Hobart property investment levels of activity is picking up with real estate values in 2017 expected to come under pressure as demand increases due to relatively lower prices when compared to Melbourne and increased migration. The property investment market in Hobart started to move over the past year.
According to figures from the Real Estate Institute of Tasmania, the median price for houses in Hobart increased by 9.4 per cent over the year to June, though unit median values dropped by 6.8 per cent in the same period.
Sales are also gaining momentum after an extended downturn, according to the REIT. In the three months to June, turnover across Tasmania increased by 5.7 per cent. In the same period, sales in Hobart climbed 23 per cent and the outer suburbs recorded a jump of 53.8 per cent.
In particular, the report highlights west and north Hobart as popular areas where growth is consistently above trend. Tranmere on the eastern shore is also attracting interest as residents take advantage of the government’s generous homebuilder’s grant.
Hobart is Australia’s cheapest property market. RP Data reports 63.2 per cent of houses are priced below $400,000, making it the only city where bargain properties are in a majority. The most affordable suburb is Clarendon Vale, where the median is just $159,159. Tasmania is the only state with no suburbs recording a median above $1 million.
Activity is also on the rise in Launceston, the state’s second biggest town. Over the June quarter, sales in the city accelerated by 14.4 per cent, the REIT reports.
However, prices in the town have softened, falling 3.7 per cent in the past year. Herron Todd White identifies Invermay and West Launceston as suburbs that are most likely to grow due to their proximity to the town centre.
The north west centres, such as Smithton, Burnie and Devonport, saw conditions ease over the past year. The REIT reports the median price in this region dropped by 1.5 per cent over the year while sales rose by 4.4 per cent.
Tasmania’s rental property market tends to achieve moderate growth. Hobart offers impressive rental yields, with both houses and units attracting returns of 5.2 per cent, according to RP Data. In addition, the city’s vacancy rate is just 1.7 per cent, SQM Research reports.
However, rents have shown liked growth over recent years, SQM data shows. House asking rents have climbed by3.1 per cent over the past year but remain 3.2 per cent below rates four years ago. Units have followed a similar trend.
On the luxury end of the scale, Hobart’s Battery Point has recorded particularly weak conditions. House rents have dropped by 14.5 per cent in the past three years while unit rents fell by 6.5 per cent, according to SQM. Nonetheless, vacancies are fairly balanced in the suburb, coming in at 2.6 per cent
In Launceston, SQM shows availability is at a low rate of 2.3 per cent. However, rents are below previous peaks. Compared to 2011, house rents are down by 1.3 per cent and units by 5.4 per cent. Both sectors appear to be picking up this year but this growth remains sluggish.
Vacancies for Devonport are at 2.4 per cent, reflecting a healthy equilibrium. Although house rents in this town have been trending downwards in recent years, the past 12 months have seen a turnaround.
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