Affordable and Liveable Property Guide - Hobart 2nd Half 2018

Hobart - Affordable & Liveable Property Guide 2nd Half 2018

Affordable Suburbs - Hobart

Median property prices in Hobart grew by 1.7% (houses) to $450,000 and 4.0% (units) to $340,000 between 2017 and 2018. During this time sales transactions softened by -41.1% (houses) and -50.3% (units), indicating that price increases were due to scarcity of stock. Compared to the 10.6% (houses) and 7.2% (units), median price growth quoted in the Hobart Affordable and Liveable Property Guide 1st Half 2018, this signals that the market is starting to return to a more sustainable level of price growth. This is great news for first home buyers, as they have been priced out of the market for the past 12 months by interstate investors.

A key finding in this report was that there are no highly liveable suburbs that met the affordable methodology of having a maximum sale price that is below the Tasmanian average home loan, plus the 69% (houses) and 27% (units) premium needed to purchase the Hobart Metro median price. To find highly liveable suburbs, buyers must be willing to pay higher than these premiums. Hobart is the only capital city in which this has occurred, making the cost of liveability the highest in Hobart.Table 1. Top Performers in the Hobart 2nd Half 2018 report

Over the past 12 months to June 2018, the proportion of income to meet home loan repayments increased by 25.4% in Tasmania. However, the number of first home buyers have increased by 20.5% during this time, which is higher than other states.Table 2. Accessible Suburbs by Price Range HOB

Liveable Suburbs - Hobart

In the 12 months between the 2nd half of 2017 and the 2nd half of 2018, there was a massive upward swing in price segments within Hobart. Houses priced below $350,000 decreased by a massive -20.4% to represent just 8.2% of total sales. This poses a great challenge for those seeking to enter the market for the first time, as the most affordable options have quickly disappeared. Looking further back to the 1st half of 2017, this represents an even bigger swing of -38.0% in just 18 months.

The strongest growth occurred in houses sales within the $650,000 to $800,000 price bracket, with an equally astonishing increase of +13.8% in total sales in just 12 months. This bracket was non-existent in the 1st half of 2017. Furthermore, in the 1st half of 2017 only 3.8% of houses sold were priced above it at $800,000. Fast forward 18 months and now 10.2% of sales are within this price bracket, signalling a real change in affordability. After a flurry of market activity in Hobart over the past 18 months, these rapid shifts in price points are expected to cool, however, not to the extent currently observed in Sydney or Melbourne.

Highly affordable suburbs (those with a maximum property sale price of the average state loan plus a 72% deposit) exists. 15 suburbs fell within this price bracket including Glenorchy, Rokeby, Warrane, Claremont and Montrose.

Despite this, many of these suburbs fail to meet the liveability criteria set. 100% (houses) and 35% (units) premiums needed to be added to the Tasmania average state loan. Lindisfarne (houses) continued to hold a position in the 2nd half 2018 report, as did Bellerive (units). Other previous hotspots either failed to meet liveability criteria or have become unaffordable due to capital growth.

Considering all methodology criteria (property trends, investment potential, affordability, project development, and liveability factors), Table 3 and 4 identify key suburbs that property watchers should look out for. 

Affordable & Liveable Suburbs - Hobart

Table 3. Affordable and Liveable Hotspot Suburbs - House HOB

Hobart’s rental market has continued to perform well when compared to other Australian Capital Cities, demonstrated by: median rental prices of $395 for houses and $350 for units, extremely low vacancy rates of 0.7% as per September 2018, and a steady increase in rental prices over the past five quarters. Hobart’s rental prices increased by 4.0% for 3-bedroom houses and 9.4% for 2-bedroom units over the past 6 months to Q2 2018. The positive performance of Hobart’s rental market has detracted investors from the Sydney and Melbourne property market. Investors need to take advantage of this low risk environment before property prices skyrocket and become unreachable.Table 4. Affordable and Liveable Hotspot Suburbs - Units HOB

Hobart’s rental market has continued to perform well when compared to other Australian Capital Cities, demonstrated by: median rental prices of $395 for houses and $350 for units, extremely low vacancy rates of 0.7% as per September 2018, and a steady increase in rental prices over the past five quarters. Hobart’s rental prices increased by 4.0% for 3-bedroom houses and 9.4% for 2-bedroom units over the past 6 months to Q2 2018. The positive performance of Hobart’s rental market has detracted investors from the Sydney and Melbourne property market. Investors need to take advantage of this low risk environment before property prices skyrocket and become unreachable.

Around $239.1M of new projects are planned in Hobart for the 2nd half of 2018, underlining its enhanced liveability for residents and continuing economic growth. This will result in conducive conditions for a vibrant property market in the future. The main commercial project is Hobart Wrest Point Casino ($90.0M), Australia’s first casino designed by Sir Roy Grounds. Another significant project for Hobart is the One Bournville Claremont Golf Course Redevelopment ($19.0M), adding 53 units into the market.

Methodology

This PRDnationwide Hobart Affordable and Liveable Property Guide 1st Half 2018 analyses all suburbs within the Greater Hobart area, with chosen affordable and liveable hotspots to be within a 10km radius from the CBD. The below factors and methodology were considered:

  • Property trends – all suburbs considered will have a minimum of 20 transactions for statistical reliability purposes, with positive price growth from 2017 to 2018.
  • Investment – as of June 2018 the suburb will have an on-par or higher rental yield than Sydney Metro, and an on-par or lower vacancy rate.
  • Affordability – suburbs with a median price below the maximum sale price of state average home loan plus allocated premium percentage. In this report 100% (house) and 35% (unit) were added to the average Tasmanian home loan, which was $266,675 as at June 2018. This is higher than the 69% (house) and 27% (unit) premiums to purchase the Hobart Metro median price, due to ensuring liveability aspects.
  • Project development – the suburb has a high total estimated value of project development for the 2nd half of 2018. This ensures sustainable economic growth, having a positive effect on the property market.
  • Liveability factors – this includes ensuring low crime rate, availability of amenities within a 5km radius (i.e. schools, green space, public transport, shopping centers, and health care facilities), and an unemployment rate on par or lower in comparison to the state average (as determined by the Department of Jobs and Small Business, June Quarter 2018 release)

AandLP 2H 2018 disclaimers

Affordable and Liveable Property Guide 2nd Half 2018 - Hobart