Slower price growth means the Apple Isle continues to outstrip its mainland counterparts in the affordability stakes.
Tasmania might not be the first port of call for interstate investors, yet the island state is outperforming many of its mainland rivals, attracting investors from around the country who are keen to take advantage of its affordable prices, low vacancy rates and significant lifestyle attractions.
According to Residex, the median house value in Hobart rose by 4.03% to $369,000 over the year to March. Regional areas were the stronger performers with the median house value rising to $274,500, a jump of 10.2% over the year to March.
Strong performance across the state was confirmed by data recently released from the Real Estate Institute of Tasmania (REIT) which showed Hobart eclipsing its previous median house price by over $30,000 for the month of March.
Peter Bushby, REIT president says that house sales for the month of March picked up dramatically. “The main reason for this increase in Hobart’s median house price is the shift from first home purchasers driving the market, to second home buyers and investors driving the market,” he says.
Despite the recent rise, Hobart still holds the record as the most affordable capital city in Australia, with 54.3% of its suburbs showing a median house price below $350,000 according to Cameron Kusher, senior analyst at RPData. “The smaller nature of Hobart, the fact that it has got a much lower population base, means that there is a greater opportunity to buy more affordable housing,” he says.
Investors continue to enjoy healthy increases in rents, thanks to the ongoing shortage of rental properties across the state. Over the past 12 months, median rents climbed by 11%, achieving an indicative yield of 4.9%, according to RP Data.
“Mainland investors who are sensitive to dramatic price hikes in Sydney and Melbourne are coming down here because they can see they’ll get really good yields,” says Tony Collidge from PRD nationwide in Hobart. “They’ve studied the market and done their homework. We haven’t got the skill set down here or the number of builders to build the places we need so demand will continue and prices will reflect that,” he says.
Ones to watch
With government spending boosting employment and million dollar developments on the horizon, the place to watch is the north-west coast.
According to REIT data, Devonport is steaming ahead, recording a staggering 71.4% increase in sales over the 12 months to March 2010. “Land is reasonably cheap and it’s not far from anywhere,” says John Ackroyd, owner of John Ackroyd real estate in Devonport. “You can get to Launceston in an hour, there is plenty of employment and there are regular boats and ferries to Melbourne. Vacancy rates are also low at around 2%” he says. “If you’re looking for growth, look between Latrobe, right along the coast to Wynyard. Sheerwater and Port Sorrell are also going very well.”
With traffic chaos, overcrowding and soaring property prices causing city dwellers to seek an escape, Tasmania’s southern suburbs are offering an affordable tree-change for world weary mainlanders. Investors can snap up bargains no more than an hour from Hobart in suburbs that are favoured by mainland migrants for their easy living lifestyle and central location. The north-west coast is also a favourite with interstate migrants both for its lifestyle and access to employment opportunities.
“People from the mainland that are moving here tend to prefer the north-west coast because it is really beautiful country,” says Collidge. “They also go to the Huonville and Cygnet areas because they are really picturesque and close to Hobart.”
According to Collidge, the federal government is actively generating employment opportunities in the north-west part of the state which is pushing demand for rental properties higher.
Martin Harris, CEO of REIT, suggests investor consider suburbs further south as well, such as Warraine, Mornington, Lindesfarne and Cambridge, all of which are only ten minutes from “the bridge” that links the eastern shore to Hobart’s CBD. He also indicates that the northern and western suburbs of Hobart are still providing affordable opportunities for a growing market. “All the way south down to Huonville continues to be a solid choice,” he says.
