According to Tony Collidge, President of the REIT, “A shortage of rental properties across most regions has seen vacancy rates fall and placed upward pressure on rents. Strong rental yields are providing incentive for growing interest in investment in this sector”.
“Whilst national focus has been on the mainland markets, Tasmania has quietly slipped under the real estate radar. Most pundits were surprised to learn that Hobart has the second-best performing market behind Sydney for cumulative growth since January 2000.
We have had the best performing market over the past 12 months. The transformation has occurred as a result of a shortage of properties for sale and for rent coupled with an increase in population growth, increase in employment, increased consumer sentiment and positive economic conditions. The growth in our market has allowed us to keep pace with the other capital cities and not fall further behind. Whilst it is a concern as to how we can close the gap between demand and supply we still provide the cheapest and best value accommodation in Australia. 2017 has seen momentum build and it appears this market may still have a way to go”.
The residential rental vacancy rate decreased 0.1% to 2.7% for the state in June 2017. From last month, the vacancy rate decreased 0.1% in Hobart (to 1.9%) and the North-West centres to 3.9%. Launceston remained steady at 2.9%. The median rental price per week for two bedroom units in Hobart increased $20 to $320 per week, with three-bedroom house rental prices increasing $20 to $370 per week. This shows a 5-6% increase in rental prices in the last quarter.
Vacancy rates have remained low throughout the off-season in Hobart showing that there has been a constant demand for property throughout the year which is not the norm for this period. Interestingly there has also been a strong demand for rental accommodation for international students in areas other than Sandy Bay and surrounding suburbs. Airbnb may be having an effect upon the availability of properties in this area normally housing international students.
In the March quarter 2017, rental affordability declined slightly with the proportion of income required to meet rent payments increasing to 24.6%, an increase of 0.1 percentage points over the quarter but a decrease of 0.5 percentage points compared to the same quarter in 2016. When compared to the March quarter 2016, all states and territories except Tasmania and the Australian Capital Territory recorded improvements in rental affordability.
Overall the rental market in Hobart continues to perform well and increased investment in the state by mainlanders and locals keen to enter the market will continue to provide good housing stock with excellent returns to investors.
By Robbie Yeoland, Knight Frank Tasmania Department Manager