Hobart Property Investment

A dramatic increase in migration has ignited Hobart's once sleepy property investment market with prices tipped to continue rising strongly this year.

After years of losing population to the mainland, Hobart has turned the tide and is now a sought-after retirement and holiday home destination.

While some slowing is inevitable - and there are already signs that the recent strong price growth is moderating - local affordability remains good and rental markets are tight.

This means locals can look forward to continued rising prices while buyers will have to dig deeper in 2007 to secure their Hobart dream home.

Looking Ahead ...

Shane Oliver, chief economist with AMP Henderson Global Investors recently told the Brisbane Courier Mail newspaper: "Prices are still playing catch-up and thus accelerating in Hobart, Brisbane, Adelaide and Perth..."

And according to the Reserve Bank Governor, Ian Macfarlane, while the boom ended is Melbourne 18 months ago and in Sydney about six months ago, Hobart is showing now signs of a slowdown.

There are three key reasons for the ongoing housing demand in areas such as Hobart and Brisbane:

• Population Growth
• Tight Supply
• Low Prices

Top Performing Suburbs

Hobart's most expensive suburbs in the September quarter were Battery Point ($447,000), Sandy Bay ($311,000) and Acton Park ($300,000). Turnover across the state was highest in Burnie, Devonport, Kingston and Sandy Bay.

The coastal town of Orford is ranked Australia's seventh-fastest-growing suburb. Other hot suburbs/areas include Richmond and Cambridge. Coastal holiday hotspots include Bridport and Beauty Point.

Hobart Property Investment Market Overview

ANZ's latest Property Outlook report says Hobart house prices have "great scope" for continued growth.

"Local affordability remains favourable and interest from mainland Australia (whose price-mindset is shaped by larger capital city parameters) will provide impetus. Our modelling suggests Hobart prices are still around 14 per cent below 'fair value', offering great scope for continued medium-term gains."

BIS Shrapnel, however, has forecast a softening in house prices and demand over the coming five years. Hobart's median house price is tipped to increase 6 per cent between 2002 and 2007. This represents a decline in real terms after accounting for inflation.

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