- Prices have been rising in Tasmania since 2017, and has been fuelled further by the pandemic
- Rental prices have increased dramatically, with the vacancy rate sitting at 0.4%
- Price expectations still high despite a slowdown nationally
With significant price growth across Australia since the pandemic, one market that has stood out is Hobart.
While property prices remained stagnant for much of the last decade, prices gradually began increasing from 2017 onwards as many Australians migrated to the Apple Isle.
The rate of growth rose sharply from the beginning of 2021, as highlighted by SQM Research data.
As of the end of June, asking prices for all houses is up by 14.4%, and 11.5% for units. Over 10 years, the average change per annum has been 6.9% and 6.8% respectively.
Along with the sales market, the rental market has continued to tighten after remaining relatively stagnant during the first half of the last decade.
While the vacancy rate peaked at 3% in April 2012, it was at 0.4% as of May 2022. However, it should be noted it has been on the decline for some time – it reached 0.3% in late 2017 and 2018.
While in 2013 you could comfortably get a rental in Hobart for $300 a week, the median is now closer to $520 for houses. This is a 13.8% increase for houses and 11.9% for units over the past 12 months to June 2022.
However, softer buyer demand has slowed down growth.
CoreLogic reported that in Hobart dwelling values decreased by 0.3%. This followed 22 consecutive months of growth and follows stock levels increasing in the middle of March. New listings were 46% higher over the four weeks to 24 April, compared to the same time last year.
“With higher inventory levels and less competition, buyers are gradually moving back into the driver’s seat. That means more time to deliberate on their purchase decisions and negotiate on price,” said Tim Lawless of CoreLogic.
Nonetheless, the median dwelling value is $738, 399, with the median unit value at $590,074.
CoreLogic data also shows a decline with the time on market. While the median time on the market was 8 days in May 2021, this has ballooned to 23 as of May 2022.
Data from Domain has shown that the Hobart monthly vacancy rate has remained steady at 0.4% as of May and April 2022.
Notably, there has been a 1.1% increase in the number of vacant rentals, to just under 90.
“Record-high asking rents and reduced choice in rentals resulted in tightening conditions that continued to favour landlords and increased the likelihood of rental price rises after the reduction in rental prices seen during COVID,” said Nicola Powell of Domain.
“The rise in investor activity, the arrival of overseas migrants, and the return of international students will see rental demand remain elevated, worsening conditions for tenants.”
So, what’s in store for 2022?
As we near the middle of the year, we spoke to several real estate practitioners on the ground to hear what they have noticed, and what they expect to occur.
Patrick Berry, director of 4one4 Property Co, told The Property Tribune that over the past six months, the team had witnessed a significant increase in available stock across the market. Although this would usually result in vendor discounting, this has not been the case so far.
“The population has grown by over 20% over the past few years, so there is a significant shortage of available homes both in the rental space and the sales area,” said Mr Berry.
“We have noticed that the Hobart market has almost moved into a two-speed setup with owner-occupied homes and empty properties selling extremely fast for good prices but investment homes and land are taking longer to sell.
Patrick Berry, 4on4 Property
“This could indicate that investors are still unsure about interest rates and land purchasers are worried about the construction cost.”
In terms of what he expects to occur over the next year or two, he said industry leaders both locally and nationally expect Hobart to travel along in a nice manner.
“People I have talked to expect still around 7-10% price growth for the remainder of 2022 and expect that we could still see price growth of about 6% in 2023,” he said.
“As more homes become available for sale, we will see subject-to-sale contracts come back into the market as people look to secure their first home before selling their existing home.”
In terms of the rental market, he added Hobart is about 1,500 properties short of meeting the current rental demand.
“Cost of living along with rising rents will put pressure on tenants; however, housing is an essential service, so unfortunately for tenants, I don’t believe we will see a drop in demand any time soon.
“I think we will see fewer properties come up for rent as tenants choose to accept rent increases to stay in their homes for a further 12-month lease, potentially resulting in less turnover available as we move forward further fulling rent increases in 2023.”
Simon Pressley, managing director of Propertyology, noted the significant growth experienced by Hobart and other Tasmanian markets such as Launceston and Burnie.
“Launceston is officially one of Australia’s top six of 200 property markets over the past five years,” he said.
“Looking ahead, while the rate of capital growth will not reach the same recent giddy heights, the pressure will continue to be more than normal and double-digit rates of capital growth are therefore likely.
“And the incredible upward pressure on rents is not going away any time soon.”
Simon Pressley, Propertyology
Mr Pressley added the strength of the overall Tasmanian economy, which recently produced an all-time record low unemployment rate, as well as bolstered optimism from the wider community would continue to impact the demand for housing.
“Community confidence has received an extra boost from the Jack Jumpers remarkable success in its first year of the national basketball competition, plus the entire state are like kids with a lollypop while eagerly awaiting confirmation of entry into the national AFL competition.
“Meanwhile, household finances have never been stronger due to record high values in both home equity and liquidity (huge cash reserves in mortgage offsets and redraws).
“We are anticipating home upgraders, first home buyers, and investors to still be very active real estate buyers in the foreseeable future.
“The volume of dwellings listed for sale has mildly increased in recent months, but still remains 48 percent lower than five years ago,” he concluded.
To view commentary from the other capital cities, please view the following articles: