Hobart property investment quietly achieving: SQM Research

Property investment in Hobart is showing an excellent return on investment according to figures from QSQM Research with an average implied gross rental yield of 4.4 percent for houses and 5.46 percent for apartments over 12 months.

Luca Simms, senior investment analyst for SQM Research said this is second only to Darwin at 4.65 percent for houses and Canberra at 5.68 percent for apartments.

He said whilst the nation has been obsessed with Sydney’s unstoppable, unaffordable juggernaut of a property market, unassuming Hobart has been happy to step away from the lime light to become a rather quiet achiever.

"When we look at the data on Hobart, we find that vacancy rates have rapidly declined by 1.42 percent over the past five years to record a February 2017 rate of 0.87 percent," he said.

"Hobart officially has the lowest vacancy rate in Australia! Stock on market levels have generally been falling in Hobart as well with a 32 percent decrease in homes on the market and a 39 percent decrease in apartments since a peak recorded in November 2012. 

"Although slow, property asking prices have been rising over the past 5 years; houses have increased on average by 16 percent and apartments by 17 percent showing compound annual growth rates (CAGR) of 3.02 percent and 3.19 percent respectively.

"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 percent for houses and 5.46 percent for apartments, second only to Darwin at 4.65 percent for houses and Canberra at 5.68 percent for apartments. 

"So what exactly has caused this upswing in Hobart’s property market?

"The simple answer is population growth due to affordability. 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 percent 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.

"So if you’re tired of the same old stories of Sydney’s unaffordability, or a looming oversupply of apartments in Melbourne, keep an eye on Hobart, it may be an interesting market to watch in the coming year."