Adelaide & Hobart for income / yield

We have investment properties in Hobart and Adelaide and despite holding the one in Hobart for over 15 years , I've never seen it ( wife has ) and neither of us have seen the Adelaide one ( purely by chance I saw it on the internet and asked DT about it in the chat room and he had seen it the weekend before with his parents ...) . So I have a financial footprint in both places ( though not an actual footprint )

Personally , at this stage , I'd buy one in Hobart , simply because it's booming at the moment and the reality is in property investing you make your money from Capital growth . Cash flow just enables you to hold things and very few people will make significant returns from cash flow unless they doing things like adding granny flats etc .

We bought one in Hobart ( Claremont ) in last half of 17 . 267 K , renting for 340 . Claremont is moving , but I don't think it's as crazy as the inner areas .

I'd also be wondering whether you'd be able to ride the boom in Hobart and then sell in time to catch the boom in Adelaide or Brisbane..... That's what I'm hoping for our claremont buy . It's easy to know in retrospect , but I wish we'd bought less in Brisbane and more in Hobart.

We've just sold a Manly ( sydney ) unit in our super so are cashed up at he moment and we have thought seriously about buying another in Hobart , but at this stage decreasing debt is more important for us . We'll pay one off and keep the rest in reserve while we see what happens over the next 1-2 years .

Cliff

 

I wouldn't say a killer , but they are a factor . Property management rates are higher in Launceston.

My wife occasionally mentions we didn't buy one in Sydney in late 2013 because I didn't want to pay land tax . It would have doubled since then .....

Capital Growth is really King .

The APRA changes in borrowing limits and decreased servicability models make things like land tax less relevant

Cliff

 

Adelaide market is not really a boom/bust kind of market. It's steady growth year after year.
Also, it's in top 10 most liveable cities around the world.
With buy and hold it will just see steady growth, however best is to find property where you can add value down the line too.
Example would be - the one I have, it can be subdivided into four which will create decent equity but in meantime, it's not costing me to hold onto it... Win win!..
And with some of the projects that are in pipe, it will drive activity in terms of infrastructure and population which will lead to faster growth in prices than usual but nothing like Melb or Sydney..

On the other hand, personally love Tassie as place to visit and retire too, but to invest, i'll steer clear. It is surely seeing some price movement but will only last for so long before it dries up. And with cost to get in and out of property, not sure if it's the smartest move..

 

Is it still wise to enter Hobart market now as it's already moved up quite a bit? I am not too sure abt how much growth that small economy has still left in the current cycle.

 

Caught this today about Hobart! (Open in incognito browser if you've maximised your fairfax free articles):

'Sleeping giant' charts whopping 17.3 per cent house price growth

CG is obviously stellar in hobart right now. A lot of supply coming on though but my research seems to suggest it is mostly apartments. Im not convinced Hobartians want/will warm to apartment living yet. The only houses that seem to be approved are in the outer suburbs (cookie cutter housing estates).

Anyone on the ground here who can comment? I worry that with the higher holding costs in hobart, yields might weaken as the apartments dump on the market?

 

Tasmania has been good for us . We bought a block of units in the early 2000's for 220 which now rents for close to a 1000 / week . We have seen very nice capital growth most of which occured in the last cycle and it has only really started moving in the last year or so . It does boom down there and the last boom started in early 2000's and peaked in around 2009 so a long healthy property boom when the economy wasn't that great , unlike now .....

So not sure about your "only last so long before it dries up " .

I wasn't aware that Adelaide didn't have booms .

I thought every where in Australia had a boom and bust cycle.... . I've only bought a year or so ago in Adelaide so don't have long term personal experience with Adelaide , but my recollection from chat on the forum in the 2000's was that Adelaide did have a healthy boom and I recall some forum members doing well from that boom .

Certainly a quick look at the ten year figures on REA.com.au show that there was a significant fall ( AKA a Bust ) in adelaide around 2010 / 2012 in various places . Ok Adelaide is " different " but so is Hobart and Darwin and Sydney and Melbourne but ...

I'd really question you comment that it's not a boom / bust kinda place

Cliff

 

Morphett Vale as a random example

2012 - $270k
2013 - $282k
2014 - $289k
2015 - $297k
2016- $300k
2017 - $310k

Or Magill while we're in the M suburbs

2013 - $490k
2014 - $548k
2015 - $577k
2016 - $604k
2017 - $655k

Certainly nothing to sneeze at. Apparently Adelaide never goes up , so if its steadily flying under the radar during the 'problematic economy' days, imagine what will happen if we get a boom cycle

 

Morphett Vale is on fire,house on devo block came on last week, 1 open, above asking with 5 offers.

 

Wouldnt surprise me if the 2018 median figure was $350K

 

DT , any idea what ours would be worth now ?

Cliff

 

I'd hazard a guess at high 2's to 300k maybe. A tart-up would be very beneficial at this property, if the long term tenant ever moves

 

Happy long term tenant = happy pm = happy owner .

Cliff

 

Morphett vale has a vacancy rate of 0.8 % which is good for investors , but Claremont in Hobart has a rate of 0.3 % along with a prolonged drop in stock on market , which MV doesn’t have .

Maybe I could sell in MV , Buy another in Claremont , watch that double , take a profit and then be back in time to buy two in MV before it booms ....

Cliff

 

Haven't really monitored the stock levels to see if its levels have changed, but its a massive suburb - 25k people is a lot for a single outer suburb (most populous in Adelaide). Because of its size, having plenty of listings online is a given.

Nah

 

Thanks everyone for all the replies. Lots of food for thought. Our plans are definitely to hold whatever we buy for the very-long-term.

The biggest fear is that we buy just before there's a big correction, so we regret the missed chance to buy at a discount... but that's always going to be a possibility, no matter what the situation is! And sitting on the sidelines for the past 18 months (since we were in a position to buy again, but my partner wanted to wait and see what happened in the markets) hasn't exactly helped our position any.

 

Sitting on the sidelines waiting for a correction doesn't exactly work - because it can always correct the day after you buy.

Helping investors with finance and watching buying patterns for years - I can tell you then when there is a correction that you actually then see less people coming into the market, as they are then concerned about at what point the correction will end, flat line and finally revert to a growth cycle. Buy quality investment properties when the numbers make sense to you - no one can truly time the market.

 

I heard from my property manager that there are very few normal rental properties available in Hobart. Most interstate buyers have configured their investment properties in Hobart for short term rentals due to the tourism boom. She mentioned one woman who broke down in tears over the phone because she missed out on a place to rent. So, rental properties are in very high demand and thus higher returns for investors. Sadly, these conditions disadvantage many.