With both Sydney and Melbourne markets cooling, a property market analyst has said a boom could occur in Tasmania’s capital city soon.
According to Simon Pressley, head of research at Propertyology, Hobart’s current growth cycle is similar to Sydney’s in 2014, yet with a median house price that is a third of Sydney’s.
“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,” Mr 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.”
“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,” he said.
The analysis by Propertyology shows Sydney and Melbourne are currently in their fifth strong year, while Hobart’s growth cycle only started in 2016, and research by Domain and CoreLogic both show changes in Hobart’s median house price is higher than any other capital city.
“Hobart has an enormous head of steam. The number of properties listed for sale now is less than half what was available a few years ago. Our buyer’s agents have missed out on numerous properties to people who have been prepared to pay up to 10 per cent more than us. It’s like a flock of seagulls fighting over a chip,” Mr Pressley said.
“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.”
Jobs are only set to increase with a $493.7 million upgrade of Tasmania’s hospitals and a $400 million science and technology precinct for the CBD, which would facilitate 3,000 students and 700 staff.
The population growth rate is also at 0.9 in 2016, higher than NSW’s Central Coast and South Australia’s Adelaide, as well as having a vacancy rate of 0.4, which Propertyology claims is potentially the lowest for any capital city on record.
“Housing demand in Australia’s most affordable capital city is largely driven by local confidence from the rapid job improvement,” Mr Pressley said.
“Now that the capital growth is there for all to see, mainland investors are appreciating Australia’s highest rental yields mean the cost to hold a property in Hobart is effectively nothing.”