growth. This is due largely to the strong rental market and continued population growth, combined with the boost to the Tasmanian economy.
This will be a short term rise, before the market comes off the boil and price growth begins to soften as 2020 approaches. With construction projects reaching completion and affordability declining, growth will fall to about 2 per cent.
In a cooling environment, QBE forecasts that the median house price will record a cumulative growth of 8 per cent by June 2021.
How are Hobart house prices expected to change in 2019?
Across the nation, the forecast from leading property analysts suggests that prices will continue to grow in 2019, but Hobart property growth will begin to lag over the next two to three years.
QBE’s Australian Housing Outlook expects Hobart average house price growth of +8 per cent for 2019 to 2021 bringing the median house price to $520,000, while units are projected to rise to $420,000 - a +9% increase on current levels.
"... leading property analysts suggests that prices will continue to grow in 2019, but Hobart property growth will begin to lag over the next two to three years."
Louis Christopher's Housing Boom and Bust report forecasts Hobart to be performing much stronger than other capital cities in the year ahead, with gains of +4% to +10%. His scenarios include:
- +5% - +9% with an unchanged cash rate, slowing economy and Labor government
- +4% - +7% with a 0.20% interest rate rise by the banks, cash rate unchanged and a Labor government
- +5% - +9% with a 0.50% rate cut passed on by the banks, and a Labor government
All these figures are made under the assumption that there will be a Labor victory in the next Federal election. The proposed policy would see Labor making changes to the capital gains tax and repealing negative gearing, which in effect would impact property prices negatively, at least for the short term.
Is unit oversupply an issue in Hobart?
No. Hobart has not suffered from an oversupply of units or apartments. Currently, there is still a shortage of properties for sale, and those on the market tend to sell very quickly - usually within ten days. With affordable housing and strong local confidence, the question of oversupply is a non-issue. In fact, due to the smaller unit market, strong price growth is expected to continue.
Best suburbs to invest in Hobart
If you want to get a foot firmly planted in the Hobart real estate market then you need to know the best areas to buy for the strongest growth potential.
Keep an eye on affordable suburbs in the city’s north-west, like Glenorchy and Moonah, which still offer good growth combined with tight vacancy rates and solid rental returns. Glenorchy offers high rental yields of 5.4% and a median house price of $365,000. Like we see with many other capitals, the suburbs on the outer ring of the city are offering the strongest growth and affordability.
"Like we see with many other capitals, the suburbs on the outer ring of the city are offering the strongest growth and affordability"
In the south, Kingston continues to outperform, offering an excellent lifestyle advantage accompanied with solid price growth and rental yields of 4.7%. Another suburb to watch is Lindisfarne. Situated in Hobart’s north-east, it offers liveability and affordability along with healthy rental demand and good rental yields of 4.6%. These areas both have low crime rates, low unemployment, and access to excellent schools, shops, parks, transport and other amenities, which makes them good choices for investors.
More affordable areas in the Greater Hobart region include Clarendon Vale with a median house price of just $211,250 and stand out rental yields of 7.4%, and Rokeby with a median house price of $281,000 and strong yields of 6.4%.
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