It’s been a challenging year for Australia’s property market, with median house prices across capital cities falling 5.3% in the past 12 months. Across the nation, property prices have either decreased, remained flat, or only shown modest increases - all except for one state that’s bucking the trend.
In Hobart, the median value of house prices increased 9.3% in the past year, with a total return of 15.2%. On top of this, Tassie’s regional areas have also grown in the past 12 months.
So why is Tasmania bucking the trend, and what does that mean for property investors?
Why is the Tasmanian property market doing so well?
CoreLogic’s November figures show that Sydney’s property prices have dropped 8.1% and Melbourne’s have dropped 5.8% in the past year. Perth also decreased by 4.2% and Darwin by 0.8%, while Brisbane remained flat with 0.3% growth. Only three capital cities reported increases: Hobart had 9.3% growth, while Canberra’s growth is less than half of this at 4%, and Adelaide at a modest 1.4%.
These figures show that the Hobart property market is now the strongest in Australia by far, but it’s not just the state’s capital that’s booming. Launceston and the north-east’s growth are outperforming Hobart with a 12.1% increase, which also makes it the nation’s best performing regional market. Tassie’s west and north-west regions increased by 9.1%.
Tim Lawless, the head of research at CoreLogic, said Tasmania’s strong property market was partly due to affordable Hobart house prices.
"A typical dwelling price in Hobart is about $450,000, so compare that to Sydney where it's $821,000 and Melbourne where it's nearly $600,000.”
Lawless also believes the state’s lifestyle factors play a big part, thanks to its high livability factor.
“I think people are just realising that Tasmania is a great place to live. The economy is starting to do better and we're seeing the attraction to the state from other parts of the country," he said.
The numbers echo this, with more people flocking to Australia’s southernmost island, which leads to more demand for property.
Tasmania’s population is growing at its fastest rate in 5 years, and the state has a faster population growth rate than France. While historically, Tasmania’s growth was entirely natural, now the biggest contributors are international migration, and interstate migration, thanks to a growth in tourism, construction activity, and a strong economy.
So what does this mean for Tasmanian property sales in future?
Nationally, it’s expected that the downward housing trend will continue in 2019, but Tasmania’s property market will most likely continue to grow. On a monthly and quarterly basis, the state’s property values continue to increase, and the market shows no sign of hitting its peak yet.
Hobart’s median property price is now $445,655, which is close behind Perth’s median price of just over $451,000. As prices in Tasmania’s capital continue to increase, it’s likely that buyers will spill over into the rest of the state, including regional areas like Launceston, which means these are areas to keep an eye on in coming years as a first home buyer or property investor.
The rental market is also likely to grow: Tasmania’s boom in tourism, the effects of AirBnB, and generally low vacancy rates suggest that rent prices will continue to trend upwards in future. This makes the state an ideal consideration for any investors looking to rent out property: half of Australia’s top 10 suburbs to invest in are in Tasmania, thanks to high cash flow potential and capital growth potential.
All signs suggest that now’s a good time to think about investment property in Tasmania, whether it’s real estate in Tasmania’s Hobart, or in booming regional areas.
However, if you’re looking to invest in the area, it’s important to keep an eye on the market trends, stay up-to-date with the latest news, and do your research on the area where you’re looking to buy.
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