Reasons to invest in Tasmania
Mathew Chugg, Knight Frank’s Department Manager for Residential Sales, gives an update on the Tasmanian residential market and the ‘Reasons to invest in Tasmania’ in this month’s editorial.
Government investment – The Tasmanian Government is investing $1.8 billion over the next four years to deliver infrastructure projects to drive economic growth and create employment opportunities. Major projects include upgrading the TasRail freight network, Hobart Airport upgrade ($30 million), major traffic decongestion and road infrastructure upgrades, Tasmanian Health Plan to upgrade hospitals ($92 million), in addition to, the extensive upgrade of Royal Hobart Hospital ($689 million).
Liveability – Hobart is placed well for liveability when compared to other cities around the world, offering rewarding career opportunities, true sense of work/life balance, affordable housing, established schools, short commutes and close to the cleanest air in the world. Over the next four years, the Tasmanian government has invested to build and promote Tasmania’s liveability, to foster a culture which is vibrant, inclusive, respectful and supportive.
Rising population growth – Tasmania’s population has grown year-on-year for 19 consecutive years. Over the year ending June 2018, an increase in the estimated resident population was recorded at 1.1% to total 528,200 persons. According to the Australian Bureau of Statistics (ABS), Greater Hobart grew 1.5% over the same time to count 232,600 persons. According to the Department of State Growth, the Tasmanian population is projected to grow to 650,000 persons by 2050.
Capital value growth – The strongest annual capital growth across all Australian capital cities was recorded for Hobart apartments, at 8.6% in March 2019, to stand at a median of $363,400. This pace outperformed the annual national average which fell by 2.7%, according to APM. Hobart also had the best performance for houses across the country over the same time, with an annual growth of 7.1% to reach a median of $478,200.
Lowered vacancy – A shortage of housing stock in Hobart has contributed to rising rents and a decline in residential vacancy. Over the course of three years, vacancy fell from 3.1% (considered to be a balanced market) to 1.5% in December 2019 according to REIA. Hobart house rents increased 7.1% in the quarter ending March 2019 according to APM. This also saw rents rise from $420/per week in March 2018, to be $450/per week, one year later making a house more expensive to rent in Hobart than in Melbourne. Rents also jumped to $380/per week for a Hobart apartment in March 2019, from $350/per week a year earlier. In March 2019, gross rental yields were 5.10% for Hobart houses and 5.20% for Hobart apartments.