Hobart property market struggles as Tasmania not attracting tree-changers: RP Data

Hobart may look beautiful in tourism shots, but the Tasmanian capital’s housing market is taking a battering this year and the picture is unlikely to improve.

According to the latest RP Data/Rismark house price index Hobart dwelling prices fell 6% in raw terms and 4.8% on a seasonally adjusted basis in August to be 9.1% down for the year. The fall in house prices has accelerated over the last three months, with Hobart dwelling prices down 6.4%

This makes Hobart the worst-performing capital city housing market for the year, some way ahead of Brisbane, which has fallen just over 6% this year, but has had to cope with a series of natural disasters.

According RP Data head of research Tim Lawless, Hobart prices are more volatile due to it being a smaller market, but he says the latest figures don’t come as a surprise.

“Hobart has been weak for some time now,” he says.

Lawless says key reasons for Hobart’s weak housing market are its low rate of migration and lack of job creation.

“It’s not attracting lifestyle buyers or prospective retirees. There are no tree changers coming to Hobart. The market has been dependent on them in the past,” he says.

Although it offers investors strong yields for both houses (5.2%) and units (5.4%) compared with the average for capital cites (4.3% for houses, 5% for units) investors appear to be shunning Hobart and the state in general for opportunities in the mainland state.

At the start of September Property Observer featured three of Tasmanian properties offering strong investment potential in desirable locations. Two months later, all three are still listed for sale.

Other figures on Hobart are not as gloomy, but certainly reflect a housing market that is in decline and generating very little in the way of buying and selling activity.

Official ABS figures for Hobart show a 1% decline in established house prices over the September quarter with prices down only 0.3% for the year.

However, burrowing down into the figures shows that established house transfers are averaging around 800 per quarter (the most recent ABS on this measure are for the March quarter) compared with about 1,100 in the March 2009 quarter.

Figures compiled by Australian Property Monitors show that stratified median house prices in Hobart are down 2.4% year on year for the September quarter, and the city has a median price of $335,000.

According to June quarter figures from the Real Estate Institute of Tasmania, the waterfront Hobart suburb of Sandy Bay is the most expensive suburb in Tasmania, with a $647,500 median, followed by Battery Point at $645,500. Sandy Bay’s median price in the 2010 was $655,000 and $599,000 in 2009.

Four other suburbs on the 10 most expensive suburbs in the state have recorded strong gains over the past two years, including Seven Mile Beach, up from $398,000 in the 2009 June quarter to $475,000; West Hobart up from $427,500 to $495,000; Sandford up from $426,000 to $497,500 and Mount Nelson up from $417,500 in 2009 to $615,000.

However two of the cheapest suburbs on the 10 cheapest locations recorded significant declines in median prices, with Ravenswood down from $190,000 in June 2009 to $142,500 and Gagebrook down from $160,250 to $150,000.

Queenstown on the west coast of Tasmania is the cheapest location, with a median price of $81,500.

Real Estate Institute of Tasmania president Adrian Kelly recently noted that with many overpriced properties on the market that “anyone currently selling a house in Tasmania needs to be willing to meet market prices or be ready for their house to sit on the market for up to a year or more".

All 10 properties on SQM Research's list of the most discounted properties in Tasmania have been on the market for more than 200 days, and six have been on the market for more than a year.

Photo courtesy of Tourism Tasmania.