Which property market is the quiet achiever?

Sydney and Melbourne often draw the most attention for their booming prices but one analyst has identified a quiet achiever market that investors should be turning their attention to.

“It’s very easy for mainland east coast dwellers to forget about that little chunk of island all the way down south we call Tasmania, but perhaps it’s time we pay attention to this picturesque haven and in particular, the evolution of its property market,” said Luca Simms, senior investment analyst, SQM Research.

Often the discussions around the Australian property market are centralised on the juggernaut regions of Sydney and Melbourne, but Australia’s market is a lot more diverse than can be simplified to these specific areas.

“When we look at the data on Hobart, we find that vacancy rates have rapidly declined by 1.42 per cent over the past five years to record a February 2017 rate of 0.87 per cent. Hobart officially has the lowest vacancy rate in Australia. Stock on market levels have generally been falling in Hobart as well with a 32 per cent decrease in homes on the market and a 39 per cent decrease in apartments since a peak recorded in November 2012,” said Mr Simms.

“Although slow, property asking prices have been rising over the past five years; houses have increased on average by 16 per cent and apartments by 17 per cent showing compound annual growth rates (CAGR) of 3.02 per cent and 3.19 per cent respectively,” he said.

Affordability has boosted the population in Tasmania, which in turn has had a positive effect on the housing market and made it a tantalising option for investors.

“Hobart also seems to be providing an excellent return on investment. Over the past 12 months, Hobart has displayed an average implied gross rental yield of 4.4 per cent for houses and 5.46 per cent for apartments, second only to Darwin at 4.65 per cent for houses and Canberra at 5.68 per cent for apartments,” said Mr Simms.

“According to a recent report undertaken by Commsec that rates each state's performance on various economic factors, Tasmania has jumped from seventh to fourth place in the rankings. As mainland Australia continues to outprice itself, the great Australian dream of home ownership has become increasingly out of reach, especially for the younger demographic. Tasmania’s annual population increase is 0.5 per cent which is the lowest in the country, however, an increase from previous years. More people have been arriving with less people departing the state. The ABS reports that the Greater Hobart area has received the majority of Tasmania’s increased population. Naturally, this influx of population has boosted the local economy creating growth in terms of the job market and housing finance, where the annual growth on home lending is currently the strongest in the country at 8.9 per cent,” he said.

Which property market is the quiet achiever?
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