John McGrath – Now Is The Time To Buy In Hobart

Tasmania’s charming capital city of Hobart has emerged as a shining star in Australia's economic landscape in the past decade, underpinned by its affordable and robust housing market.

Hobart home values soared by 45% during the pandemic boom, making the city one of the country’s top performers of that period. This was followed by a sharp market downswing, with double-digit falls in both house and apartment prices. That’s not surprising after such strong growth.

The correction in Hobart ended in March this year and home values have risen by just 0.8% since then, according to the latest available CoreLogic data. This is because, in contrast to the big mainland cities, supply has been sitting above the five-year average for most of the year, giving buyers more choice and scope to negotiate on price.

This subdued market setting provides an opportunity for mainland investors. Mainlanders heading to Tasmania over the summer holidays might like to look around for investment opportunities and/or a future seachange or treechange home. The median house price is currently just above $700,000 and the gross average rental yield is 4%. The apartment median is about $525,000 with a yield of 4.4%.

As discussed in this year’s McGrath Report, one upside of Hobart’s weaker market this year has been the improvement in affordability levels. This has paved the way for many first home buyers to get into the market. Aided by record-low unemployment and a generous $30,000 State Government-funded First Home Owner Grant, more than 700 first time homeowners have taken advantage of the conditions and incentives to buy or build a new property in the past two years.