The city of Hobart is Australia’s second oldest, founded in 1804 as a penal colony. Unfortunately the property market has been somewhat stagnant since that point. Exaggeration, of course, but it does feel like centuries since the market moved significantly above inflation; in fact, Hobart has recorded the lowest rate of capital gain since the onset of the GFC. This has made Hobart homes the most affordable of any capital city.
After Darwin, the southernmost capital is also showing the second highest gross rental yields of any other capital city. Nationally, median weekly asking rents for houses increased by 0.8 per cent over the March quarter, while unit rents rose by 0.4 per cent.
Rental markets were steady or declining in most capital cities with the exception of Melbourne and Hobart, which both saw solid increases over the quarter. Continuing the trend from last quarter, Hobart recorded the strongest increase in asking rents for both houses and units, which rose by 3.1 per cent and 3.7 per cent respectively. Melbourne was the only other capital city to record increases in the median weekly asking rents over the quarter: Melbourne unit rents rose by 1.4 per cent to $365 and house rents by 2.5 per cent to $390, both new records.
Hobart property ticks the boxes in terms of cash flow and yield but a still soft state economy and stagnant infrastructure spend is likely to keep Hobart in the correction phase of the property cycle for the foreseeable future. GSP growth between the 2012/13 and 2013/14 financial years was half that of the Australian figure and the second lowest state or territory figure after the Australian Capital Territory.
Private capital expenditure in Tasmania has remained flat over the ten years to December 2014, at the same time Queensland’s private capital expenditure spend increased more than threefold. The economic stimulus that results from infrastructure investment is one of the key mechanisms of property market growth.
