Property prices in Hobart have risen 130% in the past seven years.
It’s been an extraordinary growth period, but as prices across Australia contract, some may believe Hobart’s property boom has been and gone, and savvy investors should look elsewhere.
However, analysts like Simon Pressley of Propertyology have big expectations for the coming years.
“The future for Australia’s 11th biggest city is incredibly exciting,” Mr Pressley said.
“The local economy will benefit from the recent re-opening of the international border.
“And it now seems a formality that a $750 million world-class entertainment stadium will be developed in preparation for Tasmania entering a team in the national AFL competition.”
In conjunction with Mr Pressley, Dr Diaswati Mardiasmo of PRD Real Estate and other local agents and experts, Savings.com.au has put together a list of several suburbs in Hobart that buyers may want to consider.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
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6.04% p.a. | 6.06% p.a. | $2,408 | Principal & Interest | Variable | $0 | $530 | 90% | Featured 4.6 Star Customer Ratings |
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5.99% p.a. | 5.90% p.a. | $2,396 | Principal & Interest | Variable | $0 | $0 | 80% | Featured Apply In Minutes |
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6.09% p.a. | 6.11% p.a. | $2,421 | Principal & Interest | Variable | $0 | $250 | 60% | Featured Unlimited Redraws |
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Lutana
For two key reasons, Lutana will be a top pick for many investors.
Firstly, vacancy rates are currently at just 0.1%.
This is in the bottom percentile of all suburbs in Australia, and is one of the best indicators that demand is hugely outstripping supply.
Secondly, the value of construction projects coming to Lutana is estimated at $350 million.
These various projects will not only attract workers to the area, but will also add value to the suburb itself.
Lutana was one of the hotspots highlighted by Julie O’Donoghue, property expert at Next Address.
“[Lutana] has reached a $537 median rental return and over 30% growth in the last twelve months,” Ms O’Donoghue said.
Glenorchy
Henry Schade of Heron Todd White believes it is the lower end of the property market, rather than the prestige sector, that represents the best value in Hobart.
“Given the increases in rates and subsequent loan affordability constraints, we would expect the lower end of the market to hold up stronger than areas where the same increases in interest have seen a stronger impact on loan repayments,” Mr Schade told Savings.com.au.
In particular, he highlighted the potential returns in northern areas of Hobart.
“Suburbs in the northern areas of the Glenorchy LGA - where dwelling values can be below the $700,000 mark - are areas which could be interesting for the near future.” Mr Schade said.
Glenorchy itself, about eight kilometres to the north of Hobart CBD, saw moderate growth in 2022.
House prices rose 19.7%, while units saw a 16% increase.
However, with prices for both sitting well below the median price for Hobart ($602,500 and $475,00 respectively), growth can be expected to continue in the coming years.
Berriedale
Berriedale, one of the several high performers in the Glenorchy LGA, saw a dramatic increase in house prices last year.
The median price rose 37.5% to $660,000.
Vacancy rates in Berriedale are also exceptionally low, with just 0.2% of property currently available.
Dr Mardiasmo told Savings.com.au Berriedale ticks lots of boxes in terms of liveability.
“[Berriedale] is great for people that like quiet streets but still enjoy going out,” Dr Mardiasmo said.
“Shopping centres are only a couple of kilometres away in Claremont and Glenorchy, and schools are so close as well.
“It is great for growing families, especially with low barriers to entry at a lower than metro benchmark cost.”
Warrane
Across the River Derwent from Hobart CBD, Warrane saw huge returns in 2022.
House prices rose 42% to a median price of $625,000, while units lifted 18.9% to $550,000.
Vacancy rates are tight at 0.5%, so it’s likely strong demand will continue.
Dr Mardiasmo said there were several factors drawing investors and home buyers to Warrane.
“Warrane has seen a large increase in demand for property, likely due to the addition of new infrastructure projects planned in the development pipeline, as well as investors being attracted to a high rental market (43.89% of all residents being renters).” Dr Mardiasmo said.
“Additionally, close proximity to the CBD also provides flexibility to workers with an extensive transport system and roads available.
“Other amenities including shopping centres are also minutes' drive in every direction, leading to increased demand.”
Mornington
Neighbouring Warrane, Mornington is another northside Hobart spot that performed well this year.
It was highlighted by both Ms O’Donoghue and Dr Mardiasmo as a spot destined for continued growth.
“Mornington [has grown] by 55% over the past 3 years,” Ms O’Donoghue said, calling Mornington another hotspot to watch.
Mornington is another suburb Dr Mardiasmo believes to be ideally suited to first home buyers.
“Mornington provides excellent value for first home buyers in a strong developing residential area.
“With every shop you need and a range of primary and high schools within 5km, it's even got great mountain and river views, especially at the top of the hill.”
The median house price in Mornington was $621,000 in 2022, on the back of 24.1% annual growth.
Margate
A popular measure used to rank suburbs for their investment potential is the Demand Supply Ratio (DSR).
This is a score out of 100 given to a suburb that measures how much demand there is relative to supply: a DSR of 50 would indicate that demand and supply were balanced.
A high DSR demonstrates to investors that demand in a suburb outweighs supply, so prices are likely to significantly increase, similar to vacancy rates.
The national average DSR ratio is 55.
Jeremy Sheppard of Empower Wealth, the founder of DSR data, told Savings.com.au three particular Hobart suburbs stood out for their high DSR score.
One of these was Margate, about 20 kilometres south of the Hobart CBD.
The DSR data showed two metrics where Margate performed exceptionally.
Firstly, listed houses in Margate were on the market for an average of just 15 days, more than an entire standard deviation below the Australian average, indicating significant demand.
This data also estimated Margate’s vacancy rates at just 0.11%, again, far below the Australian average.
Header photo by Nico Smit, Lutana by Alex Eckermann, Margate by Joshua Brown, all on Unsplash
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