John McGrath –Unlimited potential for Apple Isle property values
Tasmania has been one of Australia’s hottest property markets for several years, and COVID-19 simply turbocharged the trend.
As discussed in our McGrath Report 2023, affordability, lifestyle and much improved economic conditions have helped fuel buyer demand, resulting in an impressive five-year run for Hobart.
Tasmania’s capital experienced the highest growth in median house prices of any capital city — increasing 93.5% between 2017 and 2022.
During the pandemic, Hobart achieved 22 consecutive months of growth in dwelling values. In the 12 months to the end of May 2022, median dwelling values increased by 17.3%, with houses rising 17% to a median of $796,595 and apartments rising 18.6% to a median of $590,074.
In the past two years alone, the number of suburbs with a median price of $1 million or more went from two (Battery Point and Sandy Bay) in 2020 to 10 in 2022.
The sustained growth has reduced affordability, particularly for first home buyers, with fewer young people taking on mortgages month-on-month in 2022.
The trend in building rather than purchasing an existing property is helping fuel high-growth areas of Greater Hobart such as Rokeby, Howrah-Tranmere and the township of Brighton.
A 7.9% annual increase in weekly house rents to the end of July 2022 in Hobart — up 63% over the decade to a citywide median of $561 a week — confirms the state’s severe dwelling shortage.
It’s a situation the state government is attempting to resolve, announcing $1.5 billion to deliver 10,000 new homes over the next decade.
Returning domestic and international tourists and students is a positive economic driver, particularly for hospitality and tourism operators. This will help return the state’s population growth closer to pre-pandemic levels.
The expected return to net positive population growth will also place additional demand on dwelling supply, requiring private investments and future housing development.
While Hobart’s home values have grown strongly, they were surpassed by regional Tasmania. Dwelling values in regional areas increased by 25.4% in the 12 months to the end of May 2022.
The most significant city in regional Tasmania is Launceston. During COVID, it was one of the most popular destinations for those migrating from other Australian cities.
Compared with Hobart, Launceston’s relatively affordable property prices have certainly been one compelling reason for buyers to move there. Its median house value was $581,927 as at July 2022, while Hobart’s was $782,748 for the same period.
Affordability has also driven Launceston’s apartment market, with 42.7% of all sales in the 12 months to July 2022 priced between $200,000 and $400,000.
As a result, it’s one of the strongest regional apartment markets in the country, with stock selling quicker than anywhere else. Over the year to July 2022, the median days on market was just 13 and there was 20% growth in prices over the period.
The region has outperformed even the perennially popular South East Queensland holiday destination of the Sunshine Coast.
The future looks bright for the city of 68,000 people, which is midway through the Launceston City Deal, a $536 million, 10-year plan. Designed to boost jobs and attract business investment, the deal aims to create one of Australia’s most liveable and innovative regional cities.
Tasmania boasts a combination of unspoilt beauty, and its reputation for fine food, wine and the arts provides the perfect tonic for holiday makers looking for a permanent getaway.
There has been a re-rating of property values on the Apple Isle and I think it will only get stronger from here.