Hobart has produced the fastest house and unit price growth of all Australia’s capital cities over the last three years, according to the QBE Housing Outlook 2018-2021.
The median house price in Hobart has jumped by a third over the last three years yet remains the lowest median house price of all state capitals. Meanwhile, the median unit price in Hobart has increased by 27.6% since 2015, and while this return is slightly weaker than for houses, it is still significant. That said, in 2017/18 alone, unit prices increased by 16%, surpassing house price growth of 10.6%.
In previous cycles, downsizers from Melbourne and Sydney drove net migration growth to Hobart, noted QBE. “However, the current inflow is largely coming from a younger demographic, suggesting this population seeks refuge from higher prices on the mainland.”
The Tasmanian economy has improved in recent years continued the QBE report, while a lower Australian dollar has fueled booming tourism and agricultural sectors.
Significantly, QBE notes that the demand for dwellings continues to outstrip the supply of new dwellings, while Hobart’s rental vacancy rates have fallen from around 5% in the middle of 2012, to just 1.7% in the June 2018 quarter.
Given the relatively strong rental market, coupled with the recovery in the Tasmanian economy and continued population growth, house and unit prices in Hobart are expected to continue to grow. By June 2021, Hobart’s median house price is expected to reach $520,000, almost 8% higher than current levels and the median unit price is expected to hit $420,000, around 9% higher than current levels.