TAS Time to Hype Hobart Thread?

Tasmanian real estate boom spreads island-wide

 

Tasmanian real estate boom spreads island-wide
The Real Estate Institute of Tasmania's recent June quarter report reveals just how popular the 'apple isle' has become. Sandy Bay once again has the state's highest property prices, but Launceston is keeping pace, recording strong growth in number of sales and prices.

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   Tasmanian real estate is benefiting from rising prices elsewhere in the country, and a growing appreciation of the state's natural and cultural advantages.
   
   “Whilst national focus has been on the mainland markets, Tasmania has quietly slipped under the real estate radar," said Tony Collidge, president of the REIT.
   
   “For the first time in more than a decade, we could achieve annual results exceeding 11,000 sales worth almost $4,000,000,000."
   
   "The March and June 2017 Quarters have seen real growth in not only the number of sales but also prices. The results appear to be spreading across the broader state and not just the major populated areas," he said.
   
   Collidge said it was pleasing to see the West Tamar, Meander Valley, Northern Midlands, Circular Head, Derwent Valley, Central Highlands and Southern Midlands all record increased sales.
   
   "The transformation has occurred as a result of a shortage of properties for sale and for rent coupled with an increase in population growth, increase in employment, increased consumer sentiment and positive economic conditions," said Collidge.
   
   "We still provide the cheapest and best value accommodation in Australia," said Collidge, concluding that the Tasmanian market may "still have a way to go."
   
   Sandy Bay, Hobart, the state's most valuable real estate
   
   As of 30 June 2017, Sandy Bay's median house price of $850,000, the highest in the state.
   
   
   
   Source: REIT.
   
   Jo Brownless agent with Fall Real Estate sold a four-bedroom house at 105 Princes Street, Sandy Bay, for exactly $850,000.
   
   "Sandy Bay's always been a hot spot," Brownless told SCHWARTZWILLIAMS.
   
   "It's got a lot of great schools, it's got the university, it's close to the CBD, and is on there River Derwent," she said.
   
   Brownless said there was strong interest in Hobart real estate from interstate.
   
   "We're seeing plenty of interstate interest," she said. "I receive two to three calls a day, and many emails, from people who are looking to relocate," said said.
   
   Buyers come from all over the country, and from overseas she said. Some buyers are even coming from Queensland, said Brownless, and are attracted by the more temperate climate.
   
   She said she also sees young buyers from interstate turning to Hobart to "get a foot in the property market". Other interested parties include downsizers, side-steppers, doctors and medical staff, and holiday-makers.
   
   Brownless said Hobart real estate also holds a lot of appeal for investors. "We've got some of the best returns in the market," she said.
   
   Launceston market catching up with Hobart
   
   Median prices in East Launceston raced 54.9 per cent higher in the June quarter alone to a median of $612,000. George Town, in Launceston, saw prices nearly double in the year to June 2017, to a median of $240,000.
   
   
   
   Source: REIT.
   
   
   
   Source: REIT.
   
   The Launceston market "has been moving", Jeremy Wilkinson of Harcourts told SCHWARTZWILLIAMS.
   
   The Launceston market tends "to follow the trends of the mainland and Hobart", he said.
   
   "We are probably 12 to 18 months behind Hobart," he said.
   
   Launceston property has great appeal for investors, he said. Yields are generally around the 6 per cent mark, and can sometimes even reach seven and eight per cent, he said.
   
   Though Tasmania's appreciation hasn't been as strong as in other states, it's not far behind, said Wilkinson.
   
   "There's been a highest number of sales in a long time," he said.
   
   Wilkinson said the market is facing a shortage of stock. In May this year, properties that had been on the market for some time, even properties with high prices, sold, he said.
   
   "In May and June it really came to the fore," he said.
   
   Interest from interstate is strong. "Last year 12-14 per cent of buyers were from interstate, today 30 to 40 per cent come from interstate," he said.
   
   Queenstown on the West Coast: affordable, strong capital growth recorded
   
   Queenstown, a tiny town that lies on the West Coast of the island, has some of the most affordable real estate in Tasmania, with a median price of $110,000. The town achieved 77.4 per cent growth in median prices in the year to June 2017.
   
   A charming, five-bedroom home at 2 Coalville Street, Queenstown, sold for onlly $185,000 in April through Jenelle Carey of Harcourts. (See images in slide show.)
   

 

Pete Wargent Daily Blog: Hobart rents are exploding

Hobart's vacancy rate fell from 0.7 per cent to just 0.5 per cent in July 2017, according to SQM Research data.

That's probably close to about as low as you will ever see in a capital city, based on the prevailing measurement criteria.

 

Great insights thanks for sharing!

Harks back to my very first post in this thread where I mention that Hobart can't easily grow 'out'-ways or 'up'-ways due to a plethora of reasons; so logically if demand increases and supply remains muted, seeing vacancy rates drop to sub 0.5% is a logical consequence.

I think the chances of supply increasing though are high, but development will take time in Hobart and NIMBY's will be out in force to shut that **** down. And, whatever mass-supply comes on, it is likely to be CBD units not houses (god... hasnt this city learned from the 'build it and they'll come' oversupply failures of its brother and sister, Melbourne and Brisbane?).

People want more houses in Hobart; high-rise lifestyle adaptation seems quite unlikely. Maybe some nomadic boomers will be happy to settle into a 5 story apartment with all the luxuries (and heavy strata expense...) of lifts, gardens, pools etc. But I have a feeling most won't... My $0.02 is that this same gray market will simply move into houses a bit further out (say 3-5km) in places like Moonah etc. As a favorable alternative to apartment living.

 

Hobart has become a serious national player in the residential property scene

22 AUGUST 2017
Hobart has become a serious national player in the residential property scene

There’s mounting activity in and around real estate in Hobart and, according to media, it’s a sudden explosion.

A Domain report says there’s an “unprecedented” surge in activity from international developers “who are now ditching the mainland in favour of Hobart”.

It reports a big increase in hotels planned for the city’s tourism industry – and in developers actively seeking sites for residential development.

Chief executive of Knight Frank Tasmania, Scott Newton, reports big demand for Hobart development sites, which is also described as “unprecedented”.

“Hobart has generally lagged the national market but we’re certainly seeing change unfold and there’s been a catch-up take place,” he says.

I’m not surprised at the interest in the Hobart market – and it’s not sudden and it’s certainly not unprecedented. Hobart and Tasmania have been making a strong case for attention from investors of all kinds for a couple of years now.

Hobart has become a serious national player in the overall residential property scene, with its appealing mix of the lowest prices, tightest vacancies and highest rental yields in capital city Australia, underpinned by a greatly improved state economy.

Both SQM Research and CoreLogic have published recent data showing that annual price growth is strongest in Melbourne, followed by Canberra, with Hobart now challenging the leaders.

CoreLogic has Sydney now ranked third on price growth with Hobart fourth, while SQM rates Hobart as third best on capital growth and Sydney fourth.

Vacancy rates remain tight or moderate in all of the state and territory capital cities except Perth, but Hobart has maintained its status as the tightest rental market.

Both Domain and SQM Research record vacancies below 2% in Hobart, Canberra, Melbourne and Adelaide. Both sources have Sydney hovering around 2%, with Brisbane and Darwin both around 3%.

“Available rental accommodation in Hobart and Canberra remains scarce, with the lowest house vacancy rates of all the capitals at just 0.5% and 0.8% respectively,” says Domain chief economist Andrew Wilson.

Here’s the key thing: none of this should surprise anyone who’s been paying attention. The rise of the Hobart market to national prominence has been entirely predictable and has been unfolding steadily throughout 2016 and 2017.

Here’s what I wrote on Property Observer 18 months ago, in February 2016: “For six months or more, I’ve been getting blank stares or responses like “Seriously?” whenever I suggest to investors they should be considering Hobart.

“It’s really easy to get a bad reputation and extremely hard to lose it. Tasmania has the image of a basket base economy. A state that’s losing population. A property market bereft of growth.

“For many years, all of that has been true. It’s true no longer. But most people won’t be convinced until they read there’s a boom on. And by then it will be too late to buy well.

“Perhaps it is already. According to the latest House Price Report from Domain, Hobart median prices rose 8.7% for houses and 7.1% for apartments in 2015. The apartment result is the second best among the capital cities, after Sydney.”

That was February last year. Eighteen months later it’s certainly too late to get the best of the buying, with some research showing that the nation’s hottest suburbs, in terms of “Time On Market”, are all in Hobart.

This is confirmed by reports from industry professionals at the coalface, who report that houses are selling as fast as they’re listed.

There were two core factors that prompted that prediction about Hobart prices at the beginning of last year: the steady rise in sales activity and the improvement in the state economy.

At that time, numerous reports were recording the improvement in the Tasmanian economy including the NAB business survey, a Deloitte Access Economics Business Outlook report and CommSec’s State of the States report.

But the bigger pointer for me was the research Hotspotting goes on sales volumes. Changes in sales activity are always a precursor to price movements, both up and down. Hotspotting analyses sales volumes patterns for every town and suburb in Australia every quarter – and that process forecast the price rises that are now occurring in the Hobart market.

In February 2016 I wrote: “Cheap real estate, a market with rising momentum, underpinned by a strongly moving economy - it’s a package worth considering.’

Those who followed that advice would have bought well ahead of the price rises and done well – and will do better, because there’s more to come.

Buyers can still get into the Hobart market and achieve capital growth, but the best time to be there was 18 months ago.

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.

 

Simon Pressley of Propertyology is calling big things for Hobart in the next two years

Hobart is poised for immense growth

Hobart’s property market is poised to experience rates of price growth that will be bigger than anything witnessed in Sydney, according to Propertyology, a national property market researcher and buyer’s agency.



Price growth in the Tasmanian capital has the potential to push past 20% over the next year, which is well above the best years produced by both Sydney and Melbourne during the boom years.



“Hobart’s growth cycle today is comparable to where Sydney was in 2014,” said Simon Pressley, head of market research at Propertyology. “All of the metrics which we analyse suggest that, all things being equal, the 15 per cent price growth over the last 12 months will be surpassed next year and that there’s currently no end in sight.”



While Sydney and Melbourne are now in their fifth strong year, Hobart’s growth cycle didn’t commence until 2016. Both the Domain Group and CoreLogic recently confirmed that Hobart’s shift in median house price over the last 12 months is officially higher than every other capital city.



Of the seven city councils that make up Greater Hobart, Clarence, Glenorchy, Hobart City, and Kingborough are the tightest markets.



Strong economic growth is driving demand



Affordability and the significant improvement in Tasmania’s economy are driving housing demand, while supply is very tight.



“Most Australians don’t realise that Hobart’s increase in job volumes over the last 12 months is four times the national average and more than double that of the next best capital city,” Pressley said. “Tasmania is building an international reputation for world-class agriculture, unique tourism experiences, and advanced manufacturing. Hobart is also a university city. The economy is firing up.”



Meanwhile, big international brands like Hyatt, Marriott, Fragrance Group, and others are expected to commence work on several new luxury hotels over the next year or two. There are also plans to extend the Hobart airport runway to accommodate direct flights from Asia. So far, infrastructure upgrades have produced record volumes of visitors, ranging from business delegates to tourists.



Low vacancy rate intensifies rental pressure



Hobart’s vacancy rate of 0.4% is potentially the lowest on record for any capital city, and Pressley believes rental pressure will intensify even further.



While Sydney, Melbourne, and Brisbane are now seeing record volumes of new supply hitting their markets, supply in the Tasmanian capital is constrained by low building approval volumes.



“Hobart is the only location in Australia which has the combination of an affordable entry price, an economy which is already strong (and still improving), hardly any impact on investor’s annual cash flow, and a tight supply pipeline for as far as the eye can see,” Pressley said.



“The 15 per cent headline capital growth rate over the last 12 months is dragged down by the lower rates of growth in Hobart’s urban fringe. With rates of supply tighter than anything we’ve seen, it’s quite conceivable that property prices in metropolitan Hobart could exceed 20 per cent next year and beyond.”

 

Wondering what people think of Austins Ferry?

Numbers seem to stack up reasonably well based on ideal situations (i.e. no disaster tenants).

It is about 20 minutes away from Hobart CBD which seems like a dream compared to Sydney but I imagine may be considered a bit of a trek compared to other areas.

I'm looking to spend around $300-350k and ideally get a place with a reasonably large land parcel (700-1000sqm)

Also could anyone give any insight into the attitude toward granny flats down there? I imagine they're not formally legal but perhaps an informal arrangement where there's a large under-house area etc. My only concern would be temperature and making sure it's all properly insulated. Thinking maybe students might be interested.

 

I grew up in Austins Ferry. Nice family suburb, seemed very safe. Big houses on decent blocks. I have not checked the data for investment purposes recently. It has a very well knows boys Catholic school and I believe Years 7-10 are based there so many families move for the school. I doubt there would be a market for granny flats. It is still considered a bit far out for locals, and the only students would be in school. Uni is in Sandy Bay.

 

I am not a fan. . I see Hobart as bouncing back from a LONG flat period and there is a lot of stimulation coming from Sydney and Melbourne investors giving off false sense of security. Whilst i agree the Growth numbers appear ok now and the price point is quite low... Its still an island.... It has a lot of restrictions on how far it can grow / go in my opinion. Right now I don't see anything more promising than Brisbane (S/E QLD ) for the next 3 - 5 years. Population on the rise, low median average price point, awesome yields and I am sure we will see the investors and southerners make this a massive Go To area if it isn't already

 

Yes, but it's also about diversification - certainly more than one market in Australia and spread is good. there are plenty of threads on Bris-SEQld. Hobart tops the field for vacancy rates. Not too many places with 0.5% vacancy rates and the numbers at open homes. As a general statement, and as others have said - get in when the time's right, and out when the time's right - doesn't need to be a forever hold.

 

Fair point. Def an option for diversification. Just need to make sure you can get out if the market turns there. I feel it would turn off harder when it does.....

 

Any market is hard to sell in once it's turned , even Sydney ....

Having watched markets close up for a while now , just as there is always clear evidence that markets are about to take off , we've always seen clear sentiment that the market is close to the top without it coming to a screaming halt . The ONLY time I've seen the market come to a screaming halt was in the aftermath of 911 and that took about two weeks for it to stop . We had our first open on the Saturday before and our second on the day after . We accepted a good offer on the day after and over the next two weeks while we were looking , the market stopped and people pulled out of offers . Sellers panicked ( more so when there rumors of anthrax came out ) and we were able to low ball someone for our next PPOR . About two months later when people realized it wasn't the end of the world , everything settled.

Cliff

 

Hi Cliff, what are your views on Tassie now? Do you think buying an entry level property there in 2020 would be a silly idea considering its recent growth? Thanks a lot!

 

Who blocked you? Rethink or Pure Prop?