Affordable & Liveable Property Guide 2nd Half 2021 - Hobart
Median property prices in Hobart Metro increased by 30.5% for houses to $740,000 from Q3 2020 to Q3 2021*, and by 43.5% for units at $640,000. Between Q3 2020 – Q3 2021, total house sales declined by -1.3% (to 444 sales), and by -18.5% for unit sales (to 190 sales). Median price growth coupled with low transaction volumes suggests an imbalance between stock and demand.
Median property prices in Hobart Metro increased by 30.5% for houses to $740,000 from Q3 2020 to Q3 2021*, and by 43.5% for units at $640,000. Between Q3 2020 – Q3 2021, total house sales declined by -1.3% (to 444 sales), and by -18.5% for unit sales (to 190 sales). Median price growth coupled with low transaction volumes suggests an imbalance between stock and demand.Undersupply is evident in Hobart Metro’s property market, more so significantly for units.
An estimated $387.0M of developments are planned across the 2nd half of 2021, with a higher focus on mixed-use and residential projects. This will boost supply of ready-to-sell properties (420 units, 422 townhouses, and 10 dwellings), and ready-to-build lots (50 planned). This will create a slightly more balanced property market, especially for first home buyers.
Interestingly, affordable and liveable suburbs can still be found in the inner ring market (0-5kms from Hobart CBD), which are the closest affordable and liveable suburbs to the CBD, compared to Sydney, Brisbane and Melbourne. Hobart buyers are in an advantageous position in terms of access to the CBD, as buyers in the Sydney, Brisbane and Melbourne markets have to look to middle and/or outer ring areas for an affordable and liveable suburb.
Table 1 highlights the top suburbs in Hobart Metro based on price growth and total estimated value of projects commencing in the 2nd half of 20212.
Access to Market
The dominant proportion of homes sold in Hobart Metro across 2021# were in the premium price bracket of above $800,000 (34.5%). Units recorded a dominant premium price bracket of above $700,000 (30.0%). Hobart Metro has further shifted towards premium pricing. Affordable price points are still evident, however, they have significantly shrunk in the past 12 months. Supply is crucial to create sustainable price growth for buyers.
Figure 1. Hobart Metro Houses Sold by Price Range
Affordable and Liveable Suburbs
To identify affordable and liveable suburbs, premiums of 83% for houses and 43% for units were added to the Tasmanian (TAS) average home loan, which was below those required to reach Hobart Metro’s median prices (92% for houses and 66% for units). Thus, the chosen suburbs have a median price that sits below Hobart Metro’s median prices, meaning that the suburbs identified within this report are more affordable for buyers.
Considering all methodology criteria (property trends, investment, affordability, development, and liveability), Tables 2 and 3 identify key suburbs that property watchers should be focused on.
In September 2021, house rental yields in Hobart Metro were recorded at 3.7%. In the 12 months to Q3 2021, the median house rental price increased by 10.6% to reach $520 per week, further complemented with average days on the market, declining by -9.1% (to 20 days).
In September 2021, Hobart Metro recorded a very low vacancy rate of 0.5%, which was below that of Melbourne Metro (3.5%) and Sydney Metro (2.7%). Vacancy rates in Hobart Metro also sit well below the Real Estate Institute of Australia’s healthy benchmark of 3.0%. Hobart Metro’s vacancy rate has shown a declining trend since peaking in April 2020 due to COVID-19, offering investors higher confidence in what is a consistently strong rental market.
This affordable and liveable property guide for Hobart Metro analyses all suburbs within a 20km radius of the Hobart CBD. The following criteria were considered:
- Property trends criteria – all suburbs have a minimum of 10 sales transactions for statistical reliability purposes. Based on market conditions, suburbs have either positive, or as close as possible to neutral price growth between 2020 to 2021*.
- Investment criteria – as of September 2021, suburbs considered will have an on-par or higher rental yield than Hobart Metro, and an on-par or lower vacancy rate.
- Affordability criteria – identified affordable and liveable suburbs have a median price below a set threshold. This was determined by adding percentage premiums to the TAS average home loan, which was $384,525** as of Q2 2021. Premiums of 83% for houses and 43% for units were added, which were below those required to reach Hobart Metro’s median prices (92% for houses and 66% for units). This places the chosen suburbs below Hobart’s median prices, meaning that the suburbs identified within this report are more affordable for buyers.
- Development criteria – suburbs identified must have a high total estimated value of future project development for the 2nd half of 2021, as well as a higher proportion of commercial and infrastructure projects. This ensures the suburbs show signs of sustainable economic growth, in turn positively affecting the property market.
- Liveability criteria – all identified suburbs have low crime rates, availability of amenities within a 5km radius (i.e. schools, green spaces, public transport, shopping centres and health care facilities), and an unemployment rate on-par or lower in comparison to the TAS average (as determined by the Department of Jobs and Small Business, June Quarter 2021 release).