It’s well publicised that property prices on mainland Australia have continued to go from strength to strength. What can we say though, about Tasmania – the little sister to the south. Rumours of a property boom on the island are threatening to explode – rivalling those in Sydney and Melbourne.
According to the Australian Bureau of Statistics, the process for dwellings in Hobart grew by 4.5% in the December quarter of 2016. For the year, this means that Hobart’s property prices jumped up by 8.8% for the entire year – putting the smallest capital at third place for growth in Australia. This was only surpassed by Sydney and Melbourne.
Several real estate sources have predicted that the Tasmania property market will outperform the mainland capitals by the end of 2017. The picture is a little different for long-term growth however, with Hobart having a less than shining history.
Since the GFC, the prices have only grown by 9.5% – compared to the insane 85% and 99.4% of Melbourne and Sydney respectively. What we really want to know, is whether Tasmania can buck the trend – becoming a serious player in the national property market.
Low Vacancy Rates – No Room At The Inn
CoreLogic data shows that Hobart has the lowest vacancy rates in all of the major capital cities. According to the data, only 0.5% of properties do not have tenants in them – this makes Hobart a great prospect for investors.
With housing supply struggling to meet demand on the island, the experts are predicting that prices will inevitably rise in the long-term. The state is apparently in a period of population boom – as well as boasting a thriving tourist industry. The combination of these two factors means that the economy and therefore house prices, are about to shoot into space.
CommSec reported that Tasmania has shaken its reputation for being the poorest performing state economy – skipping forward to 4th place in the national rankings last year. Hobart is a popular commuter hub, with some professionals opting to take the hour-long journey to Melbourne, as opposed to commuting from the outer suburbs.
Buyers who snap up a property in Tasmania right now, will see the benefits to the area when they retire in 10-20 years time – this is due to the local economy boom, which will see the area becoming more developed.
Rentvesting For The Future
With first-time buyers struggling to get into the market, Tasmania offers a great opportunity for “rentvesting”. This is often the best option for said buyers, who are able to buy in an affordable area and then rent the property out. This enables them to continue to rent in the more expensive area that they wish to live in.
This tactic enables young, first- time buyers to not only live in the big city for a fraction of the cost, but also gets them onto the property ladder – building wealth in the process of pursuing a career.
Rentvesting allows buyers to keep the property long-term, which enables them to maintain a regular source of income. They may also plan to sell if the market begins to boom – using the profit as a deposit for a home of their own, in a more desirable location.
Rates of interstate migration are high right now, whilst population growth and “rentvesting” cause increased demand for an already limited housing supply. This paints a colourful picture for the future of the Tasmanian property market.