We know that property prices in the mainland states have continued to go from strength to strength – but what about our little sister to the south? Has there been a property boom in Tassie, and are house prices on the Apple Isle set to explode and rival those in Melbourne or Sydney?
The Australian Bureau of Statistics reports that dwelling prices in Hobart grew 4.5% in the December 2016 quarter – a leap of 8.8% for the year, putting our smallest capital third in the country for growth, outpaced by only Sydney and Melbourne.
Several sources predict that the Tassie property market will outperform the mainland capitals in 2017. However, when it comes to long-term growth, Hobart has a less illustrious history – since the GFC, prices there have grown just 9.5%, compared to a staggering 85% in Melbourne and 99.4% in Sydney.
Is Tasmania set to buck this trend and become a major player in the national property market?
Low vacancy rates pique investors’ interests
According to CoreLogic, Hobart has the lowest vacancy rates of all the major capitals, with just 0.5% of properties untenanted – making it a great option for investors.
As housing supply struggles to meet demand, many experts predict it’s inevitable that prices will continue to rise. The whole state is in the midst of a population boom, and also boasts a thriving tourism industry – both of which are helping to push the economy, and ergo house prices, skyward.
CommSec reports that Tassie has finally shaken its reputation as the poorest-performing state economy, jumping up to fourth place in the rankings last year. Hobart is even becoming popular with commuters, with some professionals realising that the hour-long flight from Hobart to Melbourne on Monday could in fact be less stressful than attempting to commute from the outer suburbs. It’s also an excellent option for those who are able to work remotely from home.
Other buyers are snapping up a property in Tassie now while the price is right, with the goal to retire there in 10 or 20 years’ time, while the healthy economy is also helping locals get into the market.
Rentvesting opportunities abound
Tasmania offers an excellent opportunity to first home buyers who have decided that “rentvesting” is the best option for them as they attempt the Great Australian Dream of home ownership.
This trend is really taking off, and it’s easy to see why – “rentvesting” refers to buying a property in an area which you can afford, and renting it out, while continuing to rent in the more expensive area you wish to live in. This strategy can offer first-time buyers the best of both worlds – affordable rental accommodation close to amenities in Sydney and Melbourne, without the hassle of council rates and maintenance at big-city prices, while also enabling them to get a foot onto the property ladder and build wealth.
In many suburbs in Tasmania landlords can get great positive cash flow, as median rents are quite high in comparison to house prices, whereas on the mainland, most investors find themselves forking out a significant amount to meet the shortfall on their mortgage repayments – even after charging a premium in rent.
Those who are “rentvesting” in Tassie can keep the property long-term as a regular source of income, or may plan to sell if the market booms and use their profit as a deposit on a more expensive home in their own town.
With interstate migration, population growth and “rentvesting” pushing up demand, and limited housing stock up for grabs due to low building approval numbers, the future looks bright for the Tasmanian property market.
Thinking about moving to, or investing in, Tassie? Use our Property 360 tool to scope out the area you’re thinking of buying in, for all the vital stats.